Pre-Budget

Analysis
2017-2018
 INTRODUCTION
2016 was a year marked with unprecedented events. The year saw major economic upheaval at Indi-
an as well as global level. With the danger of a global economic slowdown-partly brought about by
the Chinese markets crash- looming over the major nations of the world, 2016 was full of challenges
and uncertainties. First, Japan shocked the markets announcing negative interest rates. Then, Brexit
Vote caused major economic ripples across the world. It heightened the likelihood of other major
developed economies to take protectionist actions. Further, OPEC nations decided to cut supply, first
time since 2008, driving up the oil prices sharply. The US Presidential election result was also a
matter which ruffled the financial markets across the globe.

In the Indian context, however, Demonetization took the centre stage like no other. What came as a
surprise to all also created massive turbulence in the markets; gold prices rose sharply and real es-
tate took a beating. This volatility coupled with the FED rate hike announcement induced a lot of cap-
ital flight, which in turn pushed up the dollar to new heights. In the backdrop of such volatility, Indias
image as a favourable investment destination has now been slightly tarnished.

On the GDP front, India recorded high growth of about 7.4% in the first two quarters. However, a
consumption shock due to demonetization has pushed the growth rate below 7% for 3 rd quarter and
further below for the 4th-estimates by IMF, World Bank and leading international agencies predict the
growth to be in the 6.5-6.8% range. The GDP estimates of the year 2017-18 have also been revised to
below 7%.

The three indicators of fiscal efficacy- Inflation, Fiscal Deficit, and Current Account Deficit- saw a lot
of movement over the year. On account of falling prices of food and beverages, inflation rate came
down to a 2-year-low of 3.4% in December 2016 from 5.69% in January 2016. A fall was observed in
the WPI and CPI towards the last months of the year. The Current Account Deficit has been steadily
going towards comfortable terrain since the past two years. CAD in the third quarter was $3.4 Billion.
However, increase in oil prices will deliver a blow to the Trade balance. The fiscal deficit was also
largely under control. The government had set high standards targeting 3.8% Fiscal Deficit. The gov-
ernment might not be able to achieve the target due to below par performance in quarter 3 and
quarter 4(E).

In light of the weakening macro-economic vitals of the Indian economy, it becomes essential that the
government gives a push to the economy to revive the consumption and bring back the economy on
the erstwhile expected growth curve. An increase in government spending is not only expected but
also becomes warranted in the backdrop of comfortable inflation and fiscal figures. The banks have
initiated the process by reducing lending rates. Industry looks forward to an effective transmission of
rates to revitalize domestic demand and investment.
The governments initiatives like the Skill India, Start-Up India, and Make in India promise to boost
the countrys growth by pushing the manufacturing sector and thereby creating employment opportu-
nities. However, these initiatives have not delivered any substantial results till now. It is expected that
the budget will provide a push necessary for smoother functioning and improvement of the aforemen-
tioned and other policies. The current government, with its bold and unprecedented moves like de-
monetization, has earned credit of trying to break through the policy paralysis to bring about transpar-
ency and efficiency in the system. Therefore, it is expected that the budget will address the areas which
have earlier been overlooked: youth unemployment (which is double that of the national level), widen-
ing of tax ambit (dependent on the GST roll out) and a push to agriculture sector.
 BUDGET AT A GLANCE
2016-17 2017-18
Budget Budget Estimates
Revenue Receipts 1377022 1626870

2 Tax Revenue (net to centre) 1054101 1242882

3 Non-Tax Revenue 322921 383987

Capital Receipts (5+6+7)$ 601038 610989

5 Recoveries of Loans 10634 10315

6 Other Receipts 56500 70625
Borrowings and other liabili-
7 533904 621410
ties *
Total Receipts (1+4)$ 1978060 2329220
Non-Plan Expenditure 1428050 1609601
10 On Revenue Account
1327408 1500163
of which,
11 Interest Payments 492670 566571
12 On Capital Account 100642 109438
Plan Expenditure 550010 719619
14 On Revenue Account 403628 567401
15 On Capital Account 146382 152218

Total Expenditure (9+13) 1978060 2329220

Revenue Expenditure
17 1731037 2067564
(10+14)

Of Which, Grants for crea-

18 166840 201876
tion of Capital Assets

19 Capital Expenditure (12+15) 247023 261656

Revenue Deficit (17-1) 354015 440694

(2.30) (2.75)

Effective Revenue Deficit (20

187175 238818
-18)#
(1.20) (1.49)

Fiscal Deficit {16-(1+5+6)} 533904 621410

(3.50) (3.87)
Primary Deficit (22-11) 41234 54840
(0.30) (0.34)

