The Hindu : Business : Thumbs up to Budget

Online edition of India's National Newspaper
Friday, Jul 09, 2004

Business

Business

Thumbs up to Budget

By Ramnath Subbu

MUMBAI, JULY 8. The Union Budget 2004-05 has been largely welcomed by Indian corporates and industry given its thrust on agriculture and infrastructure. Also, given the short notice to come up with a `feel-good' Budget, industry feels that the Finance Minister has at least addressed several of their concerns although some sectors feel ignored.

The shipping fraternity has welcomed the introduction of tonnage tax as an alternate to corporate tax. Vijay K. Sheth, Managing Director, Great Eastern Shipping Company, said, "The adoption of the tonnage tax has been a great relief for the Indian shipping industry especially at a time when it is on the threshold of expansion. However, the other income of shipping companies would continue to be taxed at corporate rates.''

"Tonnage tax will provide Indian shipping a level playing field vis-a-vis international shipping companies and definitely with the right taxation environment for seafarers, Indian shipping companies can be globally competitive,'' said Sanjay Mehta, Managing Director, Essar Shipping. The Finance Minister's announcement scrapping the 16 per cent excise duty on tractors was "just what the doctor ordered for the ailing farm sector,'' said Anand Mahindra, Chairman & Managing Director, Mahindra & Mahindra. ``It is not clear whether inputs will also be excise free, but even so, the excise exemption for tractors should lead to a significant expansion of demand in the industry,'' he said.

The freeing of the handloom and powerloom sectors from CENVAT and the withdrawal of the mandatory CENVAT chain as well as a new tax regime for the sector was viewed as "a good pick-up for the unorganized and organized textile sectors,'' according to K. K. Maheshwari, Group Executive President, Textiles, Aditya Birla Group. Mr. Maheshwari said the Budget had indirectly addressed the Multi-Fibre Agreement, which will come into effect from January 1, 2005, but "the competitive aspect of the industry should have been addressed post-haste particularly because from 2005 onwards, India and China will be the majors in this sector.''

Shashi Ruia, Chairman, Essar Group has lauded the setting up of an inter-institutional lending group for infrastructure projects. However, regarding steel, he said, "the same could be considered for industries like steel which provide critical inputs to the infrastructure sector. On balance, the Finance Minister has looked after all major aspects barring the requirements of quality steel manufacturers of the country. The rise in excise duty with a reduction in customs duty will merely encourage low quality steel being dumped into India. This perhaps needs a rethinking in light of what the industry has gone through over the last five years.''

In order to encourage R&D in the automotive sector, the Finance Minister announced a 150 per cent deduction of expenditure on in-house R&D. "This is a right step which will enhance India's attractiveness as a highly competitive, low-cost base for global majors for doing sophisticated automotive R&D in Asia,'' said K.V.Shetty, President, Automotive Component Manufacturers Association of India (ACMA).

Printer friendly page
Send this article to Friends by E-Mail

Business