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Specialised PLI scheme for MSMEs in food processing key
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Wednesday, 04 March, 2026, 08 : 00 AM [IST]
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Piruz Khambatta
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Growth Economy of the World
It is a matter of good fortune for Indian industry—and for Indian citizens in particular—that we have a very stable government and a Finance Minister who is not only responsible but also has a clear long-term vision for the economy, fully aligned with the Prime Minister’s vision of a Viksit Bharat. This Budget is a reflection of that vision and confidence.
At a time when much of the world is grappling with degrowth and economic uncertainty, India stands out as one of the fastest-growing economies among its peers. As per international projections, including those of the IMF, India is growing better than any other comparable economy. With interest rates, inflation, and fiscal deficit under control, India today has the right macroeconomic prescription to become a developed nation sooner than expected.
This Budget reflects that confidence. I particularly commend the government for not resorting to populist schemes that merely drain resources without productive outcomes. Instead, the government has wisely chosen to allocate funds to large, long-term strategic sectors such as Artificial Intelligence, Biotechnology, Healthcare, Aircraft Manufacturing, Import Substitution, Rare Minerals, Marine, Fisheries, Leather and Textile among others.
Budget with a Heart
The Budget also proves to be a Budget with a heart. Concessions and reliefs for the common man—such as prosecution immunity, tax relief on marine motor insurance claims, special emphasis on Divyang (specially-abled persons) through support for medical device manufacturing, and reduction of unnecessary procedural burdens in courier services, exports, and personal baggage allowances—clearly demonstrate the government’s sensitivity and intent to simplify life for citizens and businesses alike.
Tax Rationalisation, Simplification & the Tax Fraternity
This Budget was never about tax cuts; it was always about making taxes easier to pay. I am pleased to note that the Finance Minister has truly walked the talk by prioritising ease of doing business and ease of compliance.
This approach will benefit taxpayers across the board. As I have often said, taxpayers are the greatest nation builders—nearly 99% of taxes in India are paid voluntarily. What has been lacking historically is trust. The government must trust taxpayers, and taxpayers must trust the government. When this trust ecosystem is strengthened, ease of compliance naturally leads to higher tax collections. This has already been demonstrated through recent GST 2.0 reforms, where simplified compliance and rationalised rates resulted in higher revenue. The same template should now be adopted across all direct and indirect taxes.
Areas Requiring Clarification and Improvement
Like any Budget, this one too requires certain clarifications and refinements. The following points merit serious consideration:
1. Decriminalisation of Tax Laws
Unfortunately, the decriminalisation measures fall short of expectations and are not fully aligned with NITI Aayog papers and earlier CII recommendations. Merely replacing rigorous imprisonment with simple imprisonment—for example under Section 481, where even failure to produce books or comply with an Assessing Officer’s direction attracts imprisonment—can still lead to harassment and mental stress for assessees.
In such cases, monetary penalties should suffice. Criminal provisions should be completely removed except in cases of repeated offences or wilful and serious crimes such as falsification of books, concealment of income, or holding undisclosed foreign assets.
2. Non-Taxation of Global-Sourced Income
Currently, proposal is for certain individuals to enjoy exemption from taxation on global income in India. This benefit should be extended uniformly to all individuals—including businessmen, professionals, and doctors—who have built careers and wealth abroad and later return to India. Only India-sourced income should be taxed.
Such a policy would strongly encourage reverse brain drain and attract highly skilled professionals, entrepreneurs, and innovators back to the country. If this concession can be granted selectively, there is no reason it cannot be extended more broadly.
3. Limits for Declaring Foreign Assets
At present, immunity from prosecution for declaring foreign assets is capped at ?20 lakh. This threshold is unrealistically low. Many individuals may hold overseas assets acquired through gifts or inheritance and are willing to disclose them while paying applicable penalties. The immunity limit should be increased to at least ?5 crore to make the provision meaningful and practical.
4. Buy-Back of Shares
Buy-back of shares by promoters is understandably taxed at a higher rate than that applicable to minority shareholders. However, taxing such transactions at the maximum rate discourages buy-backs altogether. A more balanced tax rate would help promote buy-backs, which play an important role in maintaining market stability.
5. Indirect Taxes and GST Issues
Several unresolved issues remain under GST, including blocked credits, transfer of credits, accumulation of credits, non-availability of credit on services and capital goods, and related matters. These issues may not strictly fall within the scope of the Budget and can be addressed through a separate memorandum and sustained engagement with both Central and State authorities.
6. Definition of Eligible Exporter
The definition of “eligible exporter” should be broad-based. Any entity with export turnover exceeding ?10 crore should qualify. There is no justification for restricting benefits to a narrow or elite group when exports are a national priority and contributors to foreign exchange and employment.
The Way Forward
I am confident that these issues will be resolved over time, just as many others have been addressed in the past. The government has done its part. The ball is now in the investors’ court—both domestic and foreign.
We must step forward to invest, collaborate, and partner with the government, particularly in the high-growth sectors identified in this Budget. Together, as partners in progress, we can accelerate India’s journey towards becoming a fully developed Viksit Bharat—well before 2047.
Support Required for the Food Processing Industry – Recommendations
Going forward, the food processing industry requires focused support from the Government to enable adoption of new technologies, modern manufacturing processes, and strong brand building in overseas markets. These initiatives will necessitate substantial investments by industry players. To facilitate this, the industry seeks Government support in the following areas:
- Extension of the PLI Scheme
- The Production Linked Incentive (PLI) scheme may be extended to cover a larger number of companies and a wider range of products, with specific inclusion of branding and overseas marketing activities.
- Dedicated PLI Scheme for MSMEs
- A specialised PLI scheme for MSMEs in the food processing sector should be introduced, considering their limited access to capital and higher cost of compliance.
- Accelerated Depreciation on Advanced Machinery
- Accelerated depreciation benefits may be provided for investment in new-generation, technology-driven machinery to encourage faster modernisation of manufacturing facilities.
- Enhanced Tax Incentives for R&D
- Additional tax incentives should be introduced to promote higher investment in research and development, product innovation, and process improvement.
- Export Development Allowance
- An export development allowance may be introduced, allowing companies to claim deductions by parking funds earmarked for export development in a separate designated account.
- Double Deduction for Overseas Brand Building
- To encourage Indian brands to establish a strong presence in global markets, it is suggested that expenditure incurred abroad on branding and marketing be allowed a 200% weighted deduction.
- Extension of the TOP Scheme
- The TOP (Tomato, Onion, Potato) scheme, currently applicable to fresh produce, may be extended to finished agri-products. This will help offset high logistics costs and improve the global competitiveness of Indian food products.
- Rationalisation of RoDTEP Rates
- RoDTEP rates require immediate correction and rationalisation. The industry believes the rates should be in the range of 4% to 5% to adequately neutralise embedded taxes and duties.
(The author is CMD, Rasna)
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