India Inc. welcomed the Centre’s decision to reduce the corporate tax rate and the Minimum Alternate Tax
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 optimise their cash flows leading to increased investments. A great step towards the $5-trillion economy!”
Aditya Birla Group chairman Kumar Mangalam Birla, chairman of Aditya Birla Group, believes that said the government’s decisive steps to pump-prime the economy would 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, JSW Group, said, “The massive amount of savings in corporate tax, aggregating to ₹1.45 lakh crore, is a timely stimulus for the revival of our economy.” According to Harsh Goenka, chairman - RPG Enterprises, the 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. Goenkatold 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.
Pawan Goenka, M&M MD tweeted, “Looks like Diwali has come early.”
Gautam Adani, chairman, Adani Group, also tweeted, saying, “Amid challenging times, the reduction in corporate tax and MAT addresses the core challenge of liquidity reinstating India as an attractive investment destination.” Ashish Chauhan, MD and CEO, BSE said Indian corporate tax rates are now among 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 told The Hindu.
According to Mercedes-Benz India MD and CEO Martin Schwenk, lower tax will promote investment, help improve buying sentiment, and spur the auto sector in the long term.
Gopichand P. Hinduja, co-chairman, Hinduja Group, said Friday’s move was needed for economic revival and for the 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.
Boman Irani, CMD, Rustamjee Group, said, “The government is taking progressive and pragmatic measures. It is a clear cut message taken to make India more competitive as businesses grow through low taxes. It is a reassuring move to the industry.”“It also indicates that the government is sensitive to the requirement of the industry.I would request the Finance Minister to provide the same type of benefits to the housing and real estate sector,” he said.
“The sharp cut in corporate tax is one of the big reforms by the government. The measure will boost the manufacturing and real estate sector as well. This will help in the growth of the economy. The saving in corporate tax will provide growth capital for the industry which will be a booster for the economy. Corporate sentiment wise, it is positive,” said Kamal Khetan, chairman & managing director, Sunteck Realty Ltd.
Rajiv Agarwal, managing director & CEO, Essar Ports Ltd said the move is good for India and the corporate sector. “It will help in new investment to come. It will enable companies to plough back the money for capital formation. The move shows that the government is keen to bring down taxation to international levels,” he said.
“This big bang reform will kick-start the economy. Surplus funds available to companies will be invested in capex and talent. In a climate of global slowdown, this reform will make India an attractive destination for FIIs and long term investors. The announcement has brought parity to India’s corporate tax rate compared to that of advanced markets thus making it very competitive,” said Ajay Piramal, CMDhairman & managing director,, Piramal Enterprises.
“This will lead to improve in profit margin and capital investment across sectors. This will also help manufacturing companies to make new capital investment. The overall demand scenario will improve,”said Vijay Mansukhani, managing director, MIRC Electronics which operates under the Onida brand.
While welcoming themove,While welcoming the move, some by the Union Finance Minister Nirmala Sitharaman’s proposal to cut corporate tax and MAT reduction, leading industrialists called for a cut in personal income tax rate.
In his message, TVS chairman Venu Srinivasan said the proposed cut was a real game changer. It was the most encouraging measures announced by the FM and bound to boost investment by corporates. “Would look forward to seeing similar measures on personal taxation,” he said.
However, Gopal Srinivasan, founder-CMD, TVS Capital Funds, felt the Centre had ignored providers of risk capital. Profits of venture capital and private equity funds are taxed at full surcharge. “Today, the tax difference between long-term capital gains on listed markets and private markets are as high as 18 percentage (absolute) points,” he said.
Officials of Ashok Leyland Ltd., described the tax cut as a welcome move as it said the move would spur investment in corporate, manufacturing and capital markets and expected a similar announcement for the commercial vehicles sector also.
It is a superb move by the Centre to stimulate corporate savings, which would get channelised into investments, better pay, promotions and it would directly stimulate demand. These good measures to stimulate demand should win back sentiment and propel the economy back to 7% growth next year, said K.E. Ranganathan, managing director, Roca Bathroom Products Pvt Ltd.
Apollo Hospitals chairman Dr. Pratap C. Reddy welcomed the announcement and said it was a decisive move by the Centre to enhance competitiveness of Indian industry in the domestic and international arena. “In healthcare, this will give a boost for the manufacture of domestic consumables and devices,” he said.
It is a right step towards the revival of the economy and tackling the economic slowdown in the long-term. Besides, it would boost the earnings of the domestic manufacturing companies, said Amarendran Vummidi, managing partner, Vummidi Bangaru Jewellers.
T.T. Srinivasaraghavan, MD, Sundram Finance. said the Centre had taken a ‘real bold’ step.
Knight Frank India described it is a milestone effort towards kick starting the Indian economy and boost production. This substantial direct tax reduction will allow more liquidity for the corporates that are currently assuming drastic measures to protect their profitability, said its chairman and managing director Shishir Baijal
