Budget Wishlist From India Inc

A.M. Muralidharan – President, Volvo Construction Equipment
With the need for better infrastructure increasing by the day, the government should increase its spends in the sector considering that the projected investment is almost double at US$ 1,025 billion in the Twelfth Five Year Plan (2012-17) with 50 per cent expected to come from private sector. I am hopeful that the upcoming Union budget will bring about policy changes and better market for investments towards infrastructure building equipment.

The construction sector is a major contributor to the infrastructure sector and accounts for nearly 6 per cent of India's GDP. The market has the potential to grow 6-7 times from total revenues of US$ 3.3 billion in 2010 to US$ 22.7 billion by 2020 and from over 60,000 units in 2010 to 330,000 units in 2020. With the rise in investment, the government will need to make the land acquisition policy more robust in order to avoid project delays due to land acquisition problems.

We are also awaiting government decisions and policy changes around GST, which will be the prime factor for how the market shapes up.

Vipul Shah, President, CEO and Chairman, Dow Chemical International 
The $108 billion Indian chemical industry, which represents 3 per cent of the global chemicals industry, is estimated to grow at 11 per cent annually to reach an estimated $224 billion by 2017 if supported by a clear policy roadmap, including fiscal incentives that are in sync with the government's manufacturing policy, rollout of the goods & services tax (GST), corporate tax rationalisation and a simplified cess and duty structure. We welcome the Honourable Finance Minister's move to revive the decision to introduce GST without any further delay. While this economic reform will go a long way to streamline growth, it is pertinent to highlight the need for a GST framework that encompasses and absorbs multiple taxes currently levied at the state and local levels.
 
The industry is passing through a difficult phase in India, with demand growth decelerating during 2011-12 and no major investment on the horizon. Our key expectations from the forthcoming Union budget are to urge the government to fast track the setting up of chemical parks as charted out in the draft new Chemical Policy to attract faster investments, efficiently meet the demands of the domestic market and generate significant employment. Measures that remain unaddressed and would provide a fillip to the chemical sector are 'zero duty' on the import of chemicals to facilitate easy availability and higher import of cheaper feedstock, tax holidays for small- and large-scale players and a complete waiver of Special Additional Duty (SAD).

Sarv Saravanan, Senior Vice President & Managing Director, EMC Centers of Excellence – India and Egypt
E-governance and IT are enablers to bridge developmental gaps in the country. ICT not only acts as a strategic device in addressing urban and rural divide but also delivers benefits of e-governance projects to the needful.  IT spending in the government as we see is under rapid transformation and this is an opportunity since the Government is riding high on citizen services as part of the national e-governance program.

Last year, we witnessed two critical aspects of eGovernance; the beginning of process re-engineering and change management within the government and not just adoption of ICT. The contribution and efforts by the RTI (Right to Information act), new proposals like the Electronic Service Delivery Bill and National Data Sharing and Accessibility Policies towards ensuring greater transparency, accountability and improving e-governance in the country are only some related examples. This year we believe that the Government will rigorously invest and promote investments in IT infrastructure. Emerging technologies like cloud computing, big data analytics will be further embraced to remove the impediments that at present reduce the systems efficacy and make it easier for citizens to access information. To foster collaboration, the government should also further motivate MNCs and large companies that are developing core intellectual property.
 
Ameera Shah, MD & CEO , Metropolis Healthcare Limited
Growing at the rate of 15 per cent CAGR, the Indian healthcare industry is set to almost double by the year 2015, growing from $60 billion to $120 billion. This growth is remarkable for any industry, which definitely calls for more attention from the policy makers to the healthcare industry. This magnanimous growth and market dynamics are possibly the only major drivers for the healthcare industry. The support from government in the form of tax relaxations and subsidies is rather limited. In the last year we did witness a welcome change of tax exemption for preventive diagnostic tests below Rs. 5000, which would have a positive impact on the demand side of the diagnostic market. However many more interventions are needed on the supply side so as to reduce the costs of delivering diagnostic tests. Currently the taxation levied on necessary chemicals and technology increase the test costs, thereby making it inaccessible to most people. Some relief can be sought from the last year’s reduction of duties on raw materials used in medical devices, but its benefit on diagnostics per se would be much limited. If the costs for life saving diagnostic tests have to be brought down and its benefits are to trickle down to the common man, reduction on taxation of lab chemicals would have a much more visible effect.

Mindful of the fact that diagnostics is the first step towards effective treatment, it is important that all our national health programmes recognise the importance of quality diagnostics. According an explicit position to diagnostics was lacking even in the recent 12th FYP. In order to ensure that quality diagnostics reach people through programme verticals; budgetary allocations to diagnostics is much needed. If timely diagnostics is missed, none of the vertical programmes meant for either chronic or infectious diseases, would be able to detect cases early. In the light of this fact, it would help to allocate budgets which are ear-marked for spending on diagnostics through all the disease vertical programmes.  Additionally the functionaries should be made accountable for proper utilisation of such allocated resources.

