The cut in excise on automobiles in the interim budget is set to help exports of engineering items, according to the EEPC chief, who added that the cut by Finance Minister in the excise duty in certain manufacturing industries like cars and two-wheelers would help the export of key engineering goods, which are poised to become the top contributors to India’s export basket.

“The employment oriented engineering sector, which encompasses a large number of MSMEs, would be contributing something like $65 billion to the overall export shipments of $326 billion, as targeted by the government. However, to achieve this target and to improve upon the same, the manufacturing sector needs a big push from the government to sharpen India’s competitive edge in the global market,'' said EEPC India Chairman Anupam Shah.

He noted that the government has indicated a growth rate of 6.3 per cent in merchandise exports during the current financial year, despite headwinds in the global market. India’s merchandise exports reached a level of $300.4 billion in 2012-13, registering a negative growth of 1.8 per cent over the previous year. However, during the current year, “we are seeing a definite turnaround,” added Shah.

Budget on expected lines

However, Dinesh Kanabar, Deputy CEO, KPMG in India noted that the “Vote on Account presented by the Finance Minister was on expected lines. The significant positive was the reduction of excise duties on capital goods, which should give impetus to capital spend, and white goods, which should give impetus to consumer spend.”

Kanabar, however, noted that the non-removal of one year income tax surcharge on individual assesses was surprising and disappointing.”

Speaking about the interim budget, Dinesh Thakkar, Chairman, Angel Broking said, “The fiscal deficit for FY2014 has been positively reined in at 4.6 per cent of the GDP vis-à-vis market expectations of 4.8 per cent of GDP. At least in the interim budget, the Finance Minister has estimated the fiscal deficit target for FY2015 at 4.1 per cent of GDP, presuming higher GDP growth and tax buoyancy, but it remains to be seen whether the estimates are unchanged by the new government that comes to the helm over the coming 2-3 months.”

Thakkar noted that the market borrowing programme was estimated to be slightly lower than market expectations, and that was likely to be “positive for yields at least in the near term. Excise duty cuts have been announced for sectors facing the major brunt of the slowdown, and hence the cuts for automobile production are positive for the automotive sector and for capital and consumer durables goods production, spelling good news for the manufacturing sector.”

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