In this budget unfortunately there is nothing to tackle inflation on the contrary instead of reducing excise duty and service tax, tax has been imposed on more services and excise duty imposed on all the exempted items thought the number is small in percentage terms the overall compounding effect because of inflationary trend would be more and prices are bound to go up. Processed food products should be classified as basic food products and there is no point in taxing processed foods which are actually beneficial for rural prosperity as well as reducing wastage. I would strongly urge that both under excise and GST all processed food products should be at par with basic foods and there is no point taxing processed food products. MAT on SEZ units would be counter productive to exports on the contrary income tax on export income should have been exempted. Emphasis on infrastructure creation by announcing 15 new Mega food Park and on storage and warehousing facility for fruit and vegetable produce as well as incentives for strengthening cold chain at par with infrastructure are highly welcome.

Piruz Khambatta

President, All India Food Processors' Association.

DTC may provide succour to IT industry

The Union Budget lays specific emphasis on controlling fiscal deficit and accounts for adequate intervention from the RBI to curb issues of rising inflation. Sectors such as Agriculture, Infrastructure have been appropriately addressed in the budget but there isn't as much focus on the Information Technology industry. We believe that the inclusion of SEZs under MAT will reduce the productivity of companies, especially in the small and medium sectors which form a major chunk of the IT industry. While the increase of MAT from 18 per cent to 18.5 per cent is notable, it will not have drastic implications among companies. Although new services are included for Service Tax increasing the input costs, the efforts to streamline and simplify the refund mechanism is a welcome step. The much awaited clarification regarding taxation of Licensed Software has not come which is disappointing. Another welcome proposal is the reduction of tax on Foreign Dividends to 15 per cent. This may increase the fund repatriation to the Parent companies in India. Even though the budget does not mention any extension of the STPI scheme, we hope that the proposed Direct Tax code expected to be enforced in April 2012 will provide succour to the industry for its growth. We would also like to welcome the Finance Minister's consideration of reducing the corporate surcharge by 2.5 per cent which we believe will have a positive impact on the profitability of most companies. By enabling rural India to harness broadband internet, the Finance Minister has also provided a fillip towards the cause of penetrating internet to the grassroots of the country.

Jeya Kumar

Chief Executive Officer, Patni.

Electronics industry

let down

The support for green and energy initiatives, especially in the areas of automotive and solar, is worth noting in this year's Budget. Reduction in duty on LEDs will help boost growth of this technology and energy efficiency, since cost is one of the chief inhibitors for adoption of new energy efficient products. Additionally, sops for production of electric and hybrid cars, as well as encouragement for solar lighting will also benefit industry. Unfortunately, the Budget does not offer anything major for the Electronics and semiconductor industry in specific. We hope the government will address some of the issues to boost the local electronics manufacturing very soon as the Electronics Import bill is increasing at a rapid pace year after year.

Ashok Chandak

Sr. Director, Global Sales and Marketing, NXP Semiconductors India.

Opportunity lost to usher in housing reforms

Though certain parts of the budget shows the earnest intent of the Government towards Growth, Union Budget 2011 seems a missed opportunity for that much needed and timely impetus to the Real Estate & Housing Industry. More so as anticipation with respect to budget, was high from the Industry but ignored larger aspects which have a direct impact on RE Industry. Perhaps, the budget could have done much more which would have had a significant impact on growth of RE Industry at this crucial stage of revival that it is going through. The 1 per cent interest subvention on home loans in the LIG segment upto Rs.15lakh (previously Rs.10 lakh) is welcome and would definitely give some stimulus to the Housing Industry.

However it would have been better if this could have been up to Rs.20 lakh thereby benefiting a larger section of society as well as covering a wider customer base & product offering in this segment, which are presently out there in the market. Similarly, though increase in magnitude of priority home loan from Rs.20 lakh to Rs.25 lakh is welcome, the impact would have been substantial if this could have been enhanced to Rs.35 lakh. These suggested increases would perhaps have heralded market segmentation of home loans of Rs. 20 lakh and below and Rs.35 lakh respectively, thereby making them more in line with prevailing ground reality. The Government should have allowed FDI in Mutual Funds specific to Real estate Industry. This would have given a big boost to availability of finance.H.R.Girish

CEO, Vakil Housing Corporation Pvt Ltd.