Sunil K Goyal, Fund Manager & CEO, YourNest Angel Fund
We expect the honorable Finance Minister to encourage the flow of equity to start-ups for generating millions of productive jobs. Measures like permitting pension funds, provident funds, charitable & religious trusts to invest a small part of their corpus in Category 1 AIF and offering special incentives such as tax deduction to investors in start-ups or Alternative Investment Funds (AIFs) will indeed help. MoF can replicate the provisions of Section 54 which has been encouraging the High Net worth Individuals (HNIs) to re-invest capital gains in residential property. HNIs & Corporates can now be encouraged to invest in Category 1 AIF to seek a deduction against capital gains re-invested in AIFs.

Additionally, to really incentivize capital flow into early stage ventures, I hope the Union Budget provides that any capital gains arising from sale of investment in venture capital undertaking be exempted by introducing a securities transaction tax on the lines of transactions in listed companies. Besides, this Union Budget can play a crucial role in improving India’s ranking from 173rd position (in the Ease of starting a business parameter, World Bank Report 2013) by simplifying processes and making it easier for entrepreneurs to start a business.

Ashish Kashyap, Group CEO, IbiboGroup
E-commerce can be a massive engine of growth for India's GDP if the government makes exemptions and provisions for this sector. E-commerce can enable millions of small and medium enterprises to use the medium to transact with millions of buyers across the borders of cities and towns and even outside India. This hence is transformational for the economy. However, for the transformation to take place, following are the expectations from the budget:

Dinesh Agarwal, Founder & CEO, IndiaMART
The Indian MSMES sector plays an import role in the growth of Indian economy. In addition it is also the second largest employment generator for the country. It is no secret that the segment has tremendous growth potential and can showcase exceptional growth short period of time.

However, keeping in view the current market environment and stagnation in the economy, it is important that measures are taken by the Government to provide a boost to the sector.  Currently, there is a need to expedite the implementation of some policies and measures to help this ailing segment. While a number of items were proposed in the last budget session, implementation of the same has been a slow process.  GST or Goods and Service Tax for example was also a focal point during the last budget session and was supposed to be rolled out in a phased manner from August 2012; yet the implementation is still underway.

While there have been tremendous development in terms of Infrastructure in the telecom and logistics (roads), there needs to be special emphasis in providing land to MSMEs to expand their business. There can be infrastructural development in form of special MSMES zones and centres that provide information to MSMESs and enable them to connect better with other larger business units.

Unlike the popular perception, MSMEs do not want special measures like tax relaxations and introduction of special funds; however, they do expect simplification in policies and [procedures so that they are able to understand processes better and get their taxes files in a less cumbersome manner. Since MSMESs do not have enough manpower, it is crucial to make policies simpler for them get a more positive response from their side."

Jyoti Prakash Gadia, Managing Director, Resurgent India Limited, New Delhi and Financial Services Consultant
This year there is huge expectations from the finance minister as this is going to the final budget of this government. With world economy in a bad shape, the budget in general in expected to be one which will promote growth.

On the infrastructure push, deduction for harnessing natural resource based industries may be introduced. MAT rates may see a reduction to lay a thrust to the beleaguered corporate sector.

On the indirect tax front, it is expected that there may be moderate changes in the rates of excise duty on high end luxury cars and items of luxury. Service tax being the latest revenue grosser, integration of the service tax with excise duty is likely to be made in a cohesive manner. Service tax may be introduced on electricity leaving the domestic consumers.

Education sector and IT Sector are likely to be the centre of attention since they are the thrust sectors of economy. Infrastructure funding is likely to be given high priority.

On FEMA, FDI in retail sector having already put in place, further opening up with gradual shift to lay roadmap for capital account convertibility is going to be there in this budget.

Overall, the budget is expected to be a balanced budget to enable the economy to return to the 8% growth path in FY 2013-14.

Nikhil Jain, CEO – Ramprastha Group
The Indian budget has always held high expectations and the annual event is eagerly awaited by a cross section of India's populace and so it is by the real estate industry and its entire ecosystem. For the real estate sector, our hope is that the government would bestow Real Estate with Industry status. This will facilitate easier funding for the sector, including lower interest rate on loans, simplified approval process and increased transparency. Furthermore, the 'Interest' amount qualifying for tax benefits on residential home loans should be increased in keeping with the current prices prevailing in the sector. Also, the 'Principal' repayment of home loans should be treated as separate tax exemption entity and not clubbed under section 80C. The interest subvention schemes limit should also be extended to 35 lakhs from 25 lakhs for facilitating 1 % investment incentive earned by developers. Special residential zone for affordable housing, promotion of rental housing schemes, widening of ECB for low cost housing and reservation of priority loans for affordable housing would go a long way in fast tracking infrastructure in the country. The sector requires serious intervention and revision to merit its  status level as an important contributor to the country's economic wheel in terms of growth and employment generation.”

Anand Sundaresan, Managing Director, Schwing Stetter
2012 was a very Challenging period for the construction equipment manufacturers industry and also the construction sector in general.  Both the construction contractors as well as construction equipment manufacturers are totally depressed because of the slow down.

