Budget 2014: What the industry feels
The much awaited event that is the announcement of the Union Budget has taken place. The Finance minister Arun Jaitely’s budget seems like a mixed bag. There are concessions and also hike in the taxes to be imposed. In order to give a boast to domestic electronic manufacturing sector, he has imposed some taxes on imports telecom and IT products. He has introduced basic customs duty (BCD) of 10% in imports of specified telecommunication products, which don’t come in the purview of the technology element. He also proposed exemption of all inputs/components used in the manufacture of personal computers from 4% special additional duty (SAD)” and “Impose education cess on imported electronic products to provide parity between domestically produced goods and imported goods.
The industry has mixed feelings about the 2014 budget. Some feel that it will further the growth and development process, while others believe that it will adversely affect the growth cycle of the industry.
Commenting on the new budget, Manish Sharma, MD, Panasonic India said, “In the Union Budget 2014, CEAMA recommendations like reduction of custom duty on LCDs & LEDs below 19-inch from 10% to 0 %, have been accepted which will encourage the local production. These reforms coupled with the extension in the time period of reduced excise duty and exemption of flat copper wires from excise duty will further boost the future growth and the economy. I am particularly happy to see the government’s vision on smart cities. Allocation of 500 crores on mega solar projects and 7060 crores on 100 smart cities will definitely promote growth of infrastructure and renewable energy sector in a big way.
Anirudh Dhoot, President, Consumer Electronics and Appliances Manufacturer Association (CEAMA) and Director, Videocon said, “We appreciate the steps taken to boost the domestic production of electronic items and reduce our dependence on imports. These include imposition of basic customs duty on certain items outside the purview of IT Agreement, exemption of SAD on inputs/components in PC manufacturing. The import duty on inputs for making LCD/LED Panels has been exempted from the Custom duty. It will encourage greater Value Addition in the manufacturing of LCD/LED TVs in the country. CEAMA would like to thank the Government for considering our recommendations and we greatly appreciate this move. This we believe is the beginning of a new era which will see the rapid growth of the consumer durable sector, generate employment and revive the index of industrial production.”
Nadir Godrej, Chairman, CII National Committee on Chemicals, also welcomes the new budget and feels, “CII National Committee on Chemicals welcomes the growth-oriented budget presented by Hon. Finance Minister Mr Arun Jaitley. The reduction in customs duty is welcomed as it helps address our demand for correcting the inverted duty structure and will also help boost domestic manufacturing. The budget also proposes to introduce a new urea policy, increase connectivity with ports and setting up of new IITs, IIMs with a view to promote talent; all these proposals are steps in the right direction.”
The industry also feels that the policies introduced in the 2014 budget will turn out to be fruitful for the growth of the country and will also lead to creation of new jobs. Talking about the same, Keshav Murugesh, Group CEO, WNS LTD, says, “Progressive budget, which focuses on creating the new digital, business ready India. Steps around funding of start-ups, smart cities, e-enabled government departments, e-Visas and broad band / IT products focus is very positive for India’s digital future.” He further states, “Announcement on FDI, REITs, intent on GST, large-scale infrastructure proposals while removing uncertainties on mining and coal as well as manufacturing, job creation, and the intent to reduce litigation, shows the new government is keen on India welcoming global investments.”
However, there is certain section of the industry which feels that apart from having positive angle the union budget also have certain adverse implications. Speaking about this, Dippak Khurana, CEO and Co-founder, Vserv.mobi said, “The new government’s maiden budget proposes to levy service tax for online and mobile advertising which we believe will adversely affect the industry’s growth. It reflects differentiated treatment as traditional print media remains unaffected with respect to the tax purview but new digital media that is actually driving innovation will have to unfortunately bear the brunt. Currently, India’s exponential mobile penetration and app consumption patterns are driving the growth of the mobile advertising industry and this development could hamper innovation efforts of the entire ecosystem comprising of mobile development start-ups, advertisers and publishers. While the budget is in favour of small scale set ups and entrepreneurs, the provision for taxation is contrary in nature for budding developers and publishers.”
It will be great to watch that how these policies introduced in the budget 2014 will further the growth rate of the country. As the rabbit is out of the hat now, we will witness how these new policies will bring about a shift in the present system and also how it will benefit the consumers.