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REACTIONS on Budget

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budget expectations

Budget Reaction From Different Industry People:

Chandrashekhar Chitale, CAandTreasurer, MCCIA, Pune

Three negativities of Indian tax system have been complication, litigation and surprises. The Budget seems to address all these. The proposals for estimated income scheme, weeding out exemptions and deductions will contain complications and provide simplicity.  Specific schemes to do away litigation like compromise scheme, concession in penalty will provide relief and reduce tax litigation.  The proposals are much on predictable lines. This will gradually remove surprise element and usher in stable tax regime.  Salaried ones expecting standard deduction and step up in threshold of med expenses, education fees exemption, etc. will be disappointed. Overall a sensible budget.

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Mr. N. Chandrasekaran, Chief Executive Officer and Managing Director of Tata Consultancy Services: 

The FM has delivered a fiscally responsible budget.
The extension of SEZ scheme till 2020 and reduced tax at 10% for global revenues generated by India-registered IPR will further energise entrepreneurship. The FM has announced a slew of Digital platforms to connect farmers with their ecosystem. This is a very comprehensive technology-led plan that will significantly bootstrap the Indian heartland into the digital age. Also heartening is the plan to use digital technology across the board from administering taxes to issuing secure education certificates.

In summary, the FM has presented a forward looking budget and I will give it a 8/10

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Mr. V Ramnath, Managing Director, Racold Thermo (P) Ltd.

Budget 2016 as outlined by the Finance Minister is pragmatic & transformative. The nine pillars he talked about were well thought out.

It is commendable to see a budget which promises to keep the fiscal deficit at 3.5%. The focus on Infrastructure, boosting rural economy, thrust on agriculture, renewed efforts on kicking growth of affordable housing both to drive employment & consumption is welcoming.

While the budget has not laid any specific road map for GST implementation, one hopes that the Government is committed towards getting this into action in the near future. It was surprising to see the Budget making industrial solar water heater expensive at a time when the Government is focused & committed around promotion of renewable energy. One would have also expected the budget to be bit aggressive on increasing import duty of raw materials to boost Make in India efforts.

Overall a sound budget which focuses on growth & ensuring many steps to reforms driving simplification, stability & predictability.

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Mr. T V Narendran, Managing Director, Tata Steel India and SEA.

The Union Budget 2016-17 presented by the Honorable Finance Minister, Mr Arun Jaitley, 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.

India is the world’s third-largest producer of crude steel (up from eighth in 2003) and the world’s 3rd largest consumer of finished steel. Steel sector should get the much needed demand boost through the government spending in infrastructure. The budgetary proposals announced by the Finance Minister will help the industry meet its growth target and reach its full potential.  However, the doubling of Clean Energy Cess from Rs 200 to 400 per ton would further increase the input cost for domestic producers.

In the coming days we are hopeful that the Government will take steps to progress the GST Bill including the suggestions given under CEA panel. Steel Industry is a significant contributor to India’s GDP and is also pivotal to a number of allied industries and sectors such as- Infrastructure, Automobile, Construction . Therefore it is important that the steel be brought within the ambit of the GST.

The domestic steel industry will continue to  play an important role to the Government of India’s schemes of ‘Make in India’ and ‘Smart cities’ as it is a key  material supplier to the allied industries. However, the industry has been bogged down by a deluge of imports and predatory pricing over the last 18 months. And the absence of a level-playing field with countries would impact the domestic producers. While recent interventions by Government of India has given some breather, long term measures to create a level playing field are required to firewall the domestic steel  industry from Global overcapacity and dumping .

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 Ms. Shilpa Divekar Nirula, CEO – Monsanto India Region.

“The Union Budget has rightly focused on the growth of agriculture, farmers and development of rural India. By acknowledging the contribution of farmers towards food security and emphasizing the need for income security, the budget has surely given the much needed impetus to rural India where agriculture is a mainstay.

Irrigation and crop insurance are two of the key inputs that will help improve farm productivity in India.

The attempt to bring 28.5 lakh hectares under the “Pradhan Mantri Krishi Sinchai Yojana”, a dedicated irrigation fund along with a sharp focus on providing farmers access to crop insurance under the   “Pradhan Mantri Fasal Bima Yojana” are admirable first steps.

The United Agricultural Marketing ePlatform which aims to connect 585 agri mandis by March 2018 and will allow farmers to sell their produce at any mandi of their choice is an innovative step towards helping farmers realise fair and market determined prices for their produce thereby improving their incomes.

