# HAPPY WITH BUDGET
FOREIGN BRANDS
Major single-brand retailers, including IKEA and H&M, Friday hailed the government’s budget proposal to ease local sourcing norms for foreign direct investment in the sector. Industry experts opined that the budget proposal would help attract more foreign players to invest in India. IKEA, which opened its first store in India in August 2018, welcomed the proposed relaxation in local sourcing norms for single-brand retailers. “The Indian Government’s priority to bring about ease of doing business for companies is encouraging. IKEA is committed to increasing local sourcing from India,” IKEA India CEO Peter Betzel said. H&M India Country Manager Janne Einola also hailed the proposal to ease local sourcing norms. “While we don’t see the details of the proposal currently, we are happy to see the intent of the government to ease sourcing norms for FDI in single-brand retail to drive ease of doing business in India,” Einola said. Currently, the FDI policy on single-brand retail trade (SBRT) provides for a 30 per cent local sourcing preferably from MSMEs, village and cottage industries, artisans and craftsmen where the FDI exceeds 51 per cent. Sitharaman, though, has not spelled out the changes the government proposes to make to ease FDI norms in single-brand retail trade.
NRI BUSINESSMEN
Dubai: Several leading Non-Resident Indians and businessmen in the Gulf region Friday welcomed India’s Union Budget for 2019-20 and listed rural electrification, agricultural, support to start-ups, women entrepreneurship and reduction of corporate tax as the major takeaways. Yusuff Ali MA, Chairman of UAE-based Lulu Group, said the first budget of Prime Minister Narendra Modi’s second term in office has very efficiently covered almost all critical sectors which will surely boost India’s march towards becoming a USD 5 trillion economy. “The key takeaways for me in this maiden budget are the stress given to rural and agricultural development, women entrepreneurship and making India the global education hub of excellence,” he said. Firoz Merchant, the Chairman of Pure Gold, said the Budget is a clear attempt to simplify processes and compliances. “Overall I feel the economy is moving in the right direction but with baby steps,” Merchant said, adding that it lacks, however, clear steps on boosting the economy and employment. Kamal Vachani, Group Director al-Maya Group, welcomed the proposal related to Aadhaar cards, which will be issued for Indians travelling back without waiting for six months. “Steps easing restrictions on media, aviation and infrastructure are welcome steps as NRIs can now invest in these sectors,” Vachani said.
REALTORS
The demand for housing units worth up to Rs 45 lakh will rise on account of additional Rs 1.5 lakh tax deduction provided in the Budget on interest paid on housing loans sanctioned this fiscal to first-time homebuyers, property developers and consultants Friday said, while hailing proposals to promote rental housing and improve liquidity of NBFCs. Many players, however, rued that the real estate sector was not given ‘industry’ status and no stress fund got created for stalled projects. Some also complained about the cap of Rs 45 lakh on tax deduction on home loan interest. Jaxay Shah, chairman of realtors’ apex body CREDAI, said the Budget will provide thrust to the real estate sector and boost housing demand but said there was no need to keep a cap of Rs 45 lakh for the deduction. He requested the government to extend this benefit to all homebuyers without any cap of value of housing property. NAREDCO President Niranjan Hiranandani said, “The government’s idea to provide affordable housing (to all) will be a possibility and is successful in almost all cities except Mumbai where there is a paucity of land. I believe that the additional incentive of Rs 1.5 lakh on interest on loans borrowed under the affordable housing would give a boost to the real estate sector further.” CREDAI President Satish Magar said it is heartening that the association’s long-standing demand to reform archaic rental laws and promote public housing on government land figure among the immediate policy agenda outlined in the Budget.
