Chieftains of India Inc. cheers government decision to reduce corporate tax, a move seen to spur investments, revive growth and the animal spirits in Corporate India.
Finance Minister Nirmala Sitharaman on Friday announced to reduce corporate tax to 22% and for new manufacturing companies set-up post October 2019 to 15%.
Welcoming the move, N Chandrasekaran, Chairman, Tata Sons said, “This is a big respite which would give the required stimulus to the economy. The reduction of MAT will also enable companies to optimize their cash flows leading to increased investments. A great step towards the 5 trillion economy!”
Kumar Mangalam Birla, chairman of Aditya Birla Group, believes that government’s decisive steps to pump-prime the economy will lead to a big reset and revive animal spirits in Corporate India.
“The reduction in corporate tax rates will not only lead to economic buoyancy but will also make Indian Industry more competitive globally. Beyond the immediate benefit of an investment incentive for the manufacturing sector, these steps will also lead to a paradigm shift in mindset. Above all, these measures only reaffirm the government’s willingness to move beyond incrementalism and act with conviction to pursue economic reforms,” said Mr. Birla.
Sajjan Jindal, chairman of JSW Group sees this move as a timely stimulus. “These are welcome steps that would not only revive the sentiment but also enhance the competitiveness of the Indian industries. The massive amount of savings in corporate tax due to the measures declared today aggregating to ₹1,45,000 crore is a timely stimulus for the revival of our economy,” Mr. Jindal told The Hindu .
According to Harsh Goenka, Chairman — RPG Enterprises, FM has set the direction for pumping up the economy. “Like Chandrayaan , Sensex shoots off on the right trajectory reassuring everyone that hope should not be lost. The slash in corporate tax is a positive move that will help enterprises create long-term value and favourably impact the economy,” Mr. Goenka told The Hindu .
“The slew of measures announced by the Finance Minister have come as a much needed gust of fresh air to resurrect and pump prime the economy. The bold and positive move to rationalize the corporate tax structure will help kick-start the next big economic upcycle," Sunil Bharti Mittal, Founder and Chairman, Bharti Enterprises.
Some CEOs took on the social media to welcome the move. “Looks like Diwali has come early,” Mahindra and Mahindra Managing Director Pawan Goenka tweeted.
Finance Minister also announced the reduction of Minimum Tax Rate (MAT) from 18.5% to 15%
“Amidst these challenging times, the reduction in corporate tax & MAT will infuse confidence in the economy. It also addresses the core challenge of liquidity reinstating India as an attractive investment destination,” Gautam Adani, Chairman, Adani Group, tweeted.
“Woke up in the U.S to this news. The best way to start the day. Not only because companies will pay less tax.But because this isn’t just another policy tweak. @nsitharaman fired a shot that will be heard around the world. India has sent an invitation letter to global investors,”Anand Mahindra, chairman Mahindra Group tweeted.
Ashish Chauhan, MD and CEO, BSE believes that Indian corporate tax rates have come down to amongst the lowest in the world especially for the new manufacturing companies.
“These decisions will be celebrated as historic and will go a long way in improving ‘Ease of Doing Business In India ‘ even further. These measures will further boost the investor confidence and start the investment cycle. Removal of surcharge for domestic investors in line with the FPIs, will go long way in bringing much needed fresh investment and animal spirit in the India capital markets,” Mr. Chauhan said.
According to Mercedes-Benz India MD & CEO Martin Schwenk, the reduction in corporate tax will promote investment, help sustain profitability during challenging times and should also improve buying sentiments, thus helping the auto sector in long term.
Mr. Gopichand P. Hinduja, Co-Chairman — Hinduja Group believes that the reduction in corporate tax was needed for Indian economy revival and manufacturing sector.
“It shows government is well seized of the economic challenges facing all of us. I only wish more such steps, which government is already contemplating, could be taken together in one go like tapping NRI investments, with this one so as to create deeper impact, instill more confidence in economy and amongst Corporates,” said Mr. Hinduja.
“This is a welcome move which will help Indian companies compete better on the global stage. India Inc must now do its bit to invest more of its retained earnings in R&D and innovation, which are the surest guarantors of international competitiveness,” said Mukund Rajan — Chairman, ECube Investment Advisors.
