The Indian government has announced a slew of concessions aimed at boosting the economy that will reduce most corporate taxes for local companies to about 25 per cent from 30 per cent.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Finance Minister Nirmala Sitharaman said the lower tax rates will retroactively apply from April 1, the beginning of India's fiscal year.
Share prices surged, with the BSE Sensex in Mumbai jumping more than 5 per cent to its highest level since July.
India's economy, the world's 6th largest, was booming until recently but has slowed in recent months, with growth in manufacturing dropping to 0.6 per cent in the last quarter from 12 per cent a year earlier.
Overall, the economy grew at an annual rate of 5 per cent in the April-June quarter, its slowest annual pace in six years.
Many economists believe Prime Minister Narendra Modi's signature economic policies are at least partly to blame.
A surprise demonetisation in 2016 and a new goods and services tax have taken a dire toll on many businesses. Instead of improving government finances as intended, the two measures undermined India's financial stability, economists say.
Sitharaman said that new manufacturing companies incorporated after October 1, will be taxed initially at an effective rate of 17 per cent.
"India still has a non-performing loan swamp to drain, but this is most definitely a step in the right direction," Jeffrey Halley of Oanda said in a commentary.
Australian Associated Press