With the consumption crunch that the country is facing, the fiscal expenditure will increase because of
which the government will not be able to achieve the target of 3.5% of Fiscal Deficit as estimated.
According to our analysis, the fiscal deficit would be 3.87%.
 Taxation
-Anand Singhania & Chintan Patel
OUR EXPECTATIONS
Decrease in corporate tax rate from 30% to 25%
Expected change in income tax slab :
0-4,00,000Rs-0%'
4,00,000Rs-8,00,000Rs -10%
8,00,000Rs-12,00,000 Rs-20%
12,00,000Rs and above-30%
Government to add a new Fat tax @5% on junk
food and sugary drink.
Under Section 80C provides for overall deduction
of R1.5 lakh for all payments, like principal amount
of housing loan, insurance premium, contribution
to PF, etc. This upcoming Budget is likely to pro-
vide additional deduction for payment of principal
amount of housing loan of Rs.50000.
The Finance Act, 2016 that levied surcharge @ 15%
on individuals having total income exceeding Rs. 1
crore is expected to be removed.
Deduction under 80C will be increased from
150000 to 200000.
Discount of 0.75% on certain products and services
will be provided if the payment is made through
digital media.
SECTOR IMPACT
The tax rate on domestic companies very high in
comparison with the global standards. This reduc-
tion will help bring Indian corporate to global
standard
As the income and inflation both are increasing it
is expected that the tax slabs will increase in or-
der to give relief to the weaker section of the so-
ciety.
The revenue collected from such taxes can be
used to increase the Governments health
schemes and to discourage people from consum-
ing unhealthy products.
This increase in deduction will give maximum
benefit to all the employees.
In order to do away with the inequality the gov-
ernment has decided to scrap off this tax as the
high net worth individuals were taxed excessively.
This will give more disposable earning to the ma-
jority of Indian population.
This will help to increase the transparency in the
transactions.
 Taxation
-Anand Singhania & Chintan Patel

OUR EXPECTATIONS SECTOR IMPACT

Standard Deduction of 20% on gross salary of This will help to increase the disposable income of
employee with maximum limit of Rs.1,00,000 will employee.
be provided

Some other changes proposed are as follows- These exemptions were negligible before and is
surely going to benefit the society if increased.
1.Children Education allowance to go up from
.
100/month to 1500/month.
2.Children Hostel expenditure allowance is ex-
pected to increase from 300/month to 2000/
month.
3.Medical reimbursement to increase from
15000/year to 30000/year.
4.Clubbing of Minor childs income to increase
from 1500/ month to 5000/month.

.
 Cement
OUR EXPECTATIONS
Excise Duty Rationalization and
Simplification.
New Fringe Benefits.
Standardisation of Construction
Materials.
Tax Clarity on REIT's .
-Kumar Abhishek & Sohini Das
SECTOR IMPACT AFFECTED COMPANIES
Duty rates on cement are one of
the highest i.e. 12.5% and next
only to luxury goods. Other core
industries such as coal, steel
attract duty around 6%. The re-
duction of excise duty would
encourage the cement indus-
tries and bring it at par with
other core and infrastructure
industries.
With the housing market
melting following the cash ban,
new housing projects and their
demand have taken a hit. To
support housing related sectors
the government should provide ALMOST ALL CEMENT MANU-
for higher allocation to infra- FACTURING AND LOGISTICS
structure at large which will in COMPANIES.
turn encourage cement indus-
try.
In Union Budget 2017, policies
on standardisation of major
construction materials should
be addressed so that cartel such
as in cement industries can be
controlled which is affecting the
cost of housing to the end user.
Tax clarity on REIT's will ease
the investment options and in-
duce more inflow of capital to-
wards this industry.
.
 Infrastructure
OUR EXPECTATIONS
Since banks have become more
reluctant towards funding infra-
structure projects due to in-
creased number of defaults in
the sector, it is expected that
we should have more number
of specialised infrastructure fi-
nancing institutions. These spe-
cialised capital raising institu-
tions could serve as the much
needed complimentary source
of funding infrastructure pro-
jects.
There has been very less success
in financing of projects that are
stuck in the middle and requires
last mile funding. It is expected
that there should be a dedicat-
ed allocation of funds for such
projects either via special situa-
tion funds or carving out a por-
tion of funds from National In-
vestment and Infrastructure
Fund (NIIF) for immediate fund-
ing of such projects.
Minimum Alternative Tax (MAT)
has been quite regressive for
the infrastructure projects espe-
cially during the early stages of
projects after theyre commis-
sioned. . A reduction in MAT is
expected for long gestation in-
frastructure companies.
-Shubham Jajodia & Shreyansh Agarwal
SECTOR IMPACT AFFECTED COMPANIES
Financial additionality, raises IIFCL, IREDA, PFC, REC ETC.
the total quantity of invest-
ment, both in terms of DFI re-
sources and the private invest-
ment they can leverage as co-
investors. Policy additionality
may increase both the quantity
and quality of investment by
creating an enabling environ-
ment that is attractive to inves-
tors, and influencing the nature
of this investment to boost de-
velopment impacts.
If these stuck projects becomes R-INFRA, GMR, GVK, ESSEL AND
operational, it may lead to eas- ESSAR. ALSO BANKS LIKE AXIS
ing of bank NPAs. It will also BANK, ANDHRA BANK ETC.
lead to improvement in the con-
version rates in sectors such as
roads and highways.
Tax holiday on book profits will JSW ENERGY, TATA POWER,
not get compromised. IRR of IVRCL, GUJARAT FLURO CHEMI-
projects will be increased and it CALS ETC.
will attract more investments.
Companies may use this to
evade taxation.
 Infrastructure
-Shubham Jajodia & Shreyansh Agarwal

