Manufacturing Industry In India

The manufacturing industry in India, has all the qualities which enhance economic
development,increase the productivity of the manufacturing industry and face
competition from the global markets. The Manufacturing industry in India is believed to
have the potential of improving the economic condition of India.

Indian manufacturing industry: Research findings

Studies conducted on the manufacturing industry has concluded that India has a
working population of 75%. Out of this, only 600 million have acquired education till
middle school. Due to this reason, the manufacturing industry in India , which is labor
intensive, can provide the requisite number of employment units in the country. Studies
have indicated that the productivity of the manufacturing industry in India is
approximately 1/5th of the productivity in the manufacturing industry of United States Of
America. It is about ½ as compared to the productivity levels in South Korea as well as
Taiwan. Labor productivity has escalated only to a small extent in case of India in
comparison to United States Of America, on the contrary, labor productivity has
increased manifold in countries like Taiwan and Korea.

Manufacturing industry in India and exports:

Exports of manufactured goods in India accounted for 75% in comparison to exports of

manufactured goods all over the world. Owing to the performance manifested by the
export sector in India, the scenario indicates that there is less competition in the
manufacturing segment. Absence of competition is also established by the fact that in
spite of reducing the tariff in the early and mid 90s, India continued to be one of the
protected economies of the world. Contribution of India's export towards international
market grew from 05% to 0.7% during 1990 to 2000. During the same period,Malaysia,
China, Thailand and South Korea, registered almost double increase in exports.
Tax reform in india
India has a tax system with a three-tier federal structure: (i) the union government, (ii) the state

governments and the (iii) urban/rural local bodies. The main taxes/duties that the union government

is empowered to levy are income tax, customs duties, excise duties, sales tax, and service tax.

Income tax is a single tax that is levied on a comprehensive basis both on persons and corporate

bodies. The custom duties are levied on import side of international trade. Also internal indirect

taxes are a complicated matter: they are separately levied on goods, services and intra-states’ sales.

Tax reforms were a key element of India's economic liberalization. The tax reforms included

reduction in share of custom duties and increase in that of direct taxes. Maximum rates of personal

and corporate income taxes were reduced and now both are at same level. Major tax reforms were

aimed to improve the tax to GDP ratio, expand the tax-payer base, increase voluntary compliance

and make tax administration more efficient and taxpayer friendly. India being a developing economy

is striving to fulfill the obligations of a welfare state within its limited resources. It was observed that

the share of service sector in the real GDP in India has surpassed that of agriculture and industry at

a relatively faster pace as compared to other industrialized nations. Services constitute a large

proportion of the consumption of the rich rather than of the poor as the demand for services is

income-elastic. A new concept was, therefore, introduced in India by imposing a tax on services

following a selective approach. In order to broaden tax base, Exempt, Exempt, Taxed (EET) based

taxation has been introduced in the defined contribution pension scheme applicable to newly

recruited government servants. It is intended to fully migrate to the EET system for all kinds of

savings. Further sunset clauses were provided to various incentives and relief allowed under the tax

act. To counter tax avoidance schemes and prevent tax evasion, a number of measures like

transaction tax on securities, cash transaction tax, fringe benefit tax were introduced. To provide fair

competition to Indian shipping companies in international trade, tonnage tax system is incorporated
in the act. Many administrative reforms are underway like the Tax Information Network and the OnLine
Tax Accounting System. Following international practice, Large Taxpayer Units will be created

to provide a single window service as assured by the Honorable Finance Minister in his budget

speech for the year 2005-2006.

The most important tax reform ever attempted in this country is introduction of the value added tax

(VAT) with effect from 1 April 2005. It will replace the existing sales tax and eliminate the cascading

effect of sales tax. Following problems are associated with present regime of VAT:

• Dual methodologies of computation of VAT credit, one for the manufacturing stage and the

other for the trading stage, thus breaking the audit trail;

• Presence of a large number of tax deferral and holiday schemes, which resulted in a narrow

base;

• Low level of awareness among traders, and even administrators, giving rise to fears and

apprehensions. Owing to this, there was considerable consternation among traders, which

gave rise to open revolt against the system;

• Increased burden on retailers of bookkeeping and compliance;

• Multiplicity of rates of tax under the VAT regime.

The task of simplifying the Income Tax Law is currently being undertaken and a modified simpler

income tax law may be introduced in the coming financial year.

Manufacturing industry

Manufacturing in India has truly come of age in recent times. The buoyant manufacturing growth in the first half of 2009 was led by a
rise in production of basic goods, intermediate goods and consumer durables. But for the economic downturn, it would have
contributed 5-6% more to the gross domestic product (GDP). However, there are major infrastructural and regulatory bottlenecks
which need immediate attention in order to accelerate growth of the manufacturing sector.

