Even as the initial reaction to the Union Budget was negative due to lack of any drastic measures, it seems there are more gainers than losers in the budget announcements. The budget has further simplified the procedures for Indian corporate to attract foreign investments. It has done away with the distinction between different types of foreign investments, especially Foreign Institutional Investor (FII) that comes under portfolio investments, and Foreign Direct Investment (FDI).
Here is was brand heads had to say about this year’s Budget:
“Overall, the budget is forward looking, progressive and practical, with a very clear direction for future. It reflects Government’s focus on increased investment in infrastructure growth and generating skill based employment. We welcome the changes in taxation policy, with the reduction in corporate tax over four years and rationalization of custom duty. The determination towards GST and the proposed implementation will boost the industry through the state of art indirect tax system. Efforts being made by the current government towards achieving its vision of ‘Make in India’ policy is evident in this budget and hopefully it will turn manufacturing in India into a more profitable and business-friendly proposition. Measures to curb black money, job creation through revival of growth and investment will benefit middle class tax payers,” said Soon Kwon, MD, LG India.
According to Anirudh Dhoot, Director, Videocon, “The 2015 budget is a balanced one, setting long term goal for better economy by keeping fiscal deficit target 3.6% and implementation of GST from April 2016. The thrust has been given on infrastructure and social security. The postponement of GAAR is a positive relief and reduction in corporate tax form 30% to 25% in next four years will help industry to grow. Further thrust has been given on ‘Make in India’ where the basic custom duty on imported raw material has been reduced. This will boost assembly and value added manufacturing in the country. Reduction in the basic custom duty to zero from 10% on Back Light unit module used in LED panel manufacturing and Organic LED TV, also reducing duty on magnetron used in microwave oven are welcome steps.”
Adi Godrej, Chairman, Godrej Group, rates the budget an 8/10.
“The budget presented by the Finance Minister was overall in the right direction. I think the GDP growth rate in the next fiscal year will be on the higher side of the range at 8.5%. The high investment into infrastructure, a clear date for implementation of the GST, strong encouragement to agriculture and the social infrastructure sector will be very favourable for GDP growth in the future,” he said.
“Several of the issues faced by the foreign investors, FII and FDI have been tackled well and will lead to greater foreign investments. The announcement to reduce the corporate tax over the next four years to 25% is a very welcome one. However as a result there has been no incentives for manufacturing in this budget. Infact because of surcharge, taxes on the manufacturing sector have increased.
“I do hope the Finance Minister reduces this surcharge on the manufacturing sector and takes some corrective steps before the budget is passed,” he added.
“We must hold the Government accountable for delivering on their budget promises. Many of the announcements made in previous budget, which were geared to minimize/resolve transfer pricing litigation are yet to be implemented. It is nice to make a mention of the measures for dispute resolution in the speech, but the key is implementation. We will also need to see if some of the other Tax related concerns of the IT and ITES sector have been addressed. These include resolving ambiguities in taxation of software products and services. In that context, the service tax rate going up is a concern, because of the impact it could have of driving people to use pirated software. Especially, because of the dual tax on software - the net tax rate for software is above 20%,” said Bhaskar Pramanik, Chairman, Microsoft India.
Insurance, Banking and Financial Services
According to Rajesh Sud, CEO & MD, Max Life Insurance, “With respect to the insurance sector, the increase in exemption of health insurance is a welcome move. Also, multiple initiatives have been taken towards providing social security by means of introducing life and accidental insurance and pension schemes for financially weaker section.
“However, no major incentive has been announced to provide a fillip to long-term savings apart from increase in deduction of Rs. 50000/- towards NPS under section 80CCD. This additional limit for pension plans should have included all pension products including those offered by life insurers to provide a level playing field. Life Insurance plays a critical role in providing long-term funds for infrastructure development by channelising domestic savings and any tax incentives to this long-term savings and protection instrument could have helped in funding infrastructure growth. The increase in service tax could also be a deterrent to the insurance sector.”