CASHEW EXPORTERS
Cashew exporters’ body CEPCI hailed the move to hike import duty on cashew kernels. It said the move will help revive the crisis-hit industry. As per the budget 2019-20 document, the customs duty on both plain and broken cashew kernels will be raised. However, the council’s request for hike in the import duty and placing roasted cashew under prohibited items is yet to be decided, Cashew Export Promotion Council of India (CEPCI) Chairman R K Bhoodes said. “Also, the request to withdraw 2.5 per cent import duty on raw cashew nut which was much awaited by the industry is not seen addressed in the budget,” he said. The CEPCI also demanded the government to put a complete ban on the import of roasted cashew, semi-finished cashews and husk, and to roll back the import duty on raw cashew nuts.
TRAVEL AND TOURISM
The government’s focus on infrastructure development, improving accessibility and plans to develop 17 tourism sites into world class tourist destinations in the Union Budget for 2019-20 will give the sector a boost, according to travel and tourism players. “From travel and tourism industry point of view, while we are pleased to hear of the focus on infrastructure related spends with investment of 100 lakh crore over the next five years, it is critical that we are able to build better connectivity to key tourist destinations as that still remains a sore point for one of the fastest growing service industry in India,” MakeMyTrip Founder and Group CEO Deep Kalra said. The announcement to develop 17 iconic tourism sites into world class tourism destination is important one as it will add momentum to solving connectivity issues, providing better facilities, promotion and branding where private participation can also play a role, Kalra added. Echoing similar views, Thomas Cook (India) Chairman and MD Madhavan Menon said: “With this Budget, the government has addressed the key fundamental challenges like liquidity, FDI, employment and infrastructure development.” For travel and tourism sector, it is encouraging to see focus being given to the aviation industry, he added. “A noteworthy initiative is the setting up of 17 iconic tourism sites as world-class tourist centres, coupled with a Digital Repository as a bank of documentation on India’s tribal history and heritage,” Menon said.
# UNHAPPY WITH BUDGET
TELECOM INDUSTRY
The telecom industry was left disappointed as the Budget did not provide much-anticipated relief from high taxes and levies imposed on the sector. The Tower and Infrastructure Providers Association (TAIPA) Friday said the government’s move to raise customs duty on optical fibre cable to 15 per cent from the current 10 per cent will seriously impede rollout of 5G in India. Tilak Raj Dua, Director General of TAIPA, said the budget was “lacklustre” as hike in the basic custom duty would result in higher capital expenditure, eventually “burning a hole in the pockets of the telecom industry which is already facing financial turmoil”. Apex industry body Cellular Operators’ Association of India (COAI) said it remains optimistic that the government will provide the much-needed financial relief and impetus to the industry in its post-budget review, given the importance of the sector in driving inclusive growth. “We laud the government for a progressive and forward-looking budget that has provided the building blocks for a USD 5-trillion economy… But industry needs help, which was not forthcoming in the Budget,” Rajan S Mathews, Director General, COAI said.
EDIBLE OIL INDUSTRY
Edible oil industry body SEA Friday expressed disappointment over the Budget 2019-20 saying the government did not announce any package to boost oilseed production despite its vision talked about focusing on bringing import bill on cooking oils. Only proposal that figured in the Budget was withdrawal of exemption from customs duty of 7.5 per cent on palm stearin and fatty acid, which has practically no impact on the struggling palmoil refiners, it said in a statement. Mumbai-based Solvent Extractors Association of India (SEA) said the expectation of the industry was higher. “The industry was expecting the finance minister will announce package of incentives to boost the domestic oilseed production and curtail the import of edible oil by imposing higher duty and also announce creation of ‘Oilseed Development Fund’. It is disappointing that the above did not reflect in the Budget,” it said.
