NEW DELHI - India, until recently the world's fastest growing major economy, wants to haul itself out of a slowdown by cutting business taxes and making it easier for foreign companies like Apple to invest.
The Indian government on Friday announced a plan to cut corporate tax rates and reduce barriers to foreign investment as part of a series of measures aimed at spurring economic activity.
Unveiling her first annual budget, the country's finance minister, Nirmala Sitharaman, announced a plan to cut the corporate tax rate from 30% to 25% for Indian firms with annual revenues lower than 4 billion rupees ($58 million) — a move she said covers 99.3% of the country's companies.
It's not just Indian companies that will benefit — foreign companies that set up manufacturing plants for "advanced technology" like semiconductors, lithium batteries and solar charging infrastructure will also receive tax exemptions and benefits.
Sitharaman also said India would relax some regulations requiring foreign retailers to source a portion of their raw materials locally, a move that could make it easier for retailers like Apple, Ikea and Uniqlo to do business in the counry. India will also consider opening up its aviation, media and insurance sectors to foreign investment, she added.
The budget is aimed at raising India's gross domestic product from its current $2.7 trillion to $3 trillion by 2020. Prime Minister Narendra Modi has set a target of $5 trillion by 2025.
But GDP growth slumped from 6.6% to 5.8% in the first three months of this year, costing India the title of the world's fastest-growing major economy. And according to a recent study by the government's former chief economic advisor, that number could be even lower.
Modi will be under pressure to change that in his second term as Prime Minister. He won re-election by a landslide in May this year despite rising unemployment and a slowing economy.
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