Description
Budget helps to aid the planning of actual operations by forcing managers to consider how the conditions might change and what steps should be taken now and by encouraging managers to consider problems before they arise.
27th February 2013
Pre-Budget Expectations of Different Sectors FY2013-14
The Indian economy is going through challenging times in the light of low GDP growth, high inflation, increasing fiscal and current account deficit and sensitive to Congress political interests with an eye on upcoming elections in eight states. The Finance Minister of India will be placed the Union Budget 2013-14 in the parliament on February 28th, 2013, amidst high expectations to revive critical sectors. It is therefore extremely important for the government is likely to be focused on containing fiscal deficit and measured, pro-people and growth oriented budget. The recent reform measures over the past four months have rekindled business confidence and raised expectations of continuation of the same in the budget to boost economic growth.
Moreover, the Finance Minster (FM) has already set the target of bringing down fiscal deficit to 5.3% and tried to end profligacy of the past and presented a pragmatic budget. FM lay out roadmap for implementation Goods and Service Tax (GST) which will help remove the cascading effect of taxation and boost country growth potential by 1-2 percent. Low expectations for increase in headline corporate tax rates. Income tax slabs may be increased. The Centre assured the States that they would be adequately compensated for their losses on account of phasing out of Central Sales Tax (CST). The finance minister can be expected to step up efforts to thrash out a consensus on the pending reform measures such as hiking quantum of FDI in insurance and pension sectors.
First call India Equity Advisors Pvt Ltd
The Pre-Budget Expectations of different sectors
Health Care
Health care being a key issue of the budget and total spending by the government has been low averaging 0.9 percent of GDP in the last five years. The common strand in all of their wish lists was that give infrastructure status to health care so that the cost of interest can come down and the budget allocation for the health care should be increased to 2.5 percent of GDP to achieve the targets set for the XIIth five year plan and easing the norms for medical visas to attract more medical tourism. Remove service tax on ‘Medical Insurance and on indigenous medicine & equipment. Removal of import duty on equipment, specially diagnostic and imaging equipment like MRI and CAT scan which are not manufactured in India this will lower the cost for the patients and allow new technology to enter India.
Banking & Financial Services
The pending reform measures such as hiking quantum of FDI in insurance and pension sectors to bring net money comes back into the economy. The industry is expecting to increase of FDI limit in insurance sector by 49 percent. Capital infusion into state-owned banks and Increase in agri lending to create greater economic activity and slashed down off fixed deposit limits could be enhanced and it could improve the returns and then probably influence some flows into banks as it is a greater benefit to the stock market too. Lock-in period for tax saving deposits brought down to 3 years and bring it on par with tax saving equity linked savings schemes. The government may be slashed Securities Transaction Tax and levy transaction tax on commodity futures by cutting shortterm capital gains.
First call India Equity Advisors Pvt Ltd
Telecom
The Telecom sector demanding for infrastructure status which has been pending for a long period. An Infrastructure status will not only give it tax exemption but will also make it easier to borrow for telecom companies and Rationalization of multiple taxes and uniform tax structure. The government also looking to fill the gap of low rural teledensity and widening urban-rural penetration by providing connectivity to the remotest parts of the country. The industry also wishing that the budget should incentivize provision of telecom services in rural areas and potential proceeds from spectrum auctions in the upcoming budget. Promote Set Top Boxes manufacturing in India government may slashed down the excise and customs duty on set top box currently which is 5 percent.
IT& ITes
IT & ITes struggling with increasing costs and global uncertainty at the government duly considers and aid the sector in creating a stable environment. The sector enlarging in emerging areas like KPO, R&D, Cloud and E-Commerce etc.,
Transfer Pricing provisions should not be applied to tax neutral transactions which merely add to the administrative compliance. Removal of the minimal contiguous land requirement of 25 acres for SEZ eligibility and road map for new SEZ Policy to further improve IT exports. Withdrawal of the levy of MAT which casts a huge burden on SEZ units. Non-issuance of service tax refunds continue to pose the biggest challenge for the sector
First call India Equity Advisors Pvt Ltd
Roll back of taxation & rationalization of treatment of software as "Royalty” which is subject to tax in India. E-Commerce companies expecting eased for marketing and sales taxes by Govt. and make more and more retailers switch to e-commerce business. Inverted duty structure for manufacturers of IT products. Nil rate of CST against Form C purchases of ITA products manufactured in India. Removal of Basic Customs Duty on IT accessories. Enhancement of MRP abatement.