In this podcast we will discuss some of the key expectations of the industry from the Government in tax and regulatory matters in
view of the upcoming Union Budget.

Guest: MS Mani, Senior Director, Deloitte

ndia pr ivate e quity confidence survey Deloitte Touche Tohmatsu India Pvt. Lt d. April 2010 Issue: 5 TheIndia privateequity confidence
survey The results of this, the fifth Indian Private Equity Confidence Survey, r eflect a renewed confidence in the country pos -tdownturn. T
he private equity landscape in India is becoming increasingly sophisticated and relative interest in India on a global scale has grown
significantly. As would be expected of a rapidly developing industry, private equity in India is not without its challenges, and the most
significant continue to be those linked to market regulation and high valuations. If Indian companies implement the operational and strategic
improvements they really need, the potential for private equity deals will be huge.’ ‘Strong domestic consumption is key- I ndia has a
relatively small export industryand will therefore be more shielded from gl obal economic problems in the US and Europe.’ ‘Market
demographics and the strong domestic market ensure that India... What do you expect t o be the m ost i mportant w ays of sourcing deals
for pr ivate e quity f irms in India in the ne xt 12 m onths?20 Jul 2010  India
 Pre GST Survey 2009 
September 2009 The P re G ST S urvey 2 009 Before c hange h appens 2 The pre GST Survey 2009 4 Foreword 5 Executive summary 6
Methodology and respondents’ profile 7 Analysis: The complete picture 25 The road ahead 26 Contacts Contents The pre GST Survey 2009
3 The proposed implementation of the Goods and Services Tax (GST) in India has generated a significant amount of discussion and
debate... The introduction of the GST regime is perhaps the single most important tax reform in India. Foreword 4 The pre GST Survey
2009 The proposed introduction of the GST signals the next generation of tax reforms designed to address the barriers to trade and to
expand the tax base. Executive s ummary The pre GST Survey 2009 5 The Survey is designed to capture the views of tax & finance
executives of leading corporate houses having a pan India presence. Industry expects that the GST will bring transparency, simplicity,
harmonisation of taxbase, reduction in cascading effect and improved international competitiveness. 4.1.2 Suitability of Dual GST
to India Notwithstanding their belief about the benefits of GST to the Indian economy, the trade & industryseems uncertain about the
suitability of the Dual GST model.19 Oct 2009  India
 Budget expectations - Consumer Business industry 
February 2010 Consumer B usiness Pre-Budget e xpectations 2 010 Overall Industry Outlook India is growing with an average GDP growth
of over 8.9% in the last five years and for the financial year 2008-09, GDP growth was at 6.7% which was significantly higher than many
developing countries. With fuel cost rising, cost to deliver to overall spread of India will increase due to concentration of manufacturing at
locations with indirect tax benefits impacting margins. Regulatory Government of India has initiated reformsto propel the Indian economy
through altering Foreign Direct Investment policy by introduction of the Draft Press Note No. (2010). Direct Tax: Pre-Budget Expectation
Agro Sector India is an agriculture oriented country, On contemplating contingent scenario for natural calamity in the coming year due to
environment disaster, appropriate measures for boosting agriculture produce and import should be considered while drafting the Budget. In
this relation certain expectations are enumerated below: • While analysing the effectivetax rates of other countries, it is evident that India has
the highest rate of tax averaging to ~ 31.5 percent.25 Feb 2010  India
 Private equity confidence survey 
India pr ivate e quity confidence survey Deloitte Touche Tohmatsu India Pvt. Lt d. April 2010 Issue: 5 TheIndia privateequity confidence
survey The results of this, the fifth Indian Private Equity Confidence Survey, r eflect a renewed confidence in the country pos -tdownturn. T
he private equity landscape in India is becoming increasingly sophisticated and relative interest in India on a global scale has grown
significantly. As would be expected of a rapidly developing industry, private equity in India is not without its challenges, and the most
significant continue to be those linked to market regulation and high valuations. If Indian companies implement the operational and strategic
improvements they really need, the potential for private equity deals will be huge.’ ‘Strong domestic consumption is key- I ndia has a
relatively small export industryand will therefore be more shielded from gl obal economic problems in the US and Europe.’ ‘Market
demographics and the strong domestic market ensure that India... What do you expect t o be the m ost i mportant w ays of sourcing deals
for pr ivate e quity f irms in India in the ne xt 12 m onths?5 May 2010  India
 Overview of Indian Space Sector 2010 
With this vibrant program, there will be challenging opportunities for industries in India and abroad to provide equipment and services. It will
highlight India’s strengths in various areas of space, includingmanufacturing, launch services, communication, meterology and space
