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The cut in excise duty on automobiles in the interim budget will help exports of engineering items, according to the Engineering Export Promotion Council (EEPC) chief.
“The employment-oriented engineering sector, which encompasses a large number of MSMEs, will be contributing about $65 billion to the overall export revenue 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.
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 duty on capital goods, which should give impetus to capital spend, and white goods, which should give impetus to consumer spend,” he said.
Kanabar, however, noted that the non-withdrawal of one-year income tax surcharge on individual assessees was “surprising and disappointing.”
‘Positive step’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 a 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, he said.
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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