Metals and Mining
FM could increase the import duty on gold, which was already a steep 6% and Production tax on jewellery. Copper industry seeks import duty cut on copper cathodes. The tariff duty applicable on import of copper cathode is 5% ad valorem, while copper concentrate attracts no duty. Import duty on iron ore may be removed and the reduction of export duty. To support domestic steel industry raise in the duty on some steel imports.
Capital Goods
The capital goods sector suffering with the sluggish domestic industrial growth bearing the brunt of slowdown in investments across sector. Overall, it expects the Budget to be positive for the capital goods sector. Companies facing payment delays from SEBs. Service tax on power project services must be exempted.
First call India Equity Advisors Pvt Ltd
Duty exemption for deemed exports is expected. Reduction in VAT on energy efficient products Hike in import duty of 6-10% on power equipments. Removal and exemption of customs duty and Imported capital goods for specified industries from Current duty being 0-5%.
Auto
The auto industry is already reeling under sluggish demand.Auto industry hopes for excise duty and service tax cut on small passenger cars and two wheelers to 10% from 12% to encourage consumer buying. The steep increase in the additional duty for diesel variants and large cars and utility vehicles.
Oil & Gas
The petroleum & natural gas sectoris the critical element in propelling other sectors of the economy by constitutes over 15% of the country’s GDP. The sector looks forward in this budget for the fiscal incentives that would boost the Sector’s capital outlay.
Extend the Tax holiday by providing flexibility to claim it in a block on refining projects to be extended till end of 12th five year plan Tax holiday should available for profits from the production of natural gas blocks. Changing the pricing mechanism for auto fuel Increase on import duty on polymers to support the local polymers Sector and removal or reduction of import duty of all petro-chemical inputs
First call India Equity Advisors Pvt Ltd
Conclusion
The focus of the Union budget presented by Finance Minster this year should continue be on Development of infrastructure is a pre requisite for growth and with the objective of aligning the rate structure to the overall GST framework for the uniform GST model. The major part of budgetary allocation towards the National Highways and Development Project and streamlining processes for speedier implementation of large infrastructure projects will help kick start the growth. The budget is hoped to provide enough funds for the government's flagship programmes food security, rural jobs, village roads, health and education in the budget. However, the Government can raise money through disinvestments in public sector by target an amount of Rs. 40,000 crore via sale of non-productive public sector assets and in state-run companies in the FY14. Some affirmative steps in the areas of rationalizing and consolidating subsidies will help reducing fiscal deficit. Rationalization of subsidies in Food, Fertilizers and Fuel, and also direct payments to the common citizen will help further reducing the fiscal deficit.
____________________________________________________________
Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but we do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt.Ltd. or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.
First call India Equity Advisors Pvt Ltd
Firstcall India Equity Research: Email – [email protected]
C.V.S.L.Kameswari U. Janaki Rao A.Nagaraju Ashish Kushwaha B.Anil Kumar
Pharma Capital Goods Oil & Gas & Cement FMCG, Banking & Pharma Diversified
Firstcall India also provides
Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s, Takeover Offers, Offer for Sale and Buy Back Offerings. Corporate Finance Offerings include Foreign Currency Loan Syndications, Placement of Equity / Debt with multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity & Debt Syndications and Structured Deals. Corporate Advisory Offerings include Mergers & Acquisitions (domestic and cross-border), divestitures, spin-offs, valuation of business, corporate restructuring-Capital and Debt, Turnkey Corporate Revival – Planning & Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs, GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and other international stock exchanges. For Further Details Contact: 3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071 Tel.: 022-2527 2510/2527 6077/25276089 Telefax: 022-25276089 E-mail: [email protected] www.firstcallindiaequity.com
First call India Equity Advisors Pvt Ltd
doc_263581610.pdf
Budget helps to aid the planning of actual operations by forcing managers to consider how the conditions might change and what steps should be taken now and by encouraging managers to consider problems before they arise.