sciences. Gurpal Singh Deputy Director General & Head Defence & Aerospace Confederation of Indian Industry Amit Kumar Singh Director
Defence and Aerospace / Security / Space Confederation of Indian Industry Overview of Indian Space Sector 2010 | 5 3. India has
participated in numerous international space programs with Russia, Europe and the U.S.A and the successes in space endeavour both
national and international have burnished India’salready bright reputation. Kumar Kandaswami Indian Manufacturing Leader Senior
Director Deloitte Touche Tohmatsu India Private Limited Nidhi Goyal Aerospace and Defe3 Sep 2010  India
 Antrix-CII-Deloitte report on Indian Space Sector 2010  
With this vibrant program, there will be challenging opportunities for industries in India and abroad to provide equipment and services. It will
highlight India’s strengths in various areas of space, includingmanufacturing, launch services, communication, meterology and space
sciences. Gurpal Singh Deputy Director General & Head Defence & Aerospace Confederation of Indian Industry Amit Kumar Singh Director
Defence and Aerospace / Security / Space Confederation of Indian Industry Overview of Indian Space Sector 2010 | 5 3. India has
participated in numerous international space programs with Russia, Europe and the U.S.A and the successes in space endeavour both
national and international have burnished India’salready bright reputation. Kumar Kandaswami Indian Manufacturing Leader Senior
Director Deloitte Touche Tohmatsu India Private Li25 Aug 2010  India
 The new Indian manager  
The following also contributed to the paper: Ishika Aggarwal Ashwin Assomull Sandeep Chandola Srinivasan Komanduri Arsh Maini
Anupriya Nayyar Satish Raghvendra Shobha Ramaswamy Arvind Vijh Sameer Wadhwa 8 11 15 6 4 Executive Summary India is at the cusp
of significant economic changes which have and will continue to present both opportunities and challenges. Deloitte India is pioneering talent
management concepts that in parallel are preparing managers to be successful in this new paradigm while at the same time designing
career models that support the diverse needs of the current talent pool. For instance, Dellmanufactures a PC with components made in
Taiwan, assembled in Malaysia and sold in the US. A credit card transaction which originated in the US is processed through a global
network in India with a customer service component manufactured in Manila. Indian outbound deals (Indian companies acquiring
companies outside India), which were valued at US$ 0.7 billion in 2000, increased to US$ 4.3 billion in 2005, and further crossed US$ 35 2
billion-mark in 2007. These approvals were cumbersome and time consuming. 6 The New Manager b)Imports were severely restricted due to
foreign exchange constraints and an underlying government mandate that India needed to be an import-free economy.11 Aug 2009  India
 Animation. Broadcasting. Gaming 
This White Paper, jointly prepared by ASSOCHAM and Deloitte Touche Tohmatsu India Private Limited, mainly deals with Animation,
Broadcasting and Gaming and also the future roadmap for the Industry. D S Rawat) Secretary General, ASSOCHAM D S Rawat Secretary
General, ASSOCHAM 4 About A SSOCHAM The Associated Chambers of Commerce and Industry of India (ASSOCHAM), India's premier
apex chamber covers a membership of over 300,000 companies and professionals across the country. It was established in 1920 by
promoter chambers (Bombay Chamber of Commerce & Industry, Cochin Chamber of commerce &Industry, India Merchants Chamber,
Mumbai, The Madras Chamber of Commerce & Industry, PHD Chamber of Commerce & Industry) representing all regions of India.
Leading Corporates like Aditya Birla Management Corporation Ltd., Boeing, DLF, IBM, Reliance Communications, Reliance Industries,
TATA, Northrop Grumman, Cable & Wireless, Warburg Pincus, SREI Infocom, Ernst & Young, Huawei Telecommunications, ZTE Telecom,
Qualcomm, Centurion Bank of Punjab Limited, Diageo India Pvt. Ltd., DSP Merrill Lynch, Geojit Financial Services Ltd., GMR
Infrastructure ... The platform can be PC, Mobile, Console Global Animation and Gaming Industry The Global Animation and
Gaming industry, growing at 12% p.a. (2005-2009) is a USD 115 Billion industry (CY 2009).29 Oct 2010  India
 Deloitte launches the Pre-GST survey report 
Deloitte | Tax | Pre-GST survey report. Deloitte launches the Pre-GST survey report Before change happens Delhi, India - October 13, 2009
- Deloitte today announced nationwide launch of the “Pre-GST survey report 2009” - to gauge receptivity of trade and industry to the
implementation of GST in April 2010. Speaking at the launch of the report in India, Mr. Prashant Deshpande, Senior Director - Indirect Tax,
Deloitte said, “In less than six months, India is set to embrace the most significant reform in the indirect tax space; The most significant
point to note out of the Survey, not entirely unexpected, is the view that the appropriate date for GST introduction is April 2010. The survey is
designed to capture the views of tax & finance executives of leading corporate houses having a pan India presence. The survey
comprehensively covers the views of the trade and industry across multiple industry segments such as auto, retail and telecom.19 Oct
2009  India