We remain confident that the Government will enable a policy environment which is in the best interest of the Indian farmers. We also look forward to the effective implementation of the initiatives outlined.”

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Mr. MK Dhanuka, Managing Director, Dhanuka Agritech

“Doubling the farmers Income in five years will have an encouraging impact on the financial conditions of farmers. Rs. 28.5 lakh hectare of land will be brought under irrigation and 23 projects will be completed by March, 2017 for which the Government has allocated Rs. 17000 crores. This will increase the production and will help the Government’s initiative for 2ndGreen Revolution. Further, launching of e-platform for marketing is a welcome step as farmers will be able to get the right price for his crop. Allocation of Rs. 9 lakh crores for Agriculture loan to farmers and Rs. 87000 crores to rural sector will increase the rural demand. Government’s thrust for growth of Agriculture and rural sector development including implementation of schemes like soil health card, crop insurance and irrigation facilities will motivate farmer to continue his interest in Agriculture.”

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Mr. Prakash Chhabria, Executive Chairman, Finolex Industries Ltd.

"Our Finance Minister has very rightly given very high priority to rural infrastructure in general and  agricultural sector in particular.  Apart from all the pro-agricultural initiatives announced, the Finance Minister has laid out the road map for the Government’s ambitious aim to double farmers’ income in the next five years.  All these measures will go a long way in improving the livelihood of the farmers which form a very large portion of our population.  This is expected to reform the agricultural markets. Thrust on the rural sector and social sector, including healthcare, educational skills and job creation to make India a knowledge-based productive economy. I expect these measures to give a strong impetus to the demand for PVC pipes and fittings in the years to come.  The incentives for low cost housing also augur well for the demand for PVC pipes and fittings in the construction sector."

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Mr. Brotin Banerjee, Managing Director and CEO, Tata Housing Development Company:

“The budget announced this year is a progressive budget and indicated the Government's desire to move towards higher GDP. Thrust on infrastructure and affordable housing is commendable. Greater outlay for construction of road and highways is a definite positive. We may see a lot of traction in the affordable housing space with finance ministry announce a 100 percent deduction in tax on profits and service tax exemption for companies creating apartment upto 60 sq meters. Additionally, Digitization of land records will help in more transparent sale and market-based pricing of land and additional exemption of Rs 50,000 for houses under Rs 50 lakhs will help bring in first buyers to the market.”

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Rajat Wahi, Partner and Head of Consumer Markets, KPMG in India

Overall Consumer Markets perspective
The Union Budget for FY17 is a pro-agriculture, pro-rural sector budget. The Finance Minister has highlighted agriculture and rural sectors as two of the nine pillars of this year’s Union Budget. The provisions for this year’s budget are expected to revive rural consumption, which has been subdued for the past two years primarily due to poor monsoon and untimely rains, and has had a detrimental effect on overall consumption across all sectors in the last 2 years.
The move to create a unified agricultural market e-platform will benefit food-based FMCG companies, as this is expected to make procurement processes easier and more transparent, when compared to the APMC route. In addition, the permission for 100 per cent FDI in the marketing of food products is expected to bring in more investments into the food processing sector, especially the downstream supply chain, as well as allowing foreign multi-brand retailers to set up food-only retail stores.
With almost INR2,18,000 crore allocated for both roads and railways in FY 16-17, physical linkages are expected to improve significantly, which will help expand distribution across India, especially in to rural markets, and will also reduce transit losses by improving connectivity.
There were no significant announcements on FDI in retail, which was expected considering that the government in November 2015 had announced significant changes to the FDI policy.
The additional excise duty on unmanufactured tobacco and cigarettes is expected to negatively impact the organised tobacco industry further.

FMCG
There has been a marginal increase of countervailing duties (CVD) by 0.75 per cent and excise duty by 0.5 per cent on refined gold and silver bars. This increase, as well as the withdrawal of exemption on jewellery articles, is expected to result in the increase in price of jewellery.
With the aim to promote ‘Make in India’, customs duty on specific fibres and yarns has been halved to 2.5 per cent. However, branded apparel will become costlier due to the increase in excise and tariff value for readymade garments.
The increase in the abatement rate for footwear from 25 per cent to 30 per cent, and the reduction in excise duty for rubber soles is expected to have a positive impact on the footwear industry.
The proposed excise hike of 10 per cent to 15 per cent for tobacco products (excluding beedis) is expected to negatively impact the organised tobacco sector. The unorganised sector, primarily beedi manufacturers, will not be impacted.

