Lower corporate tax in itself not enough to trigger new capex cycle, says Nomura's Sonal Varma

According to her, the tax cut move is important from a medium-term perspective. “If one were to look at supply-chain disruptions that are going on, we are seeing evidence of production relocation out of China,” said Varma, adding that as of now the bulk of the relocation is happening in Vietnam, Taiwan, Thailand and very few companies are relocating to India.

"The corporate tax rate cut is an important signal for companies to come and do business in India. Given the size of India’s consumer market, the more consumer-oriented companies like electronics are relocating. However, the decision to relocate is not based only on corporate tax rates, it is the overall ecosystem under the broad umbrella of ease of doing business – a lot comes under this like infrastructure, logistics, port chain, land-labour laws etc along with taxes. “We need to continue this momentum, basically tick all the boxes in ‘ease of doing business’ and we need to do it quickly,” she said.