OUR EXPECTATIONS SECTOR IMPACT AFFECTED COMPANIES

Allocation of funds for infra- Reduction in red tapism of cru- SASAN POWER, ATHENA POW-
structure projects have to be cial projects due to multiple ER PROJECT, GMR INFRA, PUNK
beefed up at a rate significantly window clearance require- LLYOD ETC.
higher than the last couple of ments.
years, specifically for urban in-
frastructure, railways and roads
sector. It is expected that more
Greenfield projects should be
announced and a robust single
window clearance policy should
be set-up for rolling out com-
mercially viable projects.

Either due to bidding or financ- Tax compliance and litigation L&T, JAIPRAKAST ASSOCIATES,
ing or bidding requirements, costs can be reduced as well as LANCO INFOTECH, R-INFRA ETC.
Infrastructure companies create ease of doing business will be
multiple SPVs. It is expected enhanced.
that government announces
policies for tax consolidation or
one fiscal unit of taxation for
such companies.
IRB INFRASTRUCTURE, GMR,
Infrastructure Investment Trusts Developers can re-deploy their MEP INFRASTRUCTURE, R-
(INViTs) could be very crucial in funds for new projects. Ease of INFRA.
re-deploying the funds of devel- doing business for developers.
opers for new projects. Howev-
er, the current taxation system
has not allowed for encourage-
ment of INViTs. It is expected
that there should be complete
tax exemption, including MAT,
to developers who want to
move their assets or infrastruc-
ture projects into an InvIT.
 Infrastructure
-Shubham Jajodia & Shreyansh Agarwal

OUR EXPECTATIONS SECTOR IMPACT AFFECTED COMPANIES

While exemption from service It'll boost investor sentiments. GVK POWER AND INFRASTRUC-
tax is available for specified in- TURE, TATA POWER, ADANI
frastructure projects such as POWER ETC.
railways, airports etc, similar
benefits are not enjoyed by
equally critical areas such as
power as well as public
transport sector. This leads to
higher tax costs for such infra-
structure projects. Hence, it is
expected that these sectors get
a similar benefits in the upcom-
ing budget.

Modernisation or expansion of It'll boost investor sentiments, LANCO INFRATECH, GAMMON

existing infrastructure projects also lead of modernization of INDIA, L&T.
are very important. However, antiquated infrastructure.
there is an ambiguity in the Indi-
an tax laws as whether such
modernisation or expansion
projects qualify as a "new" in-
frastructure facility in order to
become eligible for an income-
tax holiday.

Benefits of GST may get re- Reduction in trucking time as ALL THE LOGISTICS AND
duced in the lights of poor infra- well as faster mobility of goods TRANSPORT COMPANIES.
structure. GST is expected to
reduce stoppages, consequently
reducing trucking time, more
highways will multiply that
effect. It is expected that there
should be greater focus on the
Bharatmala highways initiatives
along with Sagarmala ports.
 E-commerce
OUR EXPECTATIONS
Simplifying tax structure.
Simplified registration and less
paper work.
Start-up India, Start-up India
funding.
Technology at the helm.
Income tax Benefits for individu-
als / trust investing in Gold
Monetization Scheme.
Increase Excise Duty exemp-
tions from 1.5 crore to 5 crore.
Start-ups, especially those in the
online space, must be exempted
from direct and indirect taxes
including MAT.
-Mohit Oberoi & Rituraj Roy
SECTOR IMPACT AFFECTED COMPANIES
Speedy implementation of GST ASKMEBAZAR.COM
will rationalise supply chain by PLANMYMEDICALTRIP.COM
addressing taxation issue. Futur-
istic tax policy that will address
the complications of the current
tax structure. Less ambiguity in
taxation laws.
Save on precious time and ex- PEACHMODE.COM
pend the energies on building
the business in stead. Strategies
on improving the purchasing
power of customer-enabling
organisations.
Help the players in the online GRABHOUSE
commerce industry. Removing KRAFTLY.COM
angel tax. Exempting start-ups
from direct and indirect taxes-
assisting start-ups to get a foot-
hold in the market. Introduction
of GST would reduce the cost of
inter-state movement of goods,
and ease the documentation
requirement for small mer-
chants.
Fund allocation for speedy tech-
nology improvement and skill
development .
Bring down Gold Imports.
Encourage small scale manufac-
turing and prevent black mar-
keting.
Reduce compliance burden and
also cash outflows.
 FMCG
-Mohit Oberoi & Rituraj Roy

