A non-inflationary Budget that ticks almost all the right boxes: India Inc

Industry leaders have largely welcomed the Union Budget for 2016-17, presented by Finance Minister Arun Jaitley today in Parliament, which is seen as improving the overall business environment. The huge sops allocated to the rural sector is expected to boost spending in the rural areas, while the incentives for start-ups is seen as giving a boost to growth of entrepreneurship in the country.

Anirudh Dhoot, Director, Videocon

“The Finance Minister presented a balanced Budget with a focus on infrastructure and agriculture sectors. By keeping the fiscal deficit target to 3.5 per cent of the GDP, the Budget addresses long term positive impact on businesses. For consumer durable and home appliances industry specifically, the Budget brings mixed responses. While the focus is more on dispute resolution and simplification of provision, the voluntary income disclosure will dampen the market. The Government has lowered the corporate tax for new manufacturing units at 25 per cent with a view to promote industrial activity and generate jobs. With regard to small units having a turnover of Rs 5 crore, the corporate tax rate has been reduced from 30 per cent to 29 per cent. However, there is no relief on the corporate tax for big manufacturers. The Government has stressed on GST implementation and proposed changes in customs duty to push make in India initiatives which is aimed at improving the overall business environment.”

Pankaj Munjal, Chairman and Managing Director, Hero Cycles

“The Finance Minister has chosen to deliver a Budget that charts a new direction to the economy with renewed reforms and resurgence. The Government’s commitment to keep fiscal deficit in check is a very assuring move, so is the focus on improving ease of doing business. The emphasis on road infrastructure in particular would pave the way to a robust economy as well. At Hero Cycles, we are committed proponents of cleaner modes of transport and in this light the pollution cess on vehicles is an extremely encouraging step. Overall, a mature and well-balanced Budget designed to ramp up an overall and inclusive growth of the economy.”

Sunil Duggal, Chief Executive Officer, Dabur India

Finance Minister Arun Jaitley’s nine-point-agenda Budget is a balanced statement that seeks to move away from offering freebies to promoting investments. It is highly encouraging to see that fiscal discipline has been given priority in this year’s Budget, with an emphasis on improving the quality of life in rural India. The Union Budget 2016-17 was going to be a tough balancing act for the Finance Minister, given the strong headwinds on both the global and the domestic economic front. And he has managed it well. With a plethora of announcements, be it in the form of greater focus on farmers and rural development, promoting investments in infrastructure and health care and opening up FDI in food processing, the Finance Minister has taken positive steps that would not just boost overall confidence, but also go a long way in generating employment.”

Rakesh Jariwala, Partner & Head – M&E Tax Advisory – India, EY

“As part of the Budget proposals, India has levied an equalisation levy – what is known as ‘google tax’ globally. The tax at 6 per cent of the consideration will apply on services relating to online advertisement, provisions on online ad space or other facility or services for the purpose of online advertisement, when such services are provided by a non-resident to either an Indian resident or a non-resident having a permanent establishment in India. The payer for these services is required to deduct 6 per cent prior to making the payment. This is the first time that online services are being taxed in India.”

Krish Iyer, President & CEO, Walmart India

“The Union Budget 2016 continues to rightly focus on rural and infrastructure sector. The planned investment in these two critical sectors will not only create jobs, but also give impetus to demand generation and economic growth. The Government’s proposal to create e-market for our farmers through ‘Unified Agri Marketing platform’ is very bold and forward looking and will positively impact country’s farmers. We will continue to strengthen our Direct Farm programme to complement the Government’s vision to make a difference to the lives of our millions of farmers. The continued focus on ease of doing business, as highlighted by  Finance Minister Arun Jaitley augurs very well for the industry. Recognition of retail trade as the largest service sector employer in the country and proposed focus to simplify the regulations for retail sector is very laudable. Overall this is a very good Budget. Adherence to fiscal discipline, with emphasis on growth, development, increasing infrastructural and rural spending, and simplifying retail trade norms are key aspects of the Budget.”

Industry bodies’ reaction

Subho Ray, President, IAMAI

“The focus on leveraging technology to streamline distribution and the proposed steps for ease of doing business in India are indicative of the Government’s resolve towards Digital India and supporting entrepreneurship. The proposal for Amendment of Companies Act to register start-ups in one day is a welcome move, and is a step towards ease of doing business in India. This has been a long standing demand of the association, representing the digital industry in India. We also welcome Finance Minister Arun Jaitley’s announcement of 100 per cent tax deduction programme for three years over a period of five years for start-ups approved before FY2019 under the Start-up India scheme. This move is a step towards providing incentives to start-ups in the form of better incubation, talent and capital. We also welcome the proposal to set up a dedicated e-marketing platform for agriculture and hope that the innovation of the digital industry will be harnessed for this. The move to expand the digital literacy scheme in rural India and setting up of a higher education financing agency is also laudable. The twin move will support the increased manpower requirement for the ICT sector from a larger catchment area and will certainly boost employment generation.”

All India Gems and Jewellery Trade Federation

All India Gems and Jewellery Trade Federation (GJF) has expressed its disappointment over the Government’s inaction in budget proposals to address various issues related to gems and jewellery sector. In its Budget proposals, Finance Minister Arun Jaitley has proposed Excise duty of 1 per cent without input tax credit or 12.5 per cent with input tax credit on articles of jewellery (excluding silver jewellery, other than studded with diamonds and some other precious stones), with a higher exemption and eligibility limits of Rs 6 crore and Rs 12 crore, respectively.

GV Sreedhar, GJF Chairman, said, “Our hopes are belied as the Government has ignored the gems and jewellery sector from fiscal incentives and has imposed excise duty of 1 per cent without input credit or 12.5 per cent excise with input credit. This will create further trouble for jewellery manufacturers, who have been incurring losses in their business transactions, due to recently introduced PAN card norm.”

Ashok Minawala, GJF Director, asked, “How can excise be applied to 80 per cent unorganised sector of Gems & Jewellery? We are let down by the Budget proposals as the Government has failed to address many critical issues hindering the growth of the sector.”

Kumar Rajagopalan, CEO, Retailers Association of India

“It is commendable that the Finance Minister spoke about the retail industry in his Budget speech. He has spoken about creation of model shops and establishment act as well as commented that small and medium retailers need to be supported. Permission for keeping stores open 365 days helps the retailers increase sales, generates more employment, creates customer convenience and also increases tax collection for the Government thanks to increased sales. This also supports Make in India movement by helping better throughput from stores. Retail is the second largest employer in the country after agriculture and this is the first time that any finance minister has recognised that retail needs support as an industry. Andhra Pradesh and Maharashtra have been the torch burners in supporting and recognising retail since both these governments have announced policy for retail in the states which is a first in the history of independent India.”

 

 

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