The thrust given to rural and infrastructure sectors will have a multiplier effect on the economy but the Budget has failed on the corporate taxation front, India Inc said today.
"The Union Budget 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," Walmart India President and CEO Krish Iyer said.
However, Ficci President Harshvardhan Neotia said, "Corporate tax rate reduction was something that we were looking at ... A clearer roadmap on how it is going forward... Going forward, we expect some clarity on how the exemptions will be eased out."
"There was a lot of debate when Finance Minister Arun Jaitley talked about reducing it (corporate tax) to 25 per cent. I don't believe anything has been done on that but he has got a four-year window for it," CII President Sumit Mazumder said.
"He (Jaitley) has not reduced corporate tax at all this year except for very small firms," CII President Designate Naushad Forbes said.
Assocham President Sunil Kanoria said rationalisation and simplification of tax rates would have benefitted the overall ease of doing business, especially keeping in mind that GST implementation seems to have been pushed ahead.
Recalling his last year's promise of reducing corporate tax from 30 to 25 per cent over a period accompanied by rationalisation and removal of exemptions and incentives, Jaitley today limited accelerated depreciation provided under I-T Act to a maximum of 40 per cent from April 1, 2017.
The benefit of deduction for research would be limited to 150 per cent from April 1, 2017 and 100 per cent from April 2020.
"Overall, I would say (the Budget is) pretty good," Bajaj Auto Limited Chairman Rahul Bajaj said.
PHD Chamber President Mahesh Gupta said the Budget's focus on rural India would go a long way to generate demand in the economy and give a push to overall growth and development of the country.
To boost domestic manufacturing and job creation, Jaitley allowed new units incorporated on or after March 1, 2016 an option of being taxed at 25 per cent plus surcharge and cess, provided they do not claim profit-linked or investment-linked deductions.
He also proposed lower corporate income tax rate for next financial year for relatively small enterprises with a turnover not exceeding Rs 5 crore in fiscal 2016 to 29 per cent plus surcharge and cess.
At present, they pay 30 per cent plus surcharge and cess.
Industry leaders said they were expecting reduction in
corporate taxes for existing as well as big units, and demanded more clarity on the roadmap.
With regards to small units having turnover of Rs 5 crore, the corporate tax rate has been reduced from 30 per cent to 29 per cent, Jaitley said while unveiling Budget 2016-17 in the Lok Sabha.
This is the part of excercise to bring down corporate tax rate in a phased manner from the existing 30 per cent to 25 per cent over period of four years beginning next fiscal.
Vice Chairman and MD Bharti Enterprises Rajan Bharti Mittal termed it a "growth-oriented Budget".
Adani Group Chairman Gautam Adani termed it a prudent budget with focus on growth and adherence to fiscal discipline.
"The focus on improved infrastructure through network of roads, rail, ports and airports will provide impetus for enhanced growth and in turn generate employment.
"Targeted focus on affordable housing with tax exemptions for developers and individuals will auger well for the sector. Incentive to small tax payers will result into more savings which would provide funds for growth," Adani said.
"There is no relief on the corporate tax for big manufacturers," Anirudh Dhoot, Director, Videocon said.
"Given the current global context of slowing growth and threat of financial turbulence, the Budget needs to be commended for giving a boost to growth and investment without disturbing the path for fiscal consolidation," CII Director General Chandrajit Banerjee said.
"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," Dabur India CEO Sunil Duggal said.
Cadila Healthcare CMD Pankaj R Patel said overall, the Budget will provide a thrust to economic development.
"Measures such as lower corporate rate for small enterprises, increased turnover limit under presumptive taxation scheme under section 44AD of the Income Tax Act for assesses in MSME category and few others are welcome move for SME players," Power2SME Founder and CEO R Narayan said.
"Initiatives planned for social sector will encourage job creation and help skill India. Providing impetus to affordable housing and infrastructure sectors would bring all round development," PwC India Chairman Deepak Kapoor said.
Debjani Ghosh, Vice President Sales and Marketing Group, and Managing Director (South Asia), Intel, said, "The Budget has not treated technology in isolation but integrated the effective use of technology across all the strategic imperatives in keeping with the intent of a Digital India."
"Focus on infrastructure and rural sector, which are the backbone of the economy and society, provides major impetus to the industries in the long term. Overall this year's budget can be termed as a good effort," Director, Emami Group, Aditya V Agarwal said.
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Godrej Group Chairman Adi Godrej said: "The additional personal tax on dividends above the Rs 10 lakh limit may lead to lower investment in the long term stock market, as high rates of taxes have always in the past lead to lower investment and growth".
