Union Budget 2019-20: Reaction of Industry Stalwarts

Nadir Godrej
Managing Director
Godrej Industries Limited
"The Chemical Industry is one of the major contributors to India's exports; and we from the Industry were expecting strong support from the budget in terms of taxes, export support and incentives. However, there was one change which we were not expecting - the withdrawal of custom duty exemption on CPS , PFAD and other fatty acids which was available to manufacturers of Oleochemicals and Soaps, resulting in custom duty of 7.5 percent on the Raw Material Input. This has resulted in an inverted duty structure for this segment of the Chemical Industry, since the custom duty on the finished products is zero. We believe that this could be through an oversight and would expect this to be corrected going forward with representation from the Industry. We are also hopeful, outside the Union Budget, that the Government will provide alternative support mechanisms and incentives in lieu of the export benefits and incentives (like MEIS) which might expire during the current fiscal.", said Nadir Godrej, Managing Director, Godrej Industries Limited

Jaydev V. Sanghavi
Executive Director
Aarvi Encon Limited
"During the union budget announcement, the government mentioned its plan to spend 100 lakh cr on infrastructure and development over the next 5 years. This vision brings out an opportunity to open enormous roadmaps for our country, hoping to generate employability, especially engineers pertaining to the civil sector in order for project executions and constructions, proving to be positive in our line of business activity. Taking India forward through technology in both urban and rural areas, the government also spoke about Big Data and AI which will improve the aspects of decision making, speed and accuracy resulting in the ability to benchmark and track the progress of developmental projects. Thus, recognizing to be very promising for years to come. Overall, this is a positive move by the Government as it also acknowledges to look at the labour rules and ease them with times to come", said Jaydev V. Sanghavi, Executive Director, Aarvi Encon Limited

Priyamvada BhumkarManaging Director
Soujanya Color Pvt Ltd
"An Opportunity Missed. The budget 2019, could have been a lot more wholesome by addressing the pressing needs of the country with respect to creation of jobs, inspiring investment, and growth. It seems to have missed this opportunity.

While the overall focus of the budget on the farm, rural and urban poor sectors is laudable, it does not do enough for providing a fillip to industry or a business. While the FM set a vision for India to be propelled into a USD 5 trillion economy, there is no clear plan to achieve the same. There is a thrust on infrastructure spending by the government, as a means to stimulate growth; however the balance sheet does not seem to match as the required sourcing of funds for such spending is not clearly spelled out.

Sale of Air India and dilution of other public sector undertakings need to be a waitand-watch affair to see how they pan out. Borrowing funds in foreign currency as a means of raising capital for bridging the expenditure gap would need to be looked at carefully in the uncertain and volatile conditions of foreign trade and money markets. Financial outlays on health, education, and defense seem to be curbed. Levy of tax on petrol and diesel could lead to increase in prices of daily commodities. Push for converting the entire country to EVs in a six year time frame while no plans for the IC vehicles would be a challenge to the industry. Lastly the additional tax burden of 2 percent and 5 percent on the higher income bracket is a dampener to investor sentiment and could further drag down the investment climate in the country. The budget was an opportunity to usher in much needed reforms by having a larger outlook but the government seems to have focused too narrow and missed the opportunity to pull the economy out of the slump state", said Priyamvada Bhumkar, Managing Director, Soujanya Color Pvt Ltd

Satish ReddyChairman
Dr. Reddy's Laboratories Ltd
"The expectations from the Union Budget 2019 were that of a bold reformist budget, but it turned out to be an incremental budget at best. The emphasis on start-ups and on the education sector is a good move. However, there was nothing to fuel growth in the healthcare and pharma sectors, which is disappointing. I was particularly keen on seeing a change in the weighted deduction for R & D which did not happen. A positive policy move of this kind would have spurred R & D and innovation in pharma and other sectors", said Satish Reddy, Chairman, Dr. Reddy's Laboratories Ltd

Pramod Chaudhari
Executive Chairman
Praj Industries India
"At the outset, the Union Budget 2019 is an incremental and positive one focusing on all-round development of the Indian economy. The primary focus has been towards reversing the weakening growth, boosting domestic and foreign investments, rapid infrastructure building and also at creating a conducive business environment for start-ups and entrepreneurship. In particular, the Government's plan to build a supportive ecosystem for manufacturing green energy technologies as well as initiatives for clean water, we believe, is a step taken in the right direction to create and build a clean and green nation. Further, with India set to become a 3 trillion dollar economy this year, we believe the Government has undertaken positive steps and reforms to promote growth and development of the economy, in the years to come", said Pramod Chaudhari, Executive Chairman, Praj Industries India