FMCG – White Goods
There have been no significant announcements in this sector.

FMCG – Brown Goods
The reduction in excise duty for network internet devices has been announced keeping the Digital India initiative and Digital Literacy Mission Scheme in mind.

Retail
As retail sector is one the largest employers in the country, the government has proposed permitting the opening of retail shops for all seven days of the week and to float a model shops and establishment bill. If adopted by the states, it is expected to benefit the small retailers, generate more employment in the sector, as well as create uniformity in retail operations across the country.

Agriculture
There is a major focus on agriculture and rural sectors in the Union Budget, with the government aiming to double the income of farmers by the year 2022.
The total budgetary allocation for agriculture and farmers’ welfare is INR35,984 crore in FY17. The irrigation sector has received a significant focus, with the government allocating INR17,000 to stalled projects under the Accelerated Irrigation Benefits Programme (AIBP) and a further INR12,517 crore to the Long Term Irrigation Fund created under the NABARD, through budgetary allocations and market borrowings.
In addition, the focus on organic farming is expected to help farmer incomes in rain-fed and stressed areas.
The proposed allocation under the Pradhan Mantri Grameen Sadak Yojna has been increased to INR27,000 crore, with the aim of connecting 65,000 eligible habitations by constructing 2.23 lakh km of roads by 2019. This is expected to significantly improve farm-to-fork linkages, facilitate expansion in distribution for consumer goods companies, and reduce wastage in the value chain.

The government also announced its commitment to achieving 100 per cent village electrification by 1 May 2018, for which INR8,500 crore has been provided for Deendayal Upadhayaya Gram Jyoti Yojna and Integrated Power Development Schemes. This will further benefit the rural markets by improving cold chain infrastructure thereby reducing wastage, improving availability of perishables and increasing farmer income by reducing dependence on fuel.

To improve supply of farm credit, the target for agricultural credit has been increased to INR9 lakh crore for FY17, with a provision of INR15,000 crore towards interest subvention.

The allocation under the MGNREGS has been enhanced from INR34,700 crore to INR38,500 crore in FY17. This is expected to provide an additional safety net for the rural workforce during the non-harvest season.

Overall, the rural sector has received an allocation of INR87,765 crore in FY17.

The focus on improving irrigation and productivity, as well as rural infrastructure, and providing a safety-net for farmers through the credit and insurance schemes such as the Pradhan Mantri Fasal Bima Yojna is expected not only to revive rural demand but also improve linkages in the agri-food value chain, and also allow consumer goods firms easier access to rural markets.

Food processing sector
The operationalization of the National Agricultural Market (NAM) e-platform, with 12 states already on board, is expected to significantly strengthen the linkages by reducing intermediaries between food producers and food processors, and making procurement significantly faster and more transparent.
Permission of 100 per cent FDI under the FIPB route in marketing of food products produced and manufactured in India is expected to help foreign multi-brand retailers who can procure food products made in India and market it by setting up stores. In addition, this is also expected to help generate investments in the downstream agri-food supply chain and generate employment in this sector.
There has been a significant thrust on improving the cold chain infrastructure, with services provided by the National Centre for Cold Chain Development now exempted from service tax, as well as customs duty. The extension of concessions in customs duty for cold storage to cold chain including pre-cooling units, pack houses, sorting and grading lines and ripening chambers is expected to benefit the cold chain industry. Reduction of basic customs duty for refrigerated containers from 10 per cent to 5 per cent, and excise duty from 12.5 per cent to 6 per cent will be an added advantage to cold chain players.

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Mr.Hari S.Bhartia,Co-Chairman & Managing Director, Jubilant Life Sciences Limited 

Commenting on the Budget presented by the Finance Minister, Mr. Hari S. Bhartia, Co-Chairman & Managing Director, Jubilant Life Sciences Limited said that overall it is a very balanced Budget & would give a boost to growth sentiments & revive domestic economy. The Finance Minister has kept the fiscal discipline by keeping the budget deficit to 3.5% in 2016-17. This will give greater confidence to investors, both in India & overseas.

The Finance Minister has taken the reform process forward with emphasis on nine pillars. Mr. Bhartia particularly welcomed the focus on agriculture, rural economy, social & infrastructure sectors. The focus on rural economy will generate demand,increase consumption & create opportunities for the corporate sector.

“This is a Budget with spirit of T-20 & philosophy of a Test Match” said Mr. Bhartia since the Finance Minister has addressed both short & long term issues facing the economy.

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