Ashok P Hinduja, Chairman, Hinduja Group of Companies (India) termed the Budget as pragmatic and growth-oriented.
"The government's commitment for retaining the fiscal deficit at 3.5 per cent will have sobering effect on the interest rate in general and on the yields of government and corporate bonds in particular. This will place our economy in the double digit growth trajectory.
"Amnesty window announced for unaccounted money is a good initiative. However, tax on dividend above Rs 10 lakh is a big disincentive for promoters/large investors," he added.
Hailing the Budget, Tata Steel India managing director TV Narendran said, the Finance Minister has focused on policy and taxation reforms which are needed to provide impetus to the economy and reflects the government's commitment to improve the ease of doing business.
Pawan Goenka of M&M said, "The Budget places strong emphasis on agriculture, rural economy, infrastructure and social sector. The resurgence and thrust on the PPP in infrastructure is most welcome.
Welcoming the Budegt proposals, Thomas John Muthoot,chairman of the Muthoot Pappachan Group said the biggest beneficiaries are farmers.
Vikram Kirloskar, vice-chairman of Toyota Kirloskar Motors said the Budget gave an excellent mid-term and long term direction to the economy, but expressed concern over the extra green tax on cars.
Ashank Desai, founder of Maestak, said the overall trend is towards simplifying taxes and improving the speed of doing business.
Arup Basu of Tata Chemicals said the Budget has focused on farmers, rural income and infrastructure.
Prakash Chhabria, chairman of Finolex Industries said, "the finance minister has very rightly given high priority to rural infrastructure in general and agricultural sector in particular.
JM Financial Group managing director Vishal Kampani said, "The commitment to adhere to the fiscal deficit target of 3.5 percent amidst global headwinds and domestic challenges sends a strong signal to global investors."
The Organisation of Pharmaceutical Producers of India (OPPI) said the expectations from the Union Budget were higher and there is no specific provision that merits attention.
"While healthcare has been named one of the nine pillars of the Union Budget, there are relatively few salutary provisions for this sector," it said.
PwC India Partner and Leader- Healthcare Rana Mehta said that contrary to the belief the actual expenditure on health in 2015-16 was 1.3 per cent of GDP, higher than 1.2 per cent of GDP in 2014-15.
Om Manchanda, CEO of Dr Lal PathLabs, however said the Budget proposal for healthcare covering weaker section of the society is a path-breaking step.
Experts and industry leaders, however, welcomed the government decision to introduce Bankruptcy Code next fiscal year and said the law will help financial institutions in resolving their stressed assets issues.
Federal Bank chief Shyam Srinivasan said the proposed
Bankruptcy Code, although on expected lines, is a major announcement that will help enhance the credit health of banks.
Commenting on the proposal, Khaitan & Co partner Nikhil Narayanan said the recognition of gaps in the current insolvency and bankruptcy regime and the proposed introduction of the Bankruptcy Code is a step in the right direction.
"But much will depend on the insolvency related ecosystem that will need to evolve to make these measures a success," he added.
Industry leaders from West Bengal gave a mixed reaction to the Union Budget.
RP Sanjiv Goenka Group chairman Sanjiv Goenka said it is bound to have a very favourable impact on the Indian economy.
"Having laid down a very good structural road map for growth, Jaitley has focused on the rural economy which should create a strong demand," he said.
Century Ply managing director Sanjay Agarwal, in his reaction said, "The Budget is completely focused on agriculture and the poor. Government has clearly told industry is not its focus. Seventh Pay Commission and OROP will increase demand of certain items. Plan for roads and railways look good. Execution has to be excellent to really benefit the nation."
The Bengal Chamber president Ambarish Dasgupta said the Budget announcements is positive for rural and agriculture sectors.
Darjeeling Tea Association chairman S S Bagaria, said "I don't see anything good in this Budget except that the road sector has got some good allocation. We'll have to wait and see how many of the initiatives announced actually see the light of the day... That's a question mark right now.
Srei Infrastructure Finance Chairman Hemant Kanoria, said "We have not been enthused with the announcements pertaining to infrastructure, not because it has been neglected, but it does not have the specificity for implementation, unlike agriculture."
Emami Group Director Aditya V Agarwal said, "The Government has been facing many challenges and keeping the fiscal discipline in control is one of the most significant one, keeping the fiscal deficit at 3.5 per cent and yet meeting the growth and social objectives is a difficult task, which the Union Finance Minister has attempted to solve.
Indian Chamber of Commerce felt the Union Budget is a balanced one.