27th February 2013
Pre-Budget Expectations of Different Sectors FY2013-14
The Indian economy is going through challenging times in the light of low GDP growth, high inflation, increasing fiscal and current account deficit and sensitive to Congress political interests with an eye on upcoming elections in eight states. The Finance Minister of India will be placed the Union Budget 2013-14 in the parliament on February 28th, 2013, amidst high expectations to revive critical sectors. It is therefore extremely important for the government is likely to be focused on containing fiscal deficit and measured, pro-people and growth oriented budget. The recent reform measures over the past four months have rekindled business confidence and raised expectations of continuation of the same in the budget to boost economic growth.
Moreover, the Finance Minster (FM) has already set the target of bringing down fiscal deficit to 5.3% and tried to end profligacy of the past and presented a pragmatic budget. FM lay out roadmap for implementation Goods and Service Tax (GST) which will help remove the cascading effect of taxation and boost country growth potential by 1-2 percent. Low expectations for increase in headline corporate tax rates. Income tax slabs may be increased. The Centre assured the States that they would be adequately compensated for their losses on account of phasing out of Central Sales Tax (CST). The finance minister can be expected to step up efforts to thrash out a consensus on the pending reform measures such as hiking quantum of FDI in insurance and pension sectors.
First call India Equity Advisors Pvt Ltd
The Pre-Budget Expectations of different sectors
Health Care
Health care being a key issue of the budget and total spending by the government has been low averaging 0.9 percent of GDP in the last five years. The common strand in all of their wish lists was that give infrastructure status to health care so that the cost of interest can come down and the budget allocation for the health care should be increased to 2.5 percent of GDP to achieve the targets set for the XIIth five year plan and easing the norms for medical visas to attract more medical tourism. Remove service tax on ‘Medical Insurance and on indigenous medicine & equipment. Removal of import duty on equipment, specially diagnostic and imaging equipment like MRI and CAT scan which are not manufactured in India this will lower the cost for the patients and allow new technology to enter India.
Banking & Financial Services
The pending reform measures such as hiking quantum of FDI in insurance and pension sectors to bring net money comes back into the economy. The industry is expecting to increase of FDI limit in insurance sector by 49 percent. Capital infusion into state-owned banks and Increase in agri lending to create greater economic activity and slashed down off fixed deposit limits could be enhanced and it could improve the returns and then probably influence some flows into banks as it is a greater benefit to the stock market too. Lock-in period for tax saving deposits brought down to 3 years and bring it on par with tax saving equity linked savings schemes. The government may be slashed Securities Transaction Tax and levy transaction tax on commodity futures by cutting shortterm capital gains.
First call India Equity Advisors Pvt Ltd
Telecom
The Telecom sector demanding for infrastructure status which has been pending for a long period. An Infrastructure status will not only give it tax exemption but will also make it easier to borrow for telecom companies and Rationalization of multiple taxes and uniform tax structure. The government also looking to fill the gap of low rural teledensity and widening urban-rural penetration by providing connectivity to the remotest parts of the country. The industry also wishing that the budget should incentivize provision of telecom services in rural areas and potential proceeds from spectrum auctions in the upcoming budget. Promote Set Top Boxes manufacturing in India government may slashed down the excise and customs duty on set top box currently which is 5 percent.
IT& ITes
IT & ITes struggling with increasing costs and global uncertainty at the government duly considers and aid the sector in creating a stable environment. The sector enlarging in emerging areas like KPO, R&D, Cloud and E-Commerce etc.,
Transfer Pricing provisions should not be applied to tax neutral transactions which merely add to the administrative compliance. Removal of the minimal contiguous land requirement of 25 acres for SEZ eligibility and road map for new SEZ Policy to further improve IT exports. Withdrawal of the levy of MAT which casts a huge burden on SEZ units. Non-issuance of service tax refunds continue to pose the biggest challenge for the sector
First call India Equity Advisors Pvt Ltd
Roll back of taxation & rationalization of treatment of software as "Royalty” which is subject to tax in India. E-Commerce companies expecting eased for marketing and sales taxes by Govt. and make more and more retailers switch to e-commerce business. Inverted duty structure for manufacturers of IT products. Nil rate of CST against Form C purchases of ITA products manufactured in India. Removal of Basic Customs Duty on IT accessories. Enhancement of MRP abatement.
