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India corporate tax cut aims to boost economic growth



Profits made by Indian companies now taxed at 22%, down 30%, as long as they do not apply for incentives or exemptions, Finance Minister Nirmala Sitharaman announced on Friday. New manufacturing firms incorporated after October this year wants to be taxed at 15% instead of 25%, as long as they start production before March 2023, she added.

The rising stock market index, the Sensex, up more than 5% by Friday afternoon. India's currency, the rupee, rose around 0.5% against the US dollar.

The tax cuts will result in a 1.45 trillion rupee ($ 20.4 billion) drop in government revenues every year, according to Sitharaman.

"The idea is [that] economic buoyancy wants to generate its own revenue," she said.

India's economic growth, which has been falling for more than a year and has dropped to a six-year low of 5% in the quarter ended June , Major industries like automobiles and consumer goods are struggling, and hundreds of thousands of workers have been laid off in recent months.
The government has also Apple [ AAPL ) from opening stores in India.

Sitharaman said boosting India's manufacturing industry wants to "make a lot more investment, a lot more employment generation [and] a lot more economic activity" in the long run.

Analysts say the tax cuts will help.

"The fiscal steps by the Indian government are likely to re-energize investor interest," Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, said in a research note. India still has big problems like a banking sector saddled with a huge pile of bad debt "but this is definitely a step in the right direction," he added.


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