Government slashed its headline corporate tax rate to 22 per cent from 30 per cent on Friday in a surprise gambit aimed at wooing manufacturers and boosting investment in Asia’s third-biggest economy, where unemployment has surged as growth sinks to six-year lows.
The country is currently vying with rivals like Vietnam to attract global firms such as Apple and encourage contract manufacturers like Foxconn and Wistron to step up their presence. China’s trade tussle with the United States, which is pushing smartphone makers to seek alternative markets, is giving that fight an additional edge.
“This is a clear signal from the government to boost investors’ confidence in India’s economy,” said Vikas Agarwal, India head of China’s OnePlus, which makes its smartphones locally and rivals Apple for a share of country’s premium device segment.
“It will directly affect a company’s profitability, help fuel consumption — but more importantly it also reflects India’s ambitions.”
The trade war between Beijing and Washington has led to higher tariffs on goods worth tens of billions of dollars and disrupted global supply chains, pushing companies to look at newer markets to escape higher tariffs.