Budget 2025-26: Services Sector Issues
While many general policies in the Budget have an impact on the services sector, some important policies for the services sector in the Budget are in the Shipping and Tourism sectors and STRI related which have been emphasized by me in my earlier studies including the ones for India Exim Bank. These include the following.
Shipping and Shipbuilding
- Shipbuilding financial assistance policy to be revamped to address cost disadvantages
- Large Ships above a specified size to be included in the Infrastructure Harmonized Master List (HML)
- Shipbuilding clusters to be facilitated to increase the range, categories and capacity of ships.
- Maritime Development Fund with a corpus of RS 25000 crore to be set up with 49 percent support from the Government
- Exemption of BCD on raw materials, components, consumables or parts for the manufacture of ships for another 10 years, considering that shipbuilding has a long gestation period. Same dispensation extended for shipbreaking also to make it more competitive.
- Tonnage tax scheme for Inland vessels.
Tourism Sector
- Top 50 tourist destination sites in the country to be developed in partnership with states through a challenge mode. Hotels in these destinations to be included in the infrastructure HML.
- Facilitating employment-led tourism growth by intensive skill development for youth including in Institutes of Hospitality Management, MUDRA loans for homestays, performance linked incentives to states, streamlining e-visa facilities and visa waiver for certain tourist groups, etc.
- Special focus on destinations related to the life and times of Lord Buddha.
- Medical Tourism and Heal in India in partnership with the private sector along with capacity building and easier visa norms.
- Besides the above-mentioned policies in the Budget, recent events like the building of Ram Temple in Ayodhya and the just concluded Mahakumbh in Prayagraj have led to largescale flow of domestic tourists besides international tourists. A new tourist circuit Kashi-Ayodhya-Prayagraj has been automatically created, which probably had a larger tourist inflow than the traditional Delhi-Agra-Jaipur circuit this year.
STRI (Services Trade Restrictiveness Index) Related
Some measures in the Budget will lead to lowering services trade restrictions which can make India’s STRI less restrictive.
- These include raising the FDI limit from 74 % to 100% and the assurance that conditionalities will be reviewed.
- The policy announcement that requirements and procedures for speedy approval of company mergers will be rationalized could also lower our STRI
