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Budget 2016: FM acts, industry reacts

March 7, 2016

Promising for youth

Budget 2016-17 seems promising for India’s youth – whether it is about quality of education, focus on skill development, improving teaching and research outcomes, emphasis on job creation or creating an ease of business to promote entrepreneurship. It is good that the Public Private Partnership model has worked reasonably well for the skills ecosystem which needs to be given more encouragement. The setting up of 1500 Multi Skill Training Institutes (MSTIs) is a great PPP initiative that will give major boost to skill development while the National Skill Assessment & Certification Board with both government and industry representation, will be instrumental in ensuring quality assessment of the skilled workforce that gets trained.

—S. Ramadorai, Chairman, National Skill Development Corporation

Commitment continues

The budget is in continuation of Government’s commitment to provide 24×7 Electricity for All, with increased allocation in the power sector. The focus on augmenting nuclear power with an allocation of Rs.3,000 crore is a welcome step and reflects the government’s intent to achieve the right fuel balance. While the finance minister has not gone overboard to make some populist announcements; yet he did his best to strike a balance between short-term growth and sustainable economic gains and has done a great balancing job. This will give a big boost to the infrastructure and rural sector. With a budgetary outlay of Rs.79,884 crores to the power sector in the new Budget there is an increase over previous year. The electrical industry is hopeful that the Government will take all steps to ensure that there is full utilisation of funds allocated.

—Babu Babel, President, IEEMA

Infrastructure as fifth pillar

Infrastructure is one of the important aspects of the economy, and I am glad it received its due by being outlined as the fifth pillar out of the nine, supporting the Budget theme, ‘Transform India’. We welcome the Finance Minister’s announcement to undertake new projects and address the languishing ones to streamline and expedite the sector’s growth. However, these initiatives underline the urgent need for incorporating good project management practices to complete the projects/programs on time and within budget.”

—Raj Kalady, Managing Director, PMI India

Affordable housing

The Union Budget 2016-17 focuses substantially on affordable housing which is in line with PM’s vision of housing for all. Service tax exemption for construction of affordable housing up to 60 sqm under state and central housing schemes and 100 per cent tax deduction to an undertaking from a housing project for units up to 30 sqm in four metro cities and 60 sqm in other cities, approved during June 2016 to March 2019, and is completed within three years of the approval. This move will provide much needed boost to the affordable housing schemes. However had the area restrictions not been there, scope of this initiative would have been much wider.

—Shrikant Joshi, MD & CEO, L&T Realty

Skilled labour force

This budget signifies correcting and working towards some basic priorities in terms of providing more power and support to our internal growth engine. The government has shown a clear intent on revitalizing agriculture, infrastructure, skill development and higher education sectors. This bodes well for creating a highly skilled labour force to drive the ‘Make in India’ mission in the country. The deployment of Massive Open Online Courses to promote Entrepreneurship Education and Training will help Indian youth connect with mentors and credit markets. It is an encouraging move aimed at promoting entrepreneurial spirit, especially among youth from rural areas.

—Bhavin Turakhia, CEO & Cofounder, Directi

Healthy balance

The government has tried to keep a healthy balance between inclusive growth and fiscal consolidation amidst global volatility and additional burden on account of the 7th pay commission, OROP. With an important focus on digitation, the government has shown good intent in keeping up the momentum of the “Make in India” and “Digital India Mission.” The government has shifted its focus from large cities to rural areas showing a clear intent to uplift those who belong to the bottom of the pyramid, especially the agricultural sector and focus on creating skilled labour. The effort to incentivize the Make in India program by way of domestic value adding in the Electronics Manufacturing Systems segment is a step in the positive direction as is the removing of custom duties. This augurs well for us as majority of the spending in our industry is on imported ESDM Electronic System Design & Manufacturing items.

—Sunil Khanna, President and Managing Director of Emerson Network Power India

Directing the economy

Part 1 of the budget gave an excellent midterm and long term direction to the economy. The vision of doubling farmers’ income by 2022 is very heartening. I hope that the set direction is followed diligently in the coming years as the contribution to the nation’s economy will be significant. I am particularly pleased on the direction given to agriculture, rural India and infrastructure. I am concerned about the extra green tax on cars. The auto industry has started recovering after a few bad years and this could dampen growth.

—Vikram Kirloskar, Vice Chairman, Toyota Kirloskar Motor Pvt Ltd

Agri and rural India

While the major highlight of the budget was the big push on agriculture and rural India, the finance minister has also recognised the important role played by good quality infrastructure and skill development in supporting economic growth and India’s overall development. The plan of ‘Make In India’ can get derailed without adequate supply of top-notch manpower, therefore an allocation of Rs.1,804 has been made towards skill development. It further announced plans to set-up 1500 multi-skill training institutes, and tie-up with industry and academia for the creation of National Board for Skill Development Certification. The initiative to alter customs and excise duty rates on certain inputs to reduce local manufacturing costs and increase competitiveness of domestic industry is definitely a positive move.

—Michael Thiemann, CEO, Thyssenkrupp India

Investment push

The Budget 2016 reflects for a very promising infrastructure and investment push with increased budgetary allocation for key infrastructure areas such as roads, railways and ports. The nine pillars laid down in the budget provide a holistic approach for bringing about a socio-economic transformation while reinvigorating the infrastructure sector through Public-Private Partnership (PPP). Implementation of Indian Customs Single Window Project and initiatives to reduce the cargo release time and the transaction costs of EXIM trade will bring in the required boost in terms of ease of operations while also making the sector more attractive.