Short on concrete steps to address any issue

The Budget is along expected lines. The Finance Minister left it to the DTC and GST Act introductions in April 2012 to address the Direct and Indirect tax reform and addressed only the more immediate issues on expansion of Service tax base, increase in basic exemption limit for individual income tax and input tax credit rationalization for exporters. On the whole, the budget leaves one with the feeling that all issues were spoken of but concrete steps to address these were not laid out. The fiscal deficit numbers look optimistic and we are not sure how the Govt will work within the boundaries of this budget without additional means to mobilize additional resources. The Disinvestment program also looks far too optimistic in view of the prevailing stock market and global economic situation. There are some strong directional statements like the FII participation in Infrastructure Bonds and Mutual Funds, significant increase in Budgetary support for Education, Agriculture and Rural employment , disbursement of subsidies directly for Kerosene and Fertilizers, reviewing FDI norms by Group of Ministers etc, which are noteworthy. IT Industry's demand for extension of tax holiday to STPI units on export proceeds appears to have not been met, but we would need to dive deeper into the fine print to see if there are surprises in store. Likewise, the impact of budgetary amendments in Service tax, particularly related to refund rules for IT exporters, needs to be examined more thoroughly before coming to conclusions.

Suresh Rao

Group CFO, Mindteck.

Big reforms missing

The Union Budget is growth-oriented and forward looking, preparing the Indian economy post global financial meltdown for a sustained course to attain double digit growth. Various steps have been taken in this year's union budget to give a boost to housing sector finance.

The existing scheme of interest subvention of 1 per cent on housing loans has been liberalised by extending it to housing loan up to Rs. 15 lakh where the cost of the house does not exceed Rs. 25 lakh from the present limit of Rs. 10 lakh and Rs. 20 lakh respectively. The proposal to create a Mortgage Risk Guarantee Fund under Rajiv Awas Yojana is welcome. This would guarantee housing loans taken by Economically Weaker Sections and Low Income Group households and enhance their credit worthiness.

To prevent frauds in loan cases involving multiple lending from different banks on the same immovable property, the Government has facilitated setting up of Central Electronic registry under the SARFAESI Act, 2002. This Registry will become operational by March 31, 2011.

While the Finance Minister seems to have done a fine balancing job under trying circumstances, astutely managing fiscal deficit while keeping an eye on growth, the Budget does fall short of ushering in big ticket reforms in issues that would have provided an impetus to the economy.

The implementation of MAT on SEZ is also an impediment for the developers and seems to a retrograde step. The complex tax structure in our sector also has not been addressed.

Getamber Anand

Managing Director, ATS Group.

Lack of sops

for IT sector

This budget is halfway between being a collage with the theme of equitable access of development, and a patchwork of policy correction. It really had nothing to offer the IT/ITES industry, except some bad news in parts. Not extending the STPI scheme is a big setback especially for SME and emerging companies which were anyway the worst hit by the recession.

This is sure to hurt the competitiveness of the Indian IT vis-à-vis new IT outsourcing destinations such as the Philippines, Vietnam and even Eastern Europe where the industry still enjoys many SOPs.

Suggestion of MAT being applied to SEZ is somewhat contrarian to the whole concept of SEZ. If implemented it is certainly likely to be passed to the companies housed in the SEZ and will affect both their competitiveness right down to their business plans in cases. MAT going up is a universal dampener.

There is some good news in parts for Domestic IT, the rural broadband expansion will means more digital access which is sure to throw up opportunities for innovative service delivery and ecommerce business models which are positives for domestic IT. But the reality of this will really depend on the pace, scale and method of rollout.

One consistent disappointment with the budgets in recent years has been the lack of incentivisation of Innovation and Skill enhancement through some vision steps like tax credits etc. This is adversely affecting the skill building within the vast human capital resource of India and is in part responsible for why IT/ITES still operates in clusters in big cities. In all, the big boys will recalibrate and see the budget as a pass through, and smaller players will still continue to wait for maturing of the ecosystem. No wonder that we have Billion dollar club of services big boys, but a Google or Apple emerging from India is still a far dream.

Lavanya Rastogi

President – OSSCube Solutions Ltd.

No frill , no thrill Budget

Increase in Exemption limit of Income Tax is a step in positive direction as it would buttress the household against runaway inflation and increase their disposable income which in turn would boost demand. Special care has been taken about Senior Citizens on tax front which is praiseworthy.

Decrease in cost of steel would mean the cost push inflation of bigger projects, both realty and infra, would be under control. In fact this step can give a boost to the overall demand especially in realty sector. Exemption of Central Tax on Food and related items will somewhat ease pressure on households. Increase in spending in Health, Agriculture and Infra are most welcome.