Tarun Chugh, MD & CEO, PNB MetLife, “The Finance Minister has presented a pragmatic budget with a long-term perspective creating job opportunities for the youth, increasing investment in infrastructure while keeping the fiscal deficit in check. We welcome the proposal to increase the tax benefits for health insurance from Rs 15,000 to Rs 25,000. Currently, over 78-80% of health care expenses are funded by the Indians out of their own pocket and this move will encourage people to increase their coverage keeping in the mind the rising cost of healthcare.”
“The proposal to make the ordinances into a law is a positive move and we hope that the same is implemented quickly as it will help the insurance sector bring in additional capital of close to $3.5bn.
“From the social security perspective, it is a positive move to increase tax benefits by Rs 50,000 for people investing in pension products. In India, there are 80 crore people below 35 years of age who need to start planning quickly for their retirement. And 71% of them are concerned about running out of money in their retirement years. This will add pressure on social security and retirement needs. Being a young country, there is a huge potential for pension plans as one needs to invest early to build a corpus for retirement years. We hope that the Government considers passing on these benefits to people investing in private pension funds beyond NPS,” he added.
“As a company with deep investments in India, Samsung sees this as a progressive budget, one which provides an enabling business environment for foreign investment. It further motivates us to take our ‘Make in India’ story to the next level. In addition, we remain committed to continue to push technology boundaries to ‘Make for India’ leveraging our global strengths for the benefit of the Indian consumers,” said Hyun Chil Hong, President and CEO, Samsung India Electronics.
Pardeep Jain, MD, Karbonn Mobiles, said, “By focusing on progressive steps like reducing the rates of basic customs on 22 items including certain inputs, raw material, intermediates and components, the Union Budget 2015 is aimed to strengthen domestic manufacturing. As the role of indirect taxes is very important in boosting domestic manufacturing, the proposal of corporate tax cut from 30% to 25 % and reducing taxes on services from 25% to 10% is going to push forward ‘Make in India’ initiative. This will support the mobile and telecom services eco-system, bringing down manufacturing costs and reduce tax liabilities of companies to help them attract investments and create job opportunities in the country. By proposing the full exemption on all goods and reducing the SAD on imports of certain other inputs and raw materials, the Finance Minster has created a roadway for a robust manufacturing in the country. However, to safeguard the interests of the indigenous mobile handset players, the revisions in excise duty structure should have been unrolled gradually to give optimum time to local handset manufacturers to thrive and strengthen their manufacturing capabilities in the interim.”
Arun Malhotra, Managing Director, Nissan Motor India, said, “We were looking forward to a stronger emphasis on the automobile industry from budget 2015, but there doesn’t seem to be much momentum on that front. While we expected the incentives on EV to be more than what has come from the Finance Minister, we are happy that there is progressive step in this direction. Also, the 0.14% excise duty hike on small cars and 2 wheelers does not have much of an impact.”
“The industry would have benefited a lot had the excise duty benefits been extended but this budget has the potential to raise the consumer sentiment which will help the industry grow. There were concessions given on some identified components for EV’s in the past and these concessions continue for another year; we welcome this move,” he added.
Shankar Srinivas of Isuzu Motors India said, “The budget has indeed enhanced the positive sentiments of businesses in India. Although there are limited policy announcements specific to the automobile sector, there are a slew of proposals that the government has announced that will indirectly benefit the sector. The centre’s renewed focus on infrastructure development and implementation of GST by April 2016 will certainly aid the growth of the automobile sector in the long term.”
“Other important factors like investment in rural infrastructure development, increasing spend on farm credits for enhanced agricultural productivity and proposal to set-up corpus fund for emerging entrepreneurs and SMEs, would certainly help the hub-and-spoke transportation of the automobile industry, as most of the enterprises is likely to focus on end-consumer products,” he added.