Bharat Chamber of Commerce president Rakesh Shah said, "It is a consolidation Budget. It lays emphasis on social, agriculture and rural sectors."
CII North East Council co-chairman Abhijit Barooah said, "The Budget has laid major emphasis on entrepreneurship and small business, which will spur the entrepreneurship movement in the region."
CII Assam State Council former chairman Barun Barpujari said, "The Union Budget 2016-17 is prudent and at the same time ambitious. The sting may come on the Minister's fiscal targets unless revenue is not overestimated."
Various industry bodies in Kerala and Gulf-based Malayali business tycoons also welcomed the "progressive announcements" made in the Budget.
"We welcome the specific emphasis given to infrastructure
development, power, agriculture, health and education. The promise of electricity in rural villages by 2018, roads in every village and cooking gas in every household in three years is commendable," President of Cochin Chamber of Commerce and Industry, C S Kartha said.
He, however, said "whether it is practical will have to be seen".
Hari Krishnan Nair, Chairman CII Kerala, hailed the Finance Minister and the Government for coming up with a Budget focused on long term development.
V P Nandakumar, Vice Chairman, CII, Kerala, said initiatives like affordable housing, better allocation to irrigation are very good are welcome steps.
Yusuffali MA, a Gulf-based business tycoon, said the Budget presented by Jaitley was "a prudent" one, sure to make a positive impact in many sectors.
He waidthe "three years tax holiday" for Start-ups is one of the most exciting announcements of the budget."From a common NRI's point of view, the easing of customs declaration and increasing of free baggage allowance are a welcome step," he said.
Another Gulf-based healthcare tycoon Azad Moopen said the Union Budget is transformative in nature and is aimed at empowering the rural population and strengthening the "bottom of the pyramid".
Kochi Metro Rail Project has got an assistance of Rs 450 crore in the Union Budget for financial year 2016-17, as against an amount of Rs 779 crore that had been requested.
Regarding the shortfall in the provision for financial year 2016-17 as against the funds requested by KMRL, its Managing Director Elias George said, "We are confident that this can be made good during the course of the forthcoming financial year when the budget estimates are revised."
Federation of Indian Export Organisation (FIEO) Regional Chairman A Shaktivel said emphasis on rail and road by increased investment along with better port connectivity will help in increasing export and reducing transaction cost.
Initiatives towards Ease on Doing Business, focusing MSME as well as facility of deferred payment of custom duty will help exporters in reducing their transaction cost, he said.
Changes in custom duty on certain inputs and steps for improving competitiveness of industry in sectors like information technology, hardware, capital goods, defense purchases, textiles, chemicals, paper were expected to arrest the downward trend in exports, he said.
Southern India Mills' Association (SIMA) said that it was a growth oriented budget and has come out with nine thrust areas to enable the country to achieve a sustained growth rate inspite of slow down in the global economy.
SIMA chairman M Senthil kumar welcomed the nine pillars of growth trajectory budget marking at developing infrastructure, skill upgradation, agriculture development (doubling farmers income by 2022), health care, social development, education, SIMA Chief also welcomed the nine point agenda to ensure compliance, ease of doing business, curbing black money, providing opportunity for declaring undisclosed income.
The local chapter of Indian Chamber of Commerce and Indutry President, D Nandakumar said the contribution of 8.33 per cent by the Government for all new employees enrolling EPF for the first three years of their employment will go a long way in creating more jobs and incentivise MSME to recruit more employees.
Indian Texprenseurs Federaton Secretary, Prabhu Dhamodaran said that it was a very progressive budget with the aim of bringing structural transformation in the economy.
ITC Chairman Y C Deveshwar said: "The thrust given to the
agriculture, rural and social sectors is particularly commendable and will serve to be very effective catalysts to drive an era of stable and sustainable growth.
"The proposals to give a strong impetus to infrastructural development will also provide long-term drivers that should augur well for the Indian economy."
Biocon CMD Kiran Mazumdar Shaw said: "I see no boost to investment in manufacturing. Disappointed to note there is no increased allocation to Science & Technology".
"R&D driven businesses will be impacted by reduction of weighted tax deduction from 200 to 150 per cent but positive on introduction of patent box regime at 10 per cent tax rate for income attributable to patents/IP".
Suzlon Group CMD Tulsi Tanti said: "The government continues on its plan to providing 100 per cent electrification by May 1, 2018. This poses incredible opportunity for the renewable sector and to boost rural economy".
Snapdeal Co-founder Rohit Bansal said: "The relaxation of taxation on income from patents and direction of funds towards building world-class higher education institutions will drive innovation in the country.