PHARMACEUTICALS
Hyderabad, July 5 (PTI): The union budget which was presented by Finance Minister Nirmala Sitharaman has not offered any impetus to the growth of pharmaceutical and healthcare sectors, chairman of Dr Reddys Laboratories Sathish Reddy said Friday. Describing the budget as an incremental one, he said the emphasis on start-ups and education sector is a good move. However, there was nothing to fuel growth in the healthcare and pharma sectors, which is disappointing, he said. “I was particularly keen on seeing a change in the weighted deduction for research and Development which did not happen,” Reddy said. A positive policy move would have spurred R and D and innovation in pharma and other sectors, he said. Chairman of Apollo Hospitals group Prathap C Reddy said the healthcare major resolves to do its duty and join the nation in waging a war against the tsunami of non-communicable diseases that threatens the health of society, leading the country into a global initiative to stop the growth of NCDs in its tracks. “My compliments to the Finance Minister for outlining Modi 2.0 vision to take the nation to new heights over the next five years,” he said. Reminding citizens of their duty to the country, the budget presented a long-term vision to achieve a $5 trillion economy by 2024, he said in a statement. CII-Telangana chairman D Raju, at a press conference, termed the budget as prudent one and said the enhancement of corporate tax limit from Rs 250 crore to Rs 400 crore under 25 per cent slab would be a welcome move. The profits that the companies would make would be invested in new production capacities which would create more jobs. Interest deductions in the income tax has been enhanced. It is a welcome move. It is a big relief to home buyers, he said. It would improve the housing market which in turn would improve the cement sector steel sector and a lot of other factors of construction, Raju said.
JEWELLERY
The gems and jewellery industry is disappointed with the Union Budget 2019-20, saying the increase in customs duty will negatively impact the sector, encourage grey market and make jewellery more expensive in the domestic market. All India Gem And Jewellery Domestic Council chairman N Anantha Padmanaban said the increase in customs duty and GST will hike the prices by 15.5 per cent, which will benefit the grey market. “Smuggling is already on the rise and this move will further boost the grey market, which will provide 4-5 per cent discount making it attractive for consumers. We expect the grey market will increase by 30 per cent,” he said. Padmanaban said, the all industry bodies are planning to meet the finance minister next week to request immediate roll back of hike in customs duty. Echoing a similar view, World Gold Council Managing Director, India, Somasundaram PR said “Today’s announced import duty hike on gold from 10 per cent to 12.5 per cent will negatively impact India’s gold industry. It will impede efforts to make gold as an asset class particularly when gold prices are already rising globally.” In addition, he said, the grey market will thrive which will dilute efforts to reduce cash transactions. Gems and Jewellery Export Promotion Council vice chairman Colin Shah said the Budget 2019-20 is very disappointing for the industry. “This move will harm the exports of gold jewellery, increase the cost of doing business and smuggling will grow,” he added. IBJA director national vice president and PNG Jewellers CMD Saurabh Gadgil said, the hike in customs duty will have a dampening effect on the market. “However, the push for digitalisation and the shift to a cashless economy will strengthen the organised players in the industry, creating transparency and positive impact market sentiment. The introduction of zero tax liability for those in the Rs 5 lakh income will also align with our expansion in tier II-III markets, and augurs well for the industry as a whole,” he added.
TRUCKERS
A national truckers’ body has accused the Modi government of trying to destroy them given the Budget proposals to impose Re 1 cess on diesel and 2 per cent TDS on cash withdrawals of over Rs 1 crore. The All-India Motor Transport Congress also alleged that there is a move to make way for foreign players into the industry through such moves. “The hike of Re 1 in diesel cess (and on petrol) and levy of 2 percent TDS (tax deducted at source) on withdrawal of cash of over Rs 1 crore in a year will further cripple the transport sector. The transport sector is cash-based and has already been reeling under many other issues,” the chairman of its core committee Bal Malkit Singh said. Delivering her maiden Budget, finance minister Nirmala Sitharaman citied the softening crude prices as the reason for slap a Re 1 cess on each litre of diesel and petrol. “The insensitivity to this sector is not new but the new finance minister was expected to be more considerate given the faith reposed by more than 15 crore road transport fraternity in the Modi government,” he said. Singh also called for necessary amendments in the Finance Bill to take care of the transporters concerns.
