NEW DELHI: With a lower tax rate for new manufacturers, the government is looking to attract investment flowing out of China following its trade dispute with the US, but experts say India needs to also remove other major obstacles for multinationals to consider it as an alternative destination to the neighbouring country.The 15% rate — 17% after including a cess and surcharge — that finance minister Nirmala Sitharaman announced on Friday is among the lowest in South and Southeast Asia . The government hopes it will make India more appealing to multinational manufacturers that are preferring countries such as Vietnam Thailand and Malaysia.More than 50 MNCs including Apple, Dell, HP and Nintendo have either partly moved out of China in the past one year, or are in the process of shifting their production bases. Even Chinese electronics company TCL has been reported to be moving its TV production to Vietnam, while tyre maker Sailun Tire is transitioning its manufacturing line to Thailand.“Bringing down the corporate tax rate to 15% for new manufacturing is a deep cut. In the medium term it will be one of the major consideration for companies to shift base from China to India,” said DK Joshi, principal economist at Crisil.“Though the government is doing alot to improve ease of doing business, more needs to be done as other countries are still better off than India,” Joshi added.Inadequate infrastructure, delays in land acquisitions, stringent labour laws and high tax rates have come in the way of India to benefit from the trade war between Washington and Beijing, despite the country offering a huge domestic market as well to investors. While the proposed tax rate is on a par with those in countries like Vietnam and Myanmar — which tax corporate profits at 15% to 20% — other hindrances remain and those too need to be removed, said experts. “Make in India primarily means manufacturing, which depends on a whole list of things including land acquisitions and labour reforms,” said Bibek Debroy , the chairman of the Economic Advisory Council to the Prime Minister.“Land is a state subject while labour is in the concurrent list. Hence, we will have to see all these measures in aggregate.”Finance minister Sitharaman said the government would allow any new domestic company incorporated on or after October 1, 2019 and making fresh investment in manufacturing to pay income tax at 15% as well as exemptions from the minimum alternate tax, provided it did not avail of any exemption or incentive and commences production by March 31, 2023. Adding the cess and surcharge, the effective tax rate for these companies will be 17.01%.This is the latest of a series of reforms taken up by the current and previous BJP-led NDA governments since 2014 to improve the investment climate in the country. It has liberalised foreign domestic investment rules and kick-started labour reforms and has seen a significant jump in India’s ease of doing business rankings.Experts said one needs to read the finer details before arriving at a conclusion on Friday’s announcement. “Fine prints will have to be examined to see how this will work for companies carrying out composite operations. One will also have to see what items are included in the term ‘exemptions and incentives’,” NA Shah Associates partner Ashok Shah said.Akila Agrawal, a partner and the head of M&A practice at law firm Cyril Amarchand Mangaldas, called the tax cut a step in the right direction, but said it could also have an impact on the government’s spending plans.“The corporate tax relief announced by the government will increase capital investments which will lead to more job opportunities and growth,” Agrawal said. “One should also examine how this move impacts government spending.”