In a significant pre-budget recommendation, the Indian arm of the global consultancy giant EY has called for a strategic expansion of the government's flagship incentive program. The firm has advised the extension of the existing Production-Linked Incentive (PLI) scheme to cover cutting-edge technology sectors like artificial intelligence (AI), space, and robotics.
Broadening the PLI Framework for New-Age Tech
EY India emphasized that a forward-looking policy approach is vital for strengthening investor confidence and increasing private sector participation. The firm's National Tax Leader, Sameer Gupta, highlighted the urgent need to stimulate private investment. He suggested that the current PLI framework, which has been applied to sectors like electronics and pharmaceuticals, should be widened to support these emerging technologies.
"Public infrastructure investments in futuristic areas, including AI, GenAI, robotics, and space technology, may induce growth of private investment in these sectors," Gupta told PTI. He added that targeted incentives for these sunrise industries will be crucial for driving innovation and attracting both domestic and foreign capital.
Push for Tax Certainty and Simplified Customs
On the taxation front, EY pointed out that businesses are consistently seeking a firm commitment from the government towards tax certainty and simpler compliance procedures. To address long-standing issues in indirect taxes, the firm proposed a novel solution: a one-time settlement scheme under Customs law.
This initiative, EY suggested, could be modeled on the successful 'Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019', which helped resolve old disputes and unlocked significant revenue stuck in litigation. Furthermore, the consultancy stressed the need to simplify India's complex customs tariff structure to ease the compliance burden on importers. It recommended a sector-wise rationalisation of customs duties and aligning tariff rates with global standards to ensure the competitiveness of Indian goods in international markets.
Smooth Transition to New Income Tax Act
With the new Income Tax Act, 2025 set to roll out from April 1, EY underscored the importance of a seamless transition. The firm urged the government to issue detailed guidelines and a comprehensive set of frequently asked questions (FAQs) to reduce confusion during the shift from the decades-old Income Tax Act, 1961.
"This is crucial to avoid litigation and ensure a smooth transition for taxpayers," the firm stated. EY reiterated that establishing a stable and predictable tax environment by minimizing frequent changes in tax rates is essential. Such stability builds trust, encourages compliance, and ultimately plays a key role in boosting revenue collection for the government.
In summary, EY India's recommendations for the FY27 Budget pivot on two main pillars: incentivizing the next wave of technological innovation through an expanded PLI scheme and fostering a stable, dispute-free tax ecosystem to sustain economic growth and global competitiveness.
