FIEO's Sharad Kumar Saraf welcomes reduction in corporate tax rate from 30% to 22%

September 23, 2019: The Federation of Indian Export Organisations (FIEO) has welcomed the Indian government's move to slash corporate tax rate from 30 percent to 22 percent.

On Friday (September 20), the government announced the cut in a surprise move, boosting investor sentiment and giving a much-needed fillip to the manufaturing sector. The reduction in corporate tax will make India competitive and would boost investment. The announcement was made by Union minister for finance & corporate affairs Nirmala Sitaraman during a press conference in Goa on Friday.

Hailing the reduction in corporate tax rate to 22 percent for domestic companies and 15 percent for new companies, Sharad Kumar Saraf, president, FIEO said that such reduction would attract much needed investment both through FDI route and domestic investment.

"The timely move would also help in attracting investment from companies in China who are looking for new destinations for expansion or starting a new venture with an eye on the US market. It will encourage investment in the existing domestic companies also giving them the scale to cater to the huge market of US & China. The technology companies in small segment may migrate to medium size companies with equity participation from overseas. The effective rate of 17.01 percent is very attractive as the similar rate in US is about 21 percent and in China about 25 percent. The reduced rate has given further stimulus to investors attracted to India as a market," said Saraf.

The FIEO, representing Indian export promotion organisations, was set up jointly by the ministry of commerce, government of India and private trade and industry in 1965.

He further added that the allocation of 2 percent CSR fund on incubators, IITs, national laboratories and specified agencies engaged in conducting research would not only establish industry academia relationship, but would give a push to R&D and product innovation which he called "is the need of the hour in exports particularly as India is focusing now on sunrise sectors of exports".

Calling the move 'historic', prime minister Narendra Modi said in a tweet: "It will give a great stimulus to #MakeInIndia, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians."

The step to cut corporate tax is historic. It will give a great stimulus to #MakeInIndia, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians. https://t.co/4yNwqyzImE

— Narendra Modi (@narendramodi) September 20, 2019