Auto demand especially in rural India can now get a good fillip as there has been no increase in any duties levied on this industry.

However, it should be mentioned that we would have been happier had FM addressed the issue of reforms and unemployment which have been given a go by it seems in this budget.

The issue of Black Money was also not addressed satisfactorily. Overall we would rate the budget as satisfactory,devoid of any shocks or surprises. Probably the best that a FM could do given the current scenario. In short “It's a No-Frill No-Thrill Budget.

Abhijit Roy

COO, Berger Paints.

GST rollout is welcome

We welcome the announcement for Good and Services Tax (GST) roll-out from April 1, 2012. The Technical Advisory Group (TAG) constituted after last year's budget had proposed a GST Network (GSTN) for managing IT systems including the common GST portal. The existing tax administration systems of the central and state departments will be integrated with this portal thereby providing a seamless system interaction for the users and stakeholders. The common infrastructure and service platform will unify the revenue consolidation process of the government departments at both state and central levels. As mentioned by the Finance Minister several states have already been working to establish the key business processes and render e-services to the citizens.

Vilas Kanyal

Head - Asia Pacific, Mastek Ltd.

Growth momentum

will continue

The Budget is largely aimed at continuing the growth momentum seen in 2010. The emphasis has largely been on bridging the digital divide through use of IT and technology. This will translate into boost for domestic IT consumption. The plan to build the National Knowledge Network to connect 1,500 institutions of higher learning and research through optical fibre backbone by March 2012 is a step in the right direction. Countries like Singapore have benefited immensely from similar initiatives. The increased allocation through the Bharat Nirman program to provide rural broadband connectivity to all 2,50,000 panchayats in the country in three years should bode well for more inclusive and sustained growth. Also stress on reforming education, healthcare and general administration are healthy indicators of future growth.

Kamlesh Bhatia

Research Director, Gartner.

Impetus to rural development

The National Innovation Council under Mr Sam Pitroda has been set up, with each state having a council for innovation. This seems to be perfect step towards creating a stimulus atmosphere for India grown E-commerce products such as Martjack to reach to masses and create village level entrepreneurs. E-commerce has enabled Indian manufacturers and retailers multiply its reach to global markets. With Indian online stores in the World Wide Web, the Etail sector has experienced a second coming in India. Etail has seen 30 per cent y-o-y growth in the Rs 27,000-crore e-commerce market in India. Rural Telecom and Rural Broadband are included in an overall allocation of Rs. 58,000 crore that includes other rural initiatives too. The government plans to provide rural broadband connectivity to all 2 lakh panchayats in three years. With broadband penetration in rural areas there is two way benefit opportunity for Rural India, Rural Indian Manufacturers can market their products and services to the world. Use of Broadband will increase their market expansion without depending upon intermediaries. Better price for their products and services and better profits and revenue. This will bring access to rural India, best trade practices, updated knowledge, quality products and profitable business offers.

Jeetendra Joshi

VP – Marketing, Reasoning Global eApplications Ltd.

Education sector gets recognition

Overall the budget has been positive and provides a platform for continued economic growth. The finance minister has outlined imperatives to keep fiscal deficit at 4.6 per cent, which is encouraging. The two sectors that have been prominently benefited are the education sector and the infrastructure sector and it is indeed a welcome and critical move. These have indirect benefits to the ITES industry. With Rs 520.5 billion allocated to the education sector, if spent in the right way will help create a strong talent pool. Education plays a pivotal role in the development in the country and sectors such as IT and BPO require special talent. This will only raise our bench strength which will eventually help in creating ready talent pool which will be good for the industry and good for the country. The rural BPO will benefit from this the most and thus smaller towns will gain employment from such investments. Infrastructure is a clear stand out in the budget; the government has allocated 23 percent higher allocation in 2011-12. This shows that the government is really concerned about the infrastructure development and we have been losing a lot of interest as a market due to the lack of good infrastructure. It is great to see the government making efforts to make critical changes.

Matthew Vallance

MD & CEO - Firstsource Solutions Ltd.

Infra-friendly Budget

The focus laid on the development of the infrastructure sector is unprecedented and hoped that the proposals made in the Budget will have a salutary effect in mobilising large resources required for the infrastructure sector in the coming years. Roll over of tax exemption for infra bonds, with a ceiling of Rs.20,000 crores for another year is also a step in the right direction. The decision to come out with a comprehensive PPP model is recognition by the Government of the success of this arrangement. It is heartening that the government has taken note of ILFI's suggestion to reduce the withholding tax on FII's investment in infrastructure from 20 per cent to 5 per cent. This will accelerate the flow of investment in this sector. We compliment the government for making a statement of intent for evolving a proactive manufacturing policy, steps taken for direct transfer of subsidies for people below the poverty line in the case of kerosene, LPG and fertilizers and hope that such exercises should be done for other goods as well in future. This will go a long way in plugging pilferages.

