What the India Inc expects from Jaitley's 1st Budget

Whether it be tax sops, investment incentives or opening up of the sector to foreign investment, India Inc wants it all from finance minister Arun Jaitley who will present the Budget on July 10.  

Sectors including power, realty and cement are under pressure and are hopeful that the government announces favourable reforms that will help them improve their balance sheets. Other sectors also have a long wish list for the finance minister.

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Realty sector  

Builders and construction majors have been crying hoarse about the high interest rate and muted growth in the sector.  

Realtors body CREDAI has sought tax incentives on development of affordable housing projects and interest rate reduction on home loans to below 7 percent in their budget wish-list to boost growth in the sector.  

Single-window clearance for the real estate project and industry status to the sector were some other demands made by Confederation of Real Estate Developers Association of India. 

"Allow Tax (direct and indirect) concessions for affordable housing projects," CREDAI Chairman Lalit Kumar Jain said in a statement. 

Jain said the affordable housing should be treated as priority sector and favoured a separate policy to boost this segment.  

CREDAI Chairman mentioned that industry is going through tough times. "Sales have come down, home loans numbers are dropping and cash crunch is delaying the deliveries".  

Jain also advocated an industry status for the realty sector, which would pave the way for easier funding to the developers at lower interest rate. (PTI inputs)  

Says Mehul Thakur – Director, Viva Homes 

*Infrastructural development has been at the forefront of the new government’s agenda on account of its potential to propel economic growth significantly.

*We have already seen the positive impact of infrastructure development on the real estate markets. Therefore, it is essential that growth of the sector be maintained and policies and incentives to boost the development of the sector are introduced.  

*We have great expectations from this budget, starting with support to incentivise affordable housing and permit higher tax exemption limits on interest and principal repayments for home buyers. The government should also focus on ensuring a separate industry status for real estate which will help Boost Domestic Bank lending, Foreign Direct Investment and External Commercial Borrowing. Since the deduction of Rs 1, 50,000 for interest paid on home loan was introduced in 2010, the property rates have skyrocketed and multiplied four or five times.

*We request the government to enhance the limit of interest payment of loan to at least Rs 5,00,000 per annum. This will give impetus to the housing industry, thus boosting the economy in the long run.  

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Energy Sector

The sector has been grappling with issues like lack of financial support from the government, stagnant tariff and high interest rates on loans. This is what industry players expect from the Budget. 

Manoj Kumar Upadhyay, chairman and managing director of solar power company, Acme  

*The sector needs financial support to develop solar thermal technology which has great potential.  

*There should also be clear policy with feed-in-tariff which will expedite the implementation of the solar projects across the country.  

*Solar sector should be given a sector status so that the repercussion of power sector does not impact financing of the solar projects.  

*Solar companies should be added in the list of priority lending for the banks so that the sector can get access to cheaper debt funds. 

Anurag Garg, vice president, Schneider Electric India (Solar)  

*We hope a macro-economic framework will be put in place, linked to global renewable policies that permits solar equipment manufacturers a level-playing field, while simultaneously allowing the sector to become investor friendly.

*A strong policy framework should give the utilities the position whereby they can offer to supply solar deployment or lease schemes to their consumers. 

*Greater harmonisation in the policies of the Centre and the States is also imperative, based upon the best practices of different policies. This will ensure that no stakeholder works at cross purposes and will thereby foster a stable policy regimen across India that attracts more investments and greater interest from developers.  

*All budgetary policies should also consider the long-haul interest of investors and suppliers that underpin the long-term viability of projects, instead of incentives that promote short-term interests"   

Ved Prakash Mahendru, CMD, EON Electric Ltd  

*The government should extend the period of tax benefits for another 10 years for the special industrial zones created in Himachal Pradesh and Uttarakhand to ensure that the heavy investments already made and the experience gained which were lost in setting up the plants and in policy paralysis for effective implementation of the industrial growth can now be put to use.  

*The government should encourage setting up cluster of similar industries for 100 per cent utilisation of high quality common facilities such as import of raw materials, testing of products and convenient distribution of products all over the country and abroad thus creating millions of new job opportunities.  

*The technical Universities such as IIT Delhi, Roorkee, and Pant should be encouraged to take up research in LED Lights which have 60 – 80 per cent higher efficiency than traditional lights. This will also provide LED lighting engineers to the fast growing LED lighting industry. These R&D trained engineers / skilled / semi-skilled workers will have great job opportunities in such Industries."

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Cement Sector

Cement majors like ACC Cements, UltraTech Cements and JK Lakshmi Cement are reeling under pressure due to their inability to pass on recent hike in freight rates due to customers in monsoon as demand is weak during this period.  

There are other factors like high logistics and fuel cost, slowdown in infra projects and high interest cost has put a lot of pressure to most cement players.  

Here’s a gist of what industry players expect from the budget  

*The government should promote low cost housing, which in turn will encourage cement sales.  

*The government should announce more highway and road projects on public-private partnership model which will boost the cement sector.  

*Duty free import of coal, gypsum, pet coke which are key ingredients to manufacture cement.  

*The sector should be given a ‘declared good’ status which automatically lower taxes to 4 per cent in all states.  

*The government should give some tax relief to the industry.  

* The cement industry is putting up waste heat recovery plants so as to derive more energy from the same energy resource. The government should support this initiative as it requires huge capital.  

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IT Sector 

Though online retailing, cloud computing and e-commerce are leading to rapid growth in the IT industry, there are critical issues which the sector wants the government to consider in the upcoming Budget.   

IT industry’s trade body Nasscom has said:  

We request the government to streamline procurement process for technology products and services including SME participation, settle long pending dues on projects executed for central and state government and provide incentives for adoption of IT across sectors. 

Mohit Jain, an analyst from Anand Rathi brokerage firm   

*In 2011, the government had imposed  an 18.5 per cent Minimum Alternative Tax (MAT) on booked profits of  SEZ developers and units. This rate, if reduced to 7.5 per cent, would lower tax rates for many IT companies, especially those where effective tax rates at the company level are closer to the MAT rates.  

*Dividend tax from foreign subsidiaries, if lowered, could help the sector in terms of efficient cash movement across countries.  

*Increase in the withholding tax on royalties and fees for technical services essentially increases costs of doing business for Indian IT.   

*National e-governance plan: Allocation (including new projects) would be positive for Indian IT companies.   

*Tax sops to create employment in tier-2 cities, given infrastructure challenges faced in these areas.  

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