Metals and Mining
FM could increase the import duty on gold, which was already a steep 6% and Production tax on jewellery. Copper industry seeks import duty cut on copper cathodes. The tariff duty applicable on import of copper cathode is 5% ad valorem, while copper concentrate attracts no duty. Import duty on iron ore may be removed and the reduction of export duty. To support domestic steel industry raise in the duty on some steel imports.
Capital Goods
The capital goods sector suffering with the sluggish domestic industrial growth bearing the brunt of slowdown in investments across sector. Overall, it expects the Budget to be positive for the capital goods sector. Companies facing payment delays from SEBs. Service tax on power project services must be exempted.
First call India Equity Advisors Pvt Ltd
Duty exemption for deemed exports is expected. Reduction in VAT on energy efficient products Hike in import duty of 6-10% on power equipments. Removal and exemption of customs duty and Imported capital goods for specified industries from Current duty being 0-5%.
Auto
The auto industry is already reeling under sluggish demand.Auto industry hopes for excise duty and service tax cut on small passenger cars and two wheelers to 10% from 12% to encourage consumer buying. The steep increase in the additional duty for diesel variants and large cars and utility vehicles.
Oil & Gas
The petroleum & natural gas sectoris the critical element in propelling other sectors of the economy by constitutes over 15% of the country’s GDP. The sector looks forward in this budget for the fiscal incentives that would boost the Sector’s capital outlay.
Extend the Tax holiday by providing flexibility to claim it in a block on refining projects to be extended till end of 12th five year plan Tax holiday should available for profits from the production of natural gas blocks. Changing the pricing mechanism for auto fuel Increase on import duty on polymers to support the local polymers Sector and removal or reduction of import duty of all petro-chemical inputs
First call India Equity Advisors Pvt Ltd
Conclusion
The focus of the Union budget presented by Finance Minster this year should continue be on Development of infrastructure is a pre requisite for growth and with the objective of aligning the rate structure to the overall GST framework for the uniform GST model. The major part of budgetary allocation towards the National Highways and Development Project and streamlining processes for speedier implementation of large infrastructure projects will help kick start the growth. The budget is hoped to provide enough funds for the government's flagship programmes food security, rural jobs, village roads, health and education in the budget. However, the Government can raise money through disinvestments in public sector by target an amount of Rs. 40,000 crore via sale of non-productive public sector assets and in state-run companies in the FY14. Some affirmative steps in the areas of rationalizing and consolidating subsidies will help reducing fiscal deficit. Rationalization of subsidies in Food, Fertilizers and Fuel, and also direct payments to the common citizen will help further reducing the fiscal deficit.
____________________________________________________________
Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but we do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt.Ltd. or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.
First call India Equity Advisors Pvt Ltd
Firstcall India Equity Research: Email – [email protected]
C.V.S.L.Kameswari U. Janaki Rao A.Nagaraju Ashish Kushwaha B.Anil Kumar
Pharma Capital Goods Oil & Gas & Cement FMCG, Banking & Pharma Diversified
Firstcall India also provides
Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s, Takeover Offers, Offer for Sale and Buy Back Offerings. Corporate Finance Offerings include Foreign Currency Loan Syndications, Placement of Equity / Debt with multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity & Debt Syndications and Structured Deals. Corporate Advisory Offerings include Mergers & Acquisitions (domestic and cross-border), divestitures, spin-offs, valuation of business, corporate restructuring-Capital and Debt, Turnkey Corporate Revival – Planning & Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs, GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and other international stock exchanges. For Further Details Contact: 3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071 Tel.: 022-2527 2510/2527 6077/25276089 Telefax: 022-25276089 E-mail: [email protected] www.firstcallindiaequity.com
First call India Equity Advisors Pvt Ltd
doc_263581610.pdf