Satish Wagh
Chairman & Managing Director
Supriya Lifescience Limited
"The budget pointed out that the Indian economy has added one trillion dollar in last five years through various Government initiatives and reforms , and is poised to grow to be a 3 trillion dollar economy in the current year. Underlining the importance of 'Make in India' initiative, a number of initiatives have been proposed towards fulfilling this goal as part of a framework for kick-starting the virtuous cycle of domestic and foreign investments, with particular emphasis on Micro, Small, and Medium Enterprises (MSME). The Budget has mainly focused on ease of doing business especially for MSMEs, in addition to emphasizing on enabling growth for traditional industries while offering them business and technology incubation facilities, which is commendable. The dispute resolution cum amnesty scheme called "the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019" being introduced for resolution and settlement of legacy cases of Central Excise and Service Tax, which is a very good opportunity to the taxpayers. The proposed scheme covers past disputes of taxes which have got subsumed in GST namely Central Excise, Service Tax, and Cesses. The scheme also provides relief from payment of interest and penalty. For voluntary disclosures, the relief is regarding waiver of interest and penalty on payment of full tax dues disclosed. The person discharged under the scheme shall also not be liable for prosecution. Another commendable step taken for the Industry sector, is under the Interest Subvention Scheme for MSMEs, 350 crore has been allocated for FY 2019-20 for 2 percent interest subvention for all GST registered MSMEs, on fresh or incremental loans. It will not only incentivize informal businesses to embrace the GST regime, but also ease and enhance the credit flow to eligible the business. As announced in the budget, the start-up channel for Doordarshan will help budding entrepreneurs to shape their ideas and guide them about complex issues of compliance and taxation. The proposal to discourage business payments in cash and levy 2 percent TDS on cash withdrawal exceeding 1 crore in a year from a bank account will bring in tax compliance and also increase revenues for the government. Filing of single monthly GST return will provide a big relief for MSMEs on the compliance front. It is a welcoming step for the new initiative wherein the startups and investors' return-filing will not be subject to the scrutiny for angel tax. Angel Tax has emerged as one of the key issues faced by the Indian startup ecosystem. In the Budget, the Finance Minister has stated that special administrative arrangements will be made by the Central Board of Direct Taxes (CBDT) for pending assessments of startups and redressal of their grievances. This vital step will help startup ecosystem of the nation. The Finance Minister has also mentioned that the Government will create a payment platform for MSMEs to enable filing of bills and payment thereof on the platform itself. This will help eliminate delays in payment and give a boost to investment in MSMEs. Another step taken towards reducing disputes is: the Government is proposing to streamline multiple labour laws into a set of four labour codes. On the Customs duty, the Finance Minister said the proposals are driven with the objectives of securing country's borders, achieving higher domestic value addition through Make in India, reducing import dependence, protection to MSME sector, promoting clean energy, curbing non-essential imports, and correcting inversions. Finance Minister stated the importance of the programmes viz. Pradhan Mantri Gram Sadak Yojana, Industrial Corridors, Dedicated Freight Corridors, Bharatmala, Sagarmala, Jal Marg Vikas, and UDAN for enhancing physical connectivity through various modes. The said initiatives will improve logistics, reduce transportation cost, and increase the competitiveness of domestically produced goods. Another good step was taken by the Government to give further impetus to India's growing influence and leadership in the international community. It was decided to open Indian Embassies and High Commissions abroad in countries where India does not have a Resident Diplomatic Mission as yet. In Financial Year 2019-20, Government intends to open four new Embassies. This will not only increase India's overseas presence, but will also enable the Embassies to be more accessible and to provide better public services, especially to the local Indian community in these countries. The Indian Development Assistance Scheme (IDEAS) provides concessional financing for projects and contributes to infrastructure development and capacity building in the recipient developing countries. It is noted that the said scheme will be revamped during the current financial year. Another big policy put forth by the Finance Minister on 'One nation One grid' for easy power availability at one price across states is also a very stimulating factor for the industry. Further, in the Union Budget, it has been proposed to extend the lower rate of Corporate Tax to 25 percent for all the companies with annual turnover up to Rs. 400 crores, which is also a good step taken by the Government as currently this rate is only limited to the companies having annual turnover up to ` 250 crores", says Satish Wagh, Chairman & Managing Director, Supriya Lifescience Limited.

Sanjeev Taneja
President & Managing Director
Evonik, Region India
Economic survey and budget, laid down vision of India becoming USD 5 trillion economy by year 2024. Budget is growth oriented and forward looking. However, we need to continue to implement structural reforms to achieve this economic goal especially ease of doing business, reforms in labor laws, contract enforcement, and disposal resolution judicial reforms. Roadmap for future sustainable growth is pointing in the right direction with focused impetus for job creation via targeted investments in infrastructure and intent to infuse new vigor of enhancing India's rural economy.

In addition to the above, the finance minister also highlighted Government's plans for inviting global companies to set up high-tech manufacturing facilities in advanced technology areas such as solar photo voltaic cell, lithium storage, semiconductor fabrication, solar electric charging infrastructure, computer servers, laptops, etc. Government has also specified that they shall grant investment linked income tax exemptions to such manufacturers. Growth in specialty chemical sector will certainly get a boost with infrastructure development, housing, increased investment in manufacturing facilities in general, and in high technology areas such as solar OV, EV, and Lithium batteries. Fitness of energy sector and competitive cost of utilities will attract investments in the chemical sector. Indian market offers a great demographic landscape and demand; however, a large part of the specialty chemical industry is currently served through imports. More targeted incentive programmes for investments and R & D are needed to attract FDI", says Sanjeev Taneja, President & Managing Director, Evonik, Region India