Industry status

Budget 2022: New sectors should obtain the status of infra and industry

The Center could grant infrastructure as well as industry status to new sectors to boost several industries affected by the pandemic in the next Union budget. Industry insiders said that several sectors and sub-industries such as hospitality, automotive retail, specific digano installations and companies engaged in the installation of electric vehicle charging stations, among others, could obtain the status.

The infra beacon will allow these sectors to benefit from tax breaks, incentives and credits on lower interest rates. “Sectors that are in the green or would need increased capital expenditure to help them weather the pandemic can be looked at from the perspective of an infrastructure sector,” said Jagannarayan Padmanabhan, Director and Practice Leader, Transport and Logistics, Crisil Infrastructure Advisory. “Many sectors already identified also need sustained political momentum that will help them gain visibility both in terms of quantum and period of applicability.”

So far, activities associated with the laying of electricity and telecommunications transmission and distribution lines, roads, highways, railways and the construction of facilities such as hospitals, affordable housing , power generation units, water treatment plants, SEZs and certain types of hotels, among others, have been awarded. such status.

In addition, these sectors are part of the harmonized master list of infrastructure sub-sectors. However, in April 2021, the Exhibition and Convention Center was included in the list. “Given the focus on electric vehicles and the need for large investment in charging stations, if the government adds the sector to the infrastructure list, the benefits that will accrue will be significant,” Vishal said. Kotecha, Director, India Ratings and Research. “The Infra beacon on the sectors increases the ability to raise funds, access to dedicated funds and lenders, foreign capital, lower interest rates, among others.”

In recent years, lenders have taken a serious hit on their books in order to meet the unique financing needs of the infrastructure sector. This required regulatory changes and government support from time to time.

“The pandemic has hit the retail, hospitality and automotive sectors hard and the need for credit and liquidity support is real and urgent,” said Vipula Sharma, Senior Director – Ratings and Head of – Infrastructure Ratings, Brickwork Ratings.

“Any likely decision to reclassify lending to these sectors as infrastructure lending will allow banks to lend at concessional rates and over an extended period, giving the sectors time to recover from the three years of repeated extended shutdowns and rebuild their businesses. This would also allow access to funds from a broader set of institutions and funds.” Additionally, as the economy continues to recover from the protracted pandemic, the sustainability of the recovery is clearly the key objective of fiscal and monetary policy.

Therefore, the Center should focus not only on increasing public capital expenditure on infrastructure, but also on encouraging the private sector, including foreign players, to invest in the sector.

Lately, the Center has already taken an initiative to boost private sector capital expenditure through the Production Linked Incentives (PLI) scheme which has already covered 13 sectors with a total expenditure of Rs 1.97 trillion spread over the next few years. AGENCIES