The government needs to bounce off Production-linked Incentives (PLI) benefits to other sectors where the employment generation is more, said Niranjan Hiranandani, co-founder and MD, Hiranandani group, who was in conversation with Sourav Majumdar, Editor, Business Today at BT Market Today Summit held in Mumbai.
“We have a lot of other sectors where we see that if investments were coming in those sectors, we would get much more employment per rupee of subsidy. So for instance, let's take the real estate industry. These are the sectors the employment is higher. I'm not against the PLI. I'm for it. But what I'm saying is that they need to equally bounce off that the benefits to be given to other sectors where the employment generation is more and I think that focus is required," he said.
Textile, tourism, infra are sectors where employment generation is more and they need subsidies, said Hiranandani. He added that logistic cost is 13 per cent in India and in China it's 7 per cent, if India can bring it down to 10 per cent, that will add 2 per cent to GDP.
On whether the PLI scheme can change the game for manufacturing in India, Dilip Piramal, chairman, VIP Industries, opined that India is actually not able to compete with Bangladesh in low-cost goods industries because of high wage cost.
“So today what has happened is that we are at the bottom of the pit as far as any manufacturing country goes. I mean, there are a lot of African countries which are poorer than us, but they don't have that sort of infrastructure. So if you really go into manufacturing scenario, you see which are the countries which will compete with us in this low wage goods sector is Bangladesh, Vietnam, etc.,” said Piramal. He cited the example of China and said investments by the government in infrastructure led to lower costs in logistics.
Dilip Piramal also said that India is not as competitive as Bangladesh in the luggage industry. However, outlook for the consumer goods industry is very good in India.
On the outlook for 2023, Hiranandani said that he is very positive as compared to any other western country, which looks downwards. He added: “I think we have had several wins. Number one win, we were able to get petroleum gas from Russia. It saved us Rs 35,000 crores in an upfront double, which was otherwise we would have bought from the open market. I think that's the difference. Real estate volumes have grown 15-20 per cent depending on the type of sector you are looking at. So all in all we have growth path which is unprecedented.”
On Budget expectations, Hiranandani said that highest marginal rate of tax on individuals is 42 per cent, which is grossly unfair. There is a need to focus on home loans with tax deduction limit to go up to Rs 5 lakh.
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