—C. Sasidhar, Managing Director, Krishnapatnam Port Company Ltd

Multimodal logistics

This year’s budget has some excellent announcements that will help in developing the infrastructure of the country. The government’s decision to focus on developing roads and highways would prove to be very beneficial for the growth of the logistics sector with the allotment of Rs.97,000 crore towards the sector. We also welcome the decision of converting national highways and state highways into national highway roads. This would prove to be a great enabler in moving cargo in high traffic density corridors efficiently. The proposed investment into railways, ports and inland waterways should help in the growth of multimodal logistics strengthening the country’s competitiveness.

—Vineet Agarwal, MD, TCI Group

Energy efficiency

It is pleasing to see the government sticking to its fiscal deficit target as it will give a boost to the overall economy. Changes in customs and excise duty rates for capital goods sector is an encouraging sign for industrial growth as it will help reduce costs and improve competitiveness of domestic industry. The proposal to provide 100-per cent village electrification by May 1, 2018, is indeed very welcome as it in line with the Nation’s overall vision to provide 24×7 electricity. This will also create headroom for energy efficiency such as use of LED will be vital in achieving the Nation’s vision.

—V.P. Mahendru, Chairman, Eon Electric Ltd

Fillip to CE manufacturers

The huge investment proposed on the infrastructure development like road, airport, railway and power projects will definitely give a fillip to construction equipment manufacturers. The road equipment manufacturers are likely to be benefitted the most because of the huge investments planned in the national highway sector as well as in the upgradation of state highway roads to national highway level.

—Anand Sundaresan, Vice Chairman & Managing Director Schwing Stetter India

Mixed bag for real estate

Union Budget 2016-17 is a mixed bag for the real estate sector. We are pleased to see that the government has stuck to the 3.5 per cent fiscal target as this will give head room for the reduction in interest rates which will benefit all sectors of the economy and particularly the housing sector. The Finance Minister’s proposal that any distribution out of SPV income to REITs and INVITs with specified shareholding, not being subject to Dividend Distribution Tax, will spur investments in REITs. The additional exemption of Rs.50,000 for housing loans up to Rs.35 lakh – provided the house cost does not exceed Rs.50 lakh – is welcome too. Excise duty exemption on ready-mix concrete used in construction sites augurs well for the construction industry.

—David Walker, Managing Director, SARE Homes

Efficient cash flows

The Revised tax framework on Infrastructure Trust (InVit) will exempt Dividend Distribution Tax (DDT) in respect to distributions made by SPVs to the infrastructure trusts. Guidelines on InVit were announced as part of the budget of 2014 & 2015. However, there have not been any cases of listed InVit in India in last two years. We are very pleased with the final changes announced in the Budget 2016 as it will put into effect the original idea of granting DDT exemption to listed infrastructure trusts. This amendment will ensure there is single level taxation, thereby making the structure tax and cash flow efficient.

—Pratik Agarwal, Vice Chairman, Sterlite Grid

Circular economy

This is one of the finest budget where the importance is given to circular economy by increasing the power of buying, in hands of the poorest of the poor farmers, other low income group and the increase in the opportunities for the employed and unemployed youth by having an access to the financial and other resources, thereby by creating more thrust will give e-waste more boost to the industry, environment and employment.

—B.K. Soni, Chairman & Managing Director, Eco Recycling Ltd

Impacting power tariffs

The increase in coal cess will improve relative attractiveness of renewables, but increase the overall cost of power for utilities by approximately Rs.10,000 crore, thus impacting retail tariffs and utility financial health. For renewables, the reduction of accelerated Depreciation is a negative that will cause wind tariffs in particular to go up for projects set up after March 2017. All in all it is a mixed bag and the measures appear to be aimed more at shoring up government finances.

—Anish De, Partner Infrastructure & Government Services, KPMG in India

The Union Budget 2016-17 focuses on policy and taxation reforms needed to provide impetus to the economy and reflects the government’s commitment to improve the Ease of Doing Business. Through the Union Budget, the government has taken steps to boost the agricultural and social sector for an inclusive growth. The Budget has taken a special emphasis on Tax Reforms and Dispute Resolution which should go a long way in creating a facilitating environment for conducting business in India. The FM has tried to do a balancing act between fiscal consolidation and growth in the midst of global headwinds.

—TV Narendran, Managing Director, Tata Steel, India & South East Asi

Boosting home-grown industries

This is a progressive budget; the finance minister has tried to addresses concerns of the industry through various initiatives announced in his speech. The budget reiterates the need and importance to accelerate growth in the manufacturing sector. Announcements regarding incentivizing domestic value addition towards the Make in India initiative have been well received. Also, changes in customs and excise duty rates to improve competitiveness and boost the domestic manufacturing has been seen as a welcome move by the industry. As a company which operates in the manufacturing sector, we believe that through this, there will be a spurt in the spirit of entrepreneurship, giving boost to the home-grown industries.

 

—Manish Goel, Managing Director, Shilpi Cable Technologies Ltd
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