Mr Sushil Jiwarajka

President, Infrastructure and Logistics Federation of India.

Will help channel

US investments

Various announcements made in the Budget, such as reduction of withholding tax on FII investment in infrastructure from 20 per cent to 5 per cent, more exposure given to FIIs in investing in the Indian debt market, etc will help channelise greater investment from the US. Focus on developing supply chain for processed food is another area, that can motivate more American companies to invest in India. Steps being taken by the Finance Minister for fiscal consolidation and to limit over borrowing by the government, reducing the inflationary pressure, reining in budget deficit to the manageable level of 4.6 per cent of the GDP, etc are laudable proposals in the Budget. I compliment the Finance Minister for his statement of intent for evolving a pragmatic PPP model for the country. This should address to some of the vexatious issues pointed out by the US corporations while investing in India, such as delays in sanctioning the project, land acquisition, lack of clarity and uniformity among the state governments in attracting the foreign direct investment. IACC, he said, is in continuous dialogue with US corporations for motivating them to invest in sectors such as education, health, skill development and in improving the civic facilities, areas that have been underscored by the Finance Minister in his Budget speech.

Gautam Mahajan

President, Indo-American Chamber of Commerce.

IT, auto, FMCG, cement will get a push

I personally feel that budget proposals for 2011-12 are in right direction which aim at achieving plus 9 per cent growth in next fiscal with potential to arrest inflationary pressures on Indian economy , increase its revenue receipts and contain fiscal and current account deficit, besides recovering capital markets.

The budget will fuel growth in sectors such as auto, IT, cement and FMCG. Other welcome measures include increase in priority sector lending by banks to an extent of Rs one lakh crore and interest subvention of three per cent for timely payments would give a big boost to rural sector and also give them higher purchasing power.

In addition , this step will push up agriculture and horticulture in a direction that the UPA government wants to take it to assure India higher agricultural production and ensure food security for all Indians, especially below poverty line. Also we hold the view that finance minister should have increased ceiling for foreign direct investment in insurance sector from current level of 26 per cent to 49 per cent as Indian industry was keenly anticipating it to happen which could not happen due to political compulsions.

Otherwise, in given circumstances, the Finance Minister presented industry and aam admi friendly budget which deserves to be hailed without any groaning and whatever adjustments are brought about on customs and excise front are to satisfy needs of present time. The budget in totality is likely to accelerate participation of FIIs in Capital markets, assure higher FDIs inflow and facilitate process of disinvestment.

Subhash Chand Aggarwal

Chairman and Managing Director, SMC Group.

Parallel excise duty exemption is positive

The Indian Electrical & Electronics Manufacturers' Association (IEEMA) has welcomed the parallel excise duty exemption, to match the full exemption from CVD available to import of capital goods, for domestic suppliers producing capital goods needed for expansion of existing mega or ultra mega power projects announced Budget proposals for 2011-12. We welcomed the stability in central excise and service tax rates and the cut in corporate tax surcharge from 7.5 per cent to 5 per cent, but the increase in the rate of MAT from 18 to 18.5 per cent is a dampener. Several critical issues faced by the domestic power equipment industry with regard to a level playing field vis-à-vis imports that have not been adequately addressed in the budget proposals, according to IEEMA.

These include the service tax exemption demanded for the power sector on the lines given to other infrastructure segments, imposition of basic customs duty on import of equipment used for mega power projects, duty free import of CRGO electrical steel (a critical raw material for manufacturing transformers) till domestic production commences, etc. Given the huge effort required in rural electrification, the hike in Central Plan allocation for Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) from Rs. 5,500 crores to Rs. 6,000 crores is far too less. The Restructured Accelerated Power Development and Reforms Programme (R-APDRP), which is primarily focussed on reduction of AT&C losses, should have been allotted more funds. It is surprising that the Central Plan allocation for R-APDRP has been reduced from Rs. 3,700 crore last year to Rs. 2,034 crore this year, There has been no significant enhancement of allocation of funds for the power sector.

Vimal Mahendru

President, Indian Electrical & Electronics Manufacturers' Association.

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