We expect that the government comes out with clear SOPs for the capital equipments like reduction in Excise duty, in order to boost up sales of the construction equipments.  This can of course happen only if government takes bold steps in awarding contracts for infrastructure projects.  Outside the budget, the government also should work towards bringing in policy reforms , especially for PPP Projects to make it attractive for investors to invest in infrastructure projects in India.

Besides this ,there are many other pending issues related to the industry like uniform taxation, GST, clarity on some of the concessions given by government for duty free imports, with a view to have a level playing field for the domestic manufacturers.

On the personal front, I personally don't expect much, as long as there are no further personal tax increase. Anything that comes as a concession will be considered as a bonus. 

Subhrakant Panda – Managing Director & CEO – Indian Metals & Ferro Alloys Ltd
A 'good budget' in my books will be one which carries on with the reform process and focusses on growth while addressing key issues like fiscal deficit, inflation, infrastructure augmentation, etc. Transparency and greater accountability should be the pillars of any policy making process.

As far as the metal & mining sector is concerned mining and power generation sectors have suffered on account of lack of clarity in policy.  As such, the need of the hour is a clear & unambiguous policy for the mining sector which is both people and business friendly while addressing the issue of fuel supply for the power sector as an urgent necessity.  Also, despite the new Electricity Act being enacted almost a decade ago, 'open access' still remains a chimera in many parts of the country.  The ferro alloys industry will benefit from any action taken to stimulate growth as also clarity in mining & power which together constitute about 70% of the cost of production.
 
Matthew Spacie (MBE), Founder And CEO of Magic Bus
By the year 2020, India will be the youngest nation in the world. The 41% of us who are young can quickly grow into India's demographic challenge if something is not done to make the nation's youth future-ready.

Estimates show that there will be around 63.5 million new entrants to the working age group between 2011 and 2016. Policymakers and economists  are already flagging this as a cause for concern, but if we can turn the situation to the nation's advantage, the youth segment can become India's demographic dividend. We need the right investments to make these new entrants job-ready.

Given this, my biggest expectation from the Union Budget 2013 is a prioritised allocation to the tertiary education sector, including, very importantly, in upgrading the quality and numbers of vocational centers. Our experience in running a large employability enhancement programme shows us that what employers are looking for in young workers are not just strong basic academic skills but also soft skills such as ability to work in a team. As vocational training gets the budget it needs, it's quality can be upgraded to include such soft skills.

Economic growth is doable, but only if we have a workforce that is healthy, skilled and educated, not forced to the bottom of the pyramid in the unskilled sector. The Union Budget can correct the situation if it prioritises social spends.

The logistics sector in the backdrop of the recent reform measures, uncertain domestic and global economic environment is looking forward to the upcoming budget with much anticipation. The sector despite contributing massively to the economy is yet to be accorded industry status that would facilitate easier access to finance, robust regulatory mechanisms and a better image.

 

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Vineet Agarwal, Joint Managing Director, Transport Corporation of India
The logistics resources of the country are in need of refurbishment in all aspects. We therefore advise setting up of a nodal cross-ministerial logistics body and infrastructure status to the wider transportation and logistics industry. Another aspect, where the government needs to delve into is dedicating higher financial outlay for logistics skill improvement.TCI is in favor of a separate regulatory authority for better coordination between ministries for an integrated policy on the sector.

Relief in the form of tax benefits will facilitate the recuperation process of the industry which has been a victim of lack of critical sops in previous budgets. GST should be implemented with immediate effect to enable the creation of the common market to permit free and unimpeded movement of goods and services across the country.

An appropriate multi-modal transportation model should be devised to reduce logistics cost and to create a level playing field for private rail operators. Provisions for a greater FDI in key logistics infrastructure development areas like dredging, port connectivity etc. should also be made apart from supporting adoption of IT to modernize the sector.

Supply chain investments also need to be incentivized by exempting capital imports on supply chain equipments from taxes. Financial support should be provided for warehousing, back-end processing and construction of cold chains to boost the sector further. Treatment of warehousing for non-agricultural commodities at par with infrastructure projects and land reforms will encourage investment in warehousing industry.

Another important issue that needs attention is reduction in stoppage time to ensure faster movement of goods. This can be done by bringing uniformity in the toll charges by introducing centralized toll mechanism, reducing documentation, checking unauthorized payments through agents and development of access-controlled expressways.

The future growth prospects of the Indian economy depend on the infrastructure investment and timely execution of large projects. The government should, therefore, ensure implementation of large projects under PPP route apart from allocating long-term amount towards infrastructure development through dedicated debt funds to ensure sustained development of the sector.

As per current regulatory policy, RBI is not permitting ECB to transportation/ logistic companies for the purpose of investment into commercial vehicles, ships, construction of logistics warehouses, etc. As transportation/ logistics companies are an integral part of the economy, we look forward to the finance ministry to permit ECB funding for normal business capex environment.

We expect budget 2013 to set tone for next phase of growth in the economy as well as the sector by giving thrust to bold policy reforms and large infrastructure projects.