Key highlights on sector announcements and their impact

The Finance Minister announced a slew of announcements for different sectors on Saturday in the budget speech. From agriculture and aviation to telecommunications and tourism, Here’s how the new measures will likely impact different sectors.

Agriculture

The Finance Minister announced the Dhan Dhanya Krishi Yojana, which will be implemented in partnership with States. The programme will cover 100 districts with low productivity, moderate crop intensity, and below-average credit parameters. The government will also launch a comprehensive multi-sectoral ‘Rural Prosperity and Resilience’ programme in partnership with states.

Aquaculture

The government will introduce an enabling to support the sustainable growth of the fisheries sector in Exclusive Economic Zone and High Seas. The focus areas include Andaman & Nicobar and Lakshadweep Islands.

Aviation

Finance Minister announced that modified UDAN Scheme to enhance regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years. The scheme will also support helipads and smaller airports in hilly, aspirational, and North East region districts.

Batteries

The government proposes to add 35 additional capital goods for EV battery manufacturing and 28 additional capital goods for mobile phone battery manufacturing.

Electronic Goods

The government proposes to increase the BCD on Interactive Flat Panel Display (IFPD) from 10% to 20% and reduce the BCD to 5% on Open Cell and other components.

In the 2023 -24 Budget, the government reduced the BCD on parts of LCD/LED TVs from 5% to 2.5% for the manufacture of open cells. To further boost the manufacture of such Open Cells, the BCD on these parts will now be exempted.

Fertiliser

The government announced that a new urea plant with an annual capacity of 12.7 lakh metric tons will be set up at Namrup, Assam.

Infrastructure

Finance Minister Nirmala Sitharaman announced that each infrastructure ministry to come up with 3 PPP proposals, Rs 1.5 lakh crore interest free loans for capex and incentives for reforms.

The government's push for each infrastructure ministry to propose at least three PPP projects will encourage private investment in infrastructure, reducing the burden on public finances. It will also accelerate the development of critical infrastructure such as roads, railways, airports, ports, and urban infrastructure.

Insurance

The government announced the increase in Foreign Direct Investment (FDI) in the sector.

More FDI leads to higher capital availability, enabling insurance companies to expand operations, develop new products, and enhance coverage. It will also help insurers to meet solvency requirements, ensuring financial stability.

Leather and footwear

Finance Minister Nirmala Sitharaman announced the focus product scheme for fthe footwear and leather sectors.

The government proposes fully exempting BCD on Wet Blue leather to facilitate imports for domestic value addition and employment. It also proposes to exempt crust leather from 20% export duty to facilitate exports by small tanners.

The full exemption on Wet Blue Leather imports will lower the raw material cost for tanneries and leather product manufacturers. It will also enhance the leather value chain, benefiting sectors like footwear, garments, and accessories.

Pharmaceutical

The Finance Minister announced exemptions from basic customs duty (BCD) for 36 life-saving drugs.

The exemption in BCD will help in reducing the overall price of life-saving drugs, making them more affordable for patients who need them. Moreover, these exemptions encourage pharmaceutical companies to import and distribute essential drugs in markets where domestic production may not be sufficient to meet demand.

Shipping

The government proposes to continue the BCD exemption on raw materials, components, consumables, or parts for the manufacture of ships for another ten years. To make shipbreaking more competitive, it also proposes the same dispensation.

The exemption in BCD allows shipbuilders to import raw materials and parts without paying the basic customs duty, reducing overall production costs. This makes shipbuilding more cost-effective, especially for manufacturers who rely on imported components that are not readily available locally.

Telecommunication

The government proposes reducing the BCD from 20% to 10% on Carrier-Grade ethernet switches to make them comparable to Non-Carrier-Grade ethernet switches.

Textiles

The government proposes to add two more types of shuttle-less looms to the list of fully exempted textile machinery.

The government also proposes revising the BCD rate on knitted fabrics covered by nine tariff lines from “10% or 20%” to “20% or Rs 115 per kg, whichever is higher.”

Tourism

The Finance Minister announced the modified UDAN Scheme to enhance regional connectivity to 120 new destinations.

Expanding the UDAN scheme to 120 new destinations will give tourists more options and easier access to previously underserved or less-explored locations. This could lead to a rise in domestic and international tourist visits to these regions, unlocking their tourism potential.