Budget 2023 & the business

Finance Minister Nirmala Sitharaman stated that this budget is built on the foundation that was laid in the previous budget, which is the blueprint for India @100. Seven priorities have been laid out to guide us through the Amrit Kaal:

• Inclusive development
• Reaching the last mile
• Infrastructure and investment
• Unleashing the potential
• Green growth
• Youth power
• Financial sector

Capital expenditure for the year has been increased by 33 per cent from Rs 7.5 lakh crore in FY22 to Rs 10 lakh crore in FY23 representing 3.3 per cent of GDP. This is 400 basis points more than the previous year. This budget mostly adds on to the already laid out plans with a major focus on clean energy, and also shifts its focus towards working-class individuals. With that being said, let us take a look at important developments that will affect businesses.

Agriculture

• Digital public infrastructure for agriculture that will provide farmer-centric solutions such as crop planning, health, access to farm inputs, credit, insurance, and market intelligence.
• Agriculture accelerator fund to encourage agri-startups by entrepreneurs in rural areas.
• Collaboration between farmers, state, and industry for input supplies, extension services, and linkages to enhance the productivity of extra-long staple cotton.
• New Aatmanirbhar clean plant program with an outlay of Rs 2,200 crore for quality planting material for high value horticulture crops.
• Agriculture credit target increased to Rs 20 lakh crore with main focus on animal husbandry, fishery, and dairy.
• 10,000 bio-input resource centres will be set up to create a national-level distributed micro-fertiliser and pesticide manufacturing network.
• Plan to set up massive decentralised storage capacities that will help farmers store their produce.

Welfare:

• Outlay for PM Awas Yojana enhanced by 66 per cent to over Rs 79,000 crore.
• Rs 5,300 crore central assistance to drought-prone Upper Bhadra project in central Karnataka region.

Infrastructure

• Rs 2.4 lakh crore capital outlay for railways, highest ever in history.
• 100 critical transport infrastructure projects for last and first-mile connectivity for ports, coal, steel, fertiliser, and food grains. Rs 75,000 crore will be invested on a priority basis including Rs 15,000 crore from private sources.
• Revival of 50 additional airports, heliports, aerodromes, and advanced landing grounds to improve regional connectivity.
• Urban Infrastructure Development Fund (UIDF) will be established to create urban infrastructure in tier-2 and tier-3 cities. Rs 10,000 crore per annum will be made available for this purpose.
• Coastal shipping will be promoted as the energy-efficient and lower cost mode of transport.

Green energy

• Target to reach annual green hydrogen production of five MMT by 2030 with the help of Rs 19,700 crore sanctioned under the National Green Hydrogen Mission.
• Rs 35,000 crore priority capital investments towards energy transition and net zero objectives.
• Battery Energy Storage Systems (BESS) with a capacity of 4,000 MWH will be supported with Viability Gap Funding.
• Rs 20,700 crore to be invested in the construction of inter-state transmission system for evacuation and grid integration of 13 GW of renewable energy from Ladakh. This investment also includes Rs 8,300 crore from the centre.
• Green credit program (similar to carbon credits) incentivising environmentally sustainable actions by companies and individuals.
  500 new waste-to-wealth plants under GOBARdhan will be established, which will include 200 compressed biogas plants and 300 cluster-based plants with a total investment of Rs 10,000 crore.

Automobile

• In support of the vehicle scrapping policy setup in FY22, adequate funds have been allocated to scrap old vehicles in central and state governments.
• Customs duty exemption extended for import of capital goods and machinery required for the production of lithium-ion cells for EVs.

Electronics and electricals

• Custom duty relief on the import of certain parts and inputs like camera lens. The concessional duty on lithium-ion batteries will continue for one more year. This is to enhance the domestic value addition of mobile phone production.
• Basic customs duty on parts of open cells of TV panels reduced to 2.5 per cent.
• Basic customs duty on electric kitchen chimneys increased from 7.5 per cent to 15 per cent, and will be reduced from 20 per cent to 15 per cent for heat coils.

Chemicals

• Exemption of customs duty on denatured ethyl alcohol. This will support the ethanol blending program.
• Customs duty reduced on acid grade fluorspar to 2.5 per cent from 5 per cent to help the domestic fluorochemicals industry.
• Customs duty on crude glycerin for use in the manufacture of epichlorohydrin to be reduced from 5 per cent to 2.5 per cent.

Gems and jewellery

• Basic customs duty on seeds used to manufacture lab grown diamonds to be reduced.
• Custom duties on dores and bars of gold and platinum to be increased further.
• Import duty on silver bars and dores to also be increased in line with that of gold and platinum.

Metals

• Exemption from basic customs duty on raw materials for manufacturing of CRGO Steel, ferrous scrap and nickel cathode is continued.
• Concessional BCD of 2.5 per cent on copper scrap is being continued.

Rubber

• Basic customs duty on compounded rubber increased from 10 per cent 25 per cent or Rs 30/kg, whichever is less.

Tobacco

• National Calamity Contingent Duty (NCCD) to be increased by 16 per cent.

Financial sector

• National financial information registry to be set up to serve as a central repository of financial and ancillary information.
• Certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act are proposed.
• Few notable measures to enhance activities in GIFT IFSC:
  • Delegation of powers to IFSCA.
  • Setting up a single window IT system for registration and approval from all authorities.
  • Permitting acquisition financing by IFSC banking units of foreign banks.
  • Establishing a subsidiary of EXIM Bank for trade refinancing.

MSMEs

• In case of failure by MSMEs to execute contracts during COVID, 95 per cent of the forfeited amount will be returned by the government.
• Entity DigiLocker to be set up for MSMEs to help in storing and sharing documents online securely whenever required.
• Revamped credit guarantee scheme for MSMEs will start from April 1, 2023 through an infusion of Rs 9,000 crore in corpus. This will also enable additional collateral-free guarantee credit of Rs 2 lakh crore. Cost of credit will also be reduced by 1 per cent.
• Micro enterprises with turnover of upto Rs 2 crore can avail benefit of presumptive taxation.
• Deduction of expenditure incurred on payments made to MSMEs only when payment is actually made.

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