"The e-commerce industry will also greatly benefit from the increased investments in infrastructure and digital literacy in rural areas".
Industry players of Tamil Nadu also hailed the Union Budget for 2016-17 presented by Finance Minister Arun Jaitley today in Parliament.
"The budget makes a clear shift towards boosting the rural and social sectors and it is hoped that this, along with thrust to infrastructure should cascade the effects on the other sectors," Madras Chamber of Commerce and Industry (MCCI) President, S G Prabhakaran said.
Fast moving consumer goods company CavinKare, Chairman and Managing Director, CK Ranganathan said "the government has taken steps in the right ernest towards balanced growth of rural and corporate India".
"Commendably, the budget has retained the fiscal deficit target at 3.5 per cent while at the same time did not compromise on spending. Schemes like highest ever MGNREGA spending, irrigation schemes, funding for panchayats would increase rural employment and welfare", he said.
The social sector schemes like cooking gas to rural women, crop insurance, interest subvention on agri-loans, will go a long way in increasing the standard and comfort of living of the rural people, he said.
Murugappa Group, city-based diversified business conglomerate said the Finance Minister has attempted to present a budget that would give impetus to the agriculture sector while maintaining "fiscal discipline".
"The budget initiatives address the needs of the agriculture and rural sectors. The emphasis given to irrigation, soil health, increased use of organic fertilisers are steps in the right direction", Murugappa Group, Executive Chairman, A Vellayan said.
Federation of Indian Exports Organisation, Regional Chairman, A Sakthivel welcomed the budget saying the emphasis on rail and road by increased investment along with better port connectivity will help in increasing export and reducing transaction cost.
However, the edible oil industry body SEA expressed
disappointment over the Budget saying this it (Budget) has not proposed any steps to cut imports of cooking oils.
"The Union Budget...Has greatly disappointed Indian Vegetable oil industry. It is unfortunate that Honourable Finance Minister has not proposed any new measures to reduce dependence on burgeoning imports of edible oils," Solvent Extractors' Association of India (SEA) said in a statement.
There is no change in duty for import of vegetable oils and maintained the same at 12.5% on crude oils and 20% on refined oils, it added.
For level playing field, the industry had demanded to raise the duty difference between crude and refined oils from 7.5 per cent to 15 per cent to safeguard the interest of farmers and higher capacity utilisation of refiners which currently operating at 40 to 50 per cent only.
"Finance Minister has chosen not to increase import duty on edible oil and decided to maintain the status quo. This will discourage farmers to continue to grow oilseeds and may switch over to other crops and our dependence on imports of vegetable oil will further increase," the SEA said.
Further the FIEO Regional Chairman Sakthivel said, the initiatives towards ease of doing business, focusing MSME as well as facility of deferred payment of customs duty will help exporters in reducing the "transaction cost".
The changes in customs duty on certain inputs and steps for improving competitiveness of industry in sectors like information technology, hardware, capital goods, textiles were expected to arrest the downward trend in exports, he said.
FIEO also expressed concern on the proposal to collect excise duty on branded ready made garments as it will adversely
affect the industry and also difficult to administer, he said.
Non-banking finance company Sundaram Finance MD T T Srinivasaraghanvan said with the fiscal deficit targets being met, there may be a rate reduction by Reserve Bank of India.
"Well thought through and well articulated proposals. The focus on infra and rural sector is very welcome. Also with the fiscal deficit targets being met, a rate reduction could be on the cards", he said.
Meanwhile, Ramesh Datla, Vice Chairman, CII Southern Region and CMD, Elico Ltd today said the budget presented by the Finance Minister Arun Jaitely balanced one between rural and urban economy.
"Focus on farmer and rural economy will balance the rural and urban economy. However, we are hoping to get better clarity on taxation matters", he told reporters in Hyderabad.
Sanjay Kapoor, General Manager, L&T Hyderabad Metro Ltd said a lot of thrust was given to infrastructure sector boosting the ports, roads, railways, and most importantly civil aviation.
Budgeting unused and under-used airstrips is a good move. However, the Khelkar Report recommendations were not considered, though bringing private participation to the infrastructure sector was mentioned, he added.
P Gopalakrishna, Senior Vice President, Coromandel Fertilizers opined that creating e-platform to market products and e-procurement by FCI are good moves. Also the rationalisation of subsidy, if successful, will lead to lot of structural changes.
N Narasimhan, Managing Director, Tecumsech Products Company Ltd said new focus on reducing litigations will go a long way. Also the EPF reimbursement could play an important role in manufacturing sector companies.
