The Government of India has launched various schemes over the past few years to give benefits and incentives to attract investments and retain and grow businesses in the country. …
National, state, and local governments provide economic and business incentives annually in form of fiscal subsidies. The premiere programme was launched in 2014, the “Make in India” programme. Through government incentives and economic policies, the initative aimed at transforming India into a global manufacturing and industrial hub. Over the subsequent years, state and local officials have leveraged it to attract local and global investments in key strategic areas.
Investments being offered to growing / expanding businesses help create new employment opportunities. Critical for a country like India where there are more people than available jobs. There have been significant increases in the number of start-up businesses in the country, attracting foreign investments. Ultimately, these ventures act as a catalyst for boosting the economy.
By liberalising the economy, the government has offered various forms of government incentive programmes. Specifically targeting industry sectors, the mission is to further create a culture of entrepreneurship and level the playing field.
Types of India Government Incentives
- tax rebates and subsidies;
- interest rate cuts;
- credit guarantee schemes;
- deductions in affordable housing;
- job creation and training tax credits;
- research and development grants;
- export promotion measures, like reimbursements of taxes and duties;
- automated electronic refund route for input tax credits; and,
- export credit insurance schemes
Investments in Special Economic Zones (SEZs) can avail duty free imports, income tax exemptions on export income, and exemptions of other taxes, to name a few. To help spur the economy, the government is considering further opening new sectors to allow foreign investments in insurance, aviation, railways, education, and rental housing management companies.
Currently in India, the focus is on the availability of a qualified and talented workforce in the area under consideration. Workforce and talent incentives have a greater influence in today’s environment. Once viable sites are identified and the talent pool issue is considered, the incentives should become an integral part of the overall decision process. This, in turn, India government incentives create a win-win scenario.
The government wins by generating new jobs, higher wages and salaries and/or contributions to the country’s new tax revenues, as well as, bringing new technological innovations to the country. Companies also benefit tremendously by managing fiscal risks and offsetting some of the cost for the development and expansion of new sites or relocating businesses.
Developing a Strategic Approach
Even though many companies have internal departments who monitor and track various incentives they can secure and benefit from, there are a tremendous amount of other companies who do not have the resources, the expertise and/or the will to claim such benefits. Additionally, there is a general perception that such processes are bureaucratic, time consuming, and cumbersome. Along with concerns, that the end results may not actually yield significant benefits.
Businesses are encouraged to partner with specific industry forums or seek help from consultants with expertise in the government incentives programs. As a result, they’ll become more aware of the various government schemes numerous industry sectors can benefit from, how to claim such incentives and benefits, which government agencies and departments to follow up with, and what practices are most productive and efficient in achieving results.
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