Budget lays a foundation for strong economic growth: Sudhir Shenoy

The finance minister Arun Jaitley presented a balanced budget giving due cognizance to the issues currently being faced by India's economy. This is a positive Budget and the Finance Minister has taken suitable steps to fire up the economic growth. There has been a mix of both short term and long term measures geared towards boosting confidence of all key constituents.
 
The emphasis given to sectors like manufacturing, infrastructure, and housing, will support the growth of the manufacturing sector which will in turn propel the chemical industry into the next growth trajectory. The funds allocated to new urban development objectives, special economic zones, river projects and smart cities will add long-term value.
 
The much awaited announcements on MAT and GAAR will go a long way in reviving the investor confidence and put the growth trajectory back on track.
 
Also, the proposed exemption in service tax to cold storage services in relation to fruits and vegetables will help the crucial food processing industry. This will incentivise much needed investment towards the development of efficient cold chains and will not only play an important role in reducing the wastages of the perishable commodities but also in augmenting farmers’ income.
 
The assurance on the implementation of the Goods and Sales Tax (GST), by next year is encouraging. Proposal to bring down the basic rate of corporate tax to 25% is a step in right direction. The proposal to exempt SAD on most items and to reduce customs duty on key manufacturing components such as ethylene dichloride (EDC), vinyl chloride monomer (VCM), butyl acrylate, etc are welcome changes to address the inverted duty structures. This will improve competitiveness and encourage new investment and capacity addition in the related sectors.
 
The government demonstrates a strong resolve to move towards a more efficient expenditure management system and a rationalised tax framework while trying to support investment growth.
 
In the times to come, we would want the government to consider setting up of chemical parks, implement 'zero duty' on the import of specialty chemicals to facilitate easy availability and development of environmentally friendly and value-added solutions for the consumers and tax holidays like that of the power sector. We believe that all of these reforms, if implemented, will give the chemical industry a much needed boost and take it closer to its growth estimates. It will also increase the attractiveness of Petroleum, Chemicals, and Petrochemicals Investment Regions (PCPIRs).
 
Overall, we think that this Budget rightly addresses a lot of procedural issues and lays a foundation for strong economic growth.
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Sudhir Shenoy is the CEO of Dow India