Finance Minister Nirmala Sitharaman says the Centre is supporting domestic manufacturing to reduce import dependence and strengthen India’s industrial base.
Union Finance Minister Nirmala Sitharaman has said the Centre is providing policy and budgetary support to strengthen domestic manufacturing and reduce India’s dependence on imports from other countries.
Speaking at an interactive session at the Bharat Shakti Pondy Lit Fest in Puducherry, Sitharaman said the government has introduced measures aimed at encouraging industries to either begin manufacturing products within India or build domestic capacity over time.
Government Supporting Domestic Production
Sitharaman said several Budget announcements have been designed to provide industry with the support needed to develop manufacturing capabilities in India.
According to the Finance Minister, domestic manufacturing can help industries reduce their dependence on overseas supply chains. She said the government is incentivising companies that want to build production capacity within the country rather than remain dependent on external sources.
The approach, she indicated, is particularly relevant for products and industrial inputs where India currently relies heavily on imports.
Nirmala Sitharaman Raises Issue of Market Access in China
During the interaction, Nirmala Sitharaman also spoke about India’s exports and the difficulty of obtaining direct market access in China.
She said some Indian products ultimately reach Chinese markets through third countries, meaning the trade may not appear directly in India’s export data as exports to China.
The Finance Minister Nirmala Sitharaman cited products such as buffalo meat and generic pharmaceutical drugs while discussing the issue. She said India has faced challenges in obtaining direct market access for certain bulk-value products.
Focus on Pharmaceutical Ingredients
Nirmala Sitharaman highlighted active pharmaceutical ingredients (APIs) as an example where India had previously developed significant production capabilities but later lost ground.
She said incentives are now being provided to encourage companies to restart production of APIs and other inputs needed by the pharmaceutical industry.
The renewed push for domestic manufacturing is aimed at creating capacity within India even in areas where imports continue to meet current demand.
She said the government expects this approach to gradually reduce dependence on external suppliers for strategically important products.
Nirmala Sitharaman Comments on GDP Debate
The Finance Minister Nirmala Sitharaman also criticised the Opposition’s interpretation of India’s GDP performance. She said it was concerning to see political opponents celebrating what they regard as economic setbacks for the country.
Sitharaman said India’s growth has continued despite various challenges and argued that the country’s people and businesses have contributed to this performance.
Her comments came during a broader discussion on India’s economic outlook, manufacturing and government policy.
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Welfare Schemes and Fiscal Sustainability
Sitharaman also addressed the debate surrounding welfare schemes and so-called freebies.
She said a welfare programme should not automatically be labelled a freebie if it is properly budgeted and financially sustainable. At the same time, she cautioned that unplanned spending can put pressure on state finances.
According to the Finance Minister, when a large share of tax revenue is committed to existing expenditure, governments have less fiscal space for capital spending on areas such as schools, hospitals and infrastructure.
She also referred to the experience of a state that moved from a revenue surplus to a revenue deficit within a few years, while warning against excessive borrowing to meet routine government expenditure.
Clarification on UPI MDR
Sitharaman also addressed concerns surrounding the proposed Merchant Discount Rate (MDR) on certain UPI merchant transactions.
She said the MDR is not a tax, cess or surcharge and does not constitute government revenue. Under the framework announced by the government, specified person-to-merchant UPI transactions above ₹2,000 will attract an MDR within the payments ecosystem, while person-to-person transactions remain free.
The government has also stated that around 96% of merchant UPI transactions will remain unaffected by the framework.
Sitharaman said the charge would be handled among participants in the payment ecosystem and would not be passed on to consumers.
Push for a More Self-Reliant Manufacturing Base
The government’s focus on domestic manufacturing is part of a wider effort to build production capacity within India and reduce vulnerabilities arising from excessive dependence on overseas supply chains.
Sitharaman’s remarks indicate that sectors such as pharmaceuticals and other strategic industries remain important areas for expanding local production.
The Finance Minister’s comments at the literary festival covered manufacturing, trade access, fiscal management and digital payments, highlighting several areas that remain central to India’s economic policy discussions.
The emphasis on domestic manufacturing is expected to remain an important part of efforts to strengthen India’s industrial base and diversify supply chains.
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