The Union Budget 2018-19 was essentially a run-up to the Lok Sabha elections 2019 and has developed a blueprint for New India. While it may seem enticing enough for the masses, the Budget has received a neutral reaction from the corporates and industry at large. While the ongoing GST conundrum and various other policy initiatives are yet to settle down, the Union Budget 2018- 19 got thumbs up from the energy & healthcare sectors, MSMEs and budding entrepreneurs. Here’s a sneak peek into the recent reactions shared by the corporate head honchos on the shape of things to come post-Budget…
ADITYA V AGARWAL, DIRECTOR, EMAMI GROUP
A budget is not a collection of figures. It is an expression of aspiration and the vision of a Government. In order to maintain the socio-economic balance of a country, it is very important to bring up the quality of life and the income of the lower and middle class. The budget is in the right direction to bridge this gap. The four pillars of a nation’s development - infrastructure, education, healthcare and rural economy are the major beneficiaries from this budget, signaling more job creation and spending power in the hands of the largest population which will automatically help the fifth pillar – industry by generating strong demand across business segments, which is expected to boost the economy.
SUNIL DUGGAL, CEO, DABUR INDIA LTD
Bharat, or Rural India, has been the key focus of Finance Minister Mr. Arun Jaitley’s Union Budget for 2018-19. It presses all the right buttons and ticks all the right boxes when it comes to fueling the Rural and Agrarian Economy with a slew of measures including higher MSPs for Kharif crops, upfront agriculture focus, institutional support for price discovery and upgradation of rural haats to give farmers better access to formal mandis. These measures, coupled with the mega Health Insurance programme for the poor and massive spending on rural infrastructure, will go a long way in strengthening the rural economy and boosting consumerism in the hinterland.
Overall, the Union Budget 2018-19 is on expected lines and is focused on improving the quality of life in Rural India. He has re-iterated the Government’s promise of doubling farmers’ income by 2022 with various additional allocations and funds in this sector. The Budgetary allocation for cultivation of specialized medicinal and aromatic plants is another big positive and will help promote India’s Ayurvedic heritage. While there may not be any big-ticket Income Tax relief for the middle class, the increased standard deduction against travel and medical expenses will add to the disposable income in the pockets of the common man. The revision in fiscal deficit target for 2018-19 to 3.3% of GDP as against the earlier target of 3% is an area of concern.
RAJEEV JAIN, DIRECTOR & CFO, INTEX TECHNOLOGIES
The Budget is focused towards increasing the personal disposable income in rural India and critical areas like education, health and infrastructure. This will further enhance the Make in India initiative of the Government in critical electronic industry particularly mobile, which is the key product of all the Government’s initiatives. The Budget will spur the demand side of the economy by proposing various rural income enhancement schemes and reducing various pain areas of farmers. This will in turn rejuvenate the overall economic growth and spur demand for consumer electronics items like mobile phones and LED TVs, thereby fueling domestic businesses.
Intex has been known to cater to the developing tier 2 and 3 cities since inception with its affordable consumer products and with the various rural personal disposable income enhancement schemes introduced in the budget, it will give a fillip to the sale and demand of electronic products. The Budget has further strengthened the Digital India initiative with the boost in increasing allocation for digital education through classrooms and continue with the further broadband penetration in the country.
I welcome government’s move to walk the talk on ‘Make in India’ by increasing customs duty (to 20%) on the imported mobile phones and in PCBAs of accessories like batteries & chargers (15%), which will prove to be the big boost for localization and setting up of a domestic component ecosystem. This is big thumbs up to domestic players like Intex, which have been developing domestic capacities since long in electronics manufacturing.
The Budget has also increased duty on certain LED TV components such as LED panels (15%), which will push for developing capacities for local manufacturing of components. Such move encourages Intex that has been working on enhancing domestic capacities and has recently began its own Open Cell Manufacturing or LED Panel manufacturing to improve quality control and produce affordable quality products. It will encourage localization in India with domestic manufacturers now implementing plans for local production capacity. Overall, the budget is development oriented fulfilling the ease of doing business and ease of living for citizens.
RAVICHANDRAN PURUSHOTHAMAN, PRESIDENT, DANFOSS INDIA
Through the government's efforts to double farmer incomes by 2020, through initiatives such as setting up of an agricultural market fund of Rs2000 crores, doubling the budget allocation for the food processing sector from Rs750 crores to Rs1500 crores and the upcoming 42 food parks for agriculture exports, India is set to uncover its potential to emerge as the food factory of the world. This development-oriented budget’s focus towards strengthening India’s infrastructure sector through the expansion of highways, railways, metros and airports are set to re-write India's growth story. With the projected growth rate of 7.4% per annum in the coming year, India can look forward to furthering its development across all sectors, but the key growth outcomes will depend on how states execute the new projects on ground.
KUNWER SACHDEV, MD, SU-KAM
The announcement of establishing 20 GW of solar power capacity and feeding 7,000 railway stations with solar power will go a long way in the adoption of solar energy. Measures such as lower corporate rate for small enterprises, the increased turnover limit under Presumptive taxation scheme under section 44AD of the Income Tax Act for assessees in MSME category will create an enabling ecosystem for startups in the renewable energy category.
ANSHUL SINGHAL, CEO, EMBASSY INDUSTRIAL PARKS
India is one of the fastest growing economies in the world today. The inefficient logistics account for about 2% of the country’s GDP, so high costs could be attributed to inadequate infrastructure. There is a massive need of optimization. There is no doubt that the current government is highly supportive of developing logistics and infrastructure. We are well aware of the fiscal deficit and reducing exports in the country and this is a reason to worry but the high cost of logistics in India is coming into sharp focus as one of the key factors affecting the country’s cost competency. We hope that new reforms like Make in India, GST, Digital India and some reliefs given to the industry in the upcoming budget would help enhance performance in this segment and help grow trade nationally. We have huge internal consumption, which needs urgent addressing. Focusing on improving trade efficiencies within the country, creating millions of new jobs and contributing significantly to the country’s GDP.
TARANPREET SINGH, PARTNER – TAX & REGULATORY SERVICES, TASS ADVISORS LLP
The Budget 2018 continued to reflect the government’s intention to brand a ‘new India’ as the budget proposals continued to put more focus on infrastructure development with the robust allocation of Rs5.97 lakh crore towards this sector. A strong infrastructure sector will support the stated objective of the government to boost further investment as well as generate employment. Continuing the focus on increasing air connectivity to support the regional connectivity scheme – UDAN, there is a lot in store in this budget for the aviation industry. Similarly, the budget proposal acknowledged the need to restore trust in the national transporter (railways) with focus on redevelopment of 600 major railway stations and setting up of escalators, CCTVs and Wi-Fi facilities. Significant spend on the infrastructure sector is indirectly going to boost growth in the logistics industry, which is likely to touch $215 billion in the next two years as per the Economic Survey. The policy initiatives announced in this year’s budget for the logistics industry is in line with the growth potential of this sector. The announcement of the development of online National Logistics portal to provide a single window clearance for all major issues faced by the logistics industry is a step in right direction. With new E-way bill regime in process of being implemented under the new GST law, India logistics industry is going to witness a smooth turn in operations increasing profitability. Reduction of the corporate tax rate to 25% should provide some relief to new infrastructure/logistics companies having a turnover less than Rs250 crores in FY2016-17. Considering the all-time high allocation to rail and road sectors and the intention to promote investment in infrastructure, the Government has certainly taken a step in the right direction to fulfil its agenda for inclusive growth and development.
NIKHIL AGGARWAL, CEO, CAMPUS FOOTWEAR
We welcome the increase in custom duty from 10% to 20% on footwear industry, a great move to boost ‘Make in India’ by the finance minister and we congratulate him for the same. Also, the 2600 crore allocation to the leather and footwear industry, will auger well for job creation in the country. Budget 2018 has a lot for the 40% of the agricultural and rural population base, the national health cover and MSP is a fantastic step, which would result in generation of disposable income and inclusive growth for years to come.
JASMINE SINGH, EXECUTIVE DIRECTOR - NATIONAL HEAD - INDUSTRIAL & LOGISTICS SERVICES, CBRE SOUTH ASIA PVT. LTD.
The logistics sector comprises road transport including small businesses, truck fleets and large transport companies, warehousing & third-party logistics companies. The sector has recently gained a stronger role with the growth of technology and digital commerce. Keeping the sector’s growth in mind (in addition to the infrastructure status granted in late 2017), the government has made some significant announcements in Union Budget 2018, especially with the emphasis on highways, railways and inland waterways infrastructure; all of which are likely to result in enhanced cost and time efficiency for the transportation and logistics in India. The proposed target of doubling 18,000km of railway lines and said gauge conversion is underway to enhance capacity. Additionally, the government aims to add 9,000kms to the highway network of India. Moreover, the budget focuses on constructing the rural infrastructure, earmarking Rs14.34 lakh crore from extra budgetary and non-budgetary resources, of Rs500 crore for ‘Operation Green’ to promote agriculture logistics along with Rs168 crores for port development and modernization.
ANJAN GHOSH, CHIEF RATING OFFICER, ICRA LTD
The NDA Government’s last full-fledged budget, before the elections next year, was widely expected to deviate modestly from the fiscal deficit targets, while prioritizing its expenditure outlays on areas that could support the ongoing economic recovery and also address some of the critical issues plaguing the rural and agricultural sectors. Additionally, an area of interest was the forecast on revenue buoyancy for FY2019, given that the series of structural reforms carried out over the last couple of years was primarily expected to provide a fillip to tax revenues – both direct and indirect. With the GST having been implemented, there were no changes expected on the indirect tax front. There has been an increase in customs duty on several items which is expected to provide a boost to local manufactures of such products. The reduction in tax rates for corporates with a turnover of less than Rs250 crore would primarily benefit sectors like textiles, leather and ceramic tiles, which are highly fragmented and
have a large number of small players. Overall, the budget is clearly focused on the rural and social sectors with the objective of increasing agricultural income and improving the quality of rural infrastructure and healthcare.