OUR EXPECTATIONS SECTOR IMPACT AFFECTED COMPANIES

Boosting the rural sector and Increases demand and con- ALL FMCG COMPANIES LIKE
agricultural productivity. sumption from rural sector. MARICO.

Providing benefits to the sala- Increases disposable income in ALL FMCG COMPANIES LIKE
ried tax payers. the urban markets and increase MARICO.
consumption.

Encouraging private investment. Generation of employment ALL FMCG COMAPNIES WHO

ARE PRODUCERS OF AYURVEDIC
PRODUCTS .
 BFSI
OUR EXPECTATIONS
Implementation of Banking
Transaction Tax (BTT).
Higher capital support for
banks.
Removal of service tax on digital
transactions.
Changes in capital gains tax in
the stock market and reduction
of securities transaction tax
(STT) on stock trading.
Increase in Service Tax in Capital
market brokerage.
Increase in the investment limit
for tax-saving equity mutual
fund schemes to Rs 2 lakh from
the current Rs 1.5 lakh.
Tax benefits to Debt-linked sav-
ings scheme and Rajiv Gandhi
Equity Savings Scheme (RGESS).
Extending Sec 54 EC benefit for
mutual fund schemes with lock-
in period of 3-5 years..
-Yashik Garg & Anil Shah
SECTOR IMPACT AFFECTED COMPANIES
More people under taxation TAXATION UNIT OF THE GOV-
ambit. Greater accountability ERNMENT.
and transparency. States with
less emphasis on banking sector
may lose revenue. May prove as
a disaster for rural economy. No
flexibility in taxation- Uniform
tax irrespective of income slabs.
Push for credit growth needed ALL BANKS UNDER BANKING
for the banks to better their bal- SYSTEM OF INDIA HOUSING
ance sheet and surely for the AND INFRASTRUCTURE SECTOR.
economy.
PAYMENT BANKS AND TAXA-
Increase in transactions under TION UNIT OF THE GOVERN-
digital platform to push the gov- MENT.
ernment move of less-cash India
and reduce the unaccounted
illegal wealth.
MUTUAL FUNDS AND STOCK
Increase in existing holding peri- MARKET.
od to 2-3 years for availing the
LTCG tax exemption. Reduction
in STT will promote people to
shift to more of financial assets,
increase in ST for capital market
brokerage will take a hit on
earnings of brokers.
MUTUAL FUNDS.
Increasing in savings rate for the
economy. Thus, excess funds
become available for lending to
corporates and SME.
FINANCIAL SERVICES.
Money flows into the hands of
citizens through various initia-
tives. Providing tax benefits like
this will uplift the savings and
investments rate which plum-
meted in few previous years.
 BFSI
-Yashik Garg & Anil Shah

OUR EXPECTATIONS SECTOR IMPACT AFFECTED COMPANIES

Listing of state-owned general Listing of GIC will provide more ALL INSURANCE COMPANIES.
insurance companies (GICS) . funds under the ambit of com-
panies as well as government.

Deduction under Sec on 80C for Boost to saving schemes and NBFC'S.
Deposits placed with Housing apart from this, improving cus-
Finance Companies. tomer sentiment towards de-
posits in NBFC.

Period of Carry Forward and Set Increase in the revenue of insur- ALL INSURANCE COMPANIES.
-off of Losses in Case of Insur- ance companies. And to push
ance Business and Hike in Limit citizens of India to take different
types of insurances to safeguard
of Investment under Section
themselves.
80C. Deduction in Respect of
Insurance Premium and En-
hanced Deduction of Life Insur-
ance Premium under Sec on 80C
of the Income Tax Act.
 Telecom
-Mayank Churendra & Mehul Choudhary

OUR EXPECTATIONS SECTOR IMPACT AFFECTED COMPANIES

We can expect reduction in tax-
ation and compliance costs
which has been a long-standing
demand of the industry and we
await such relief in the Budget
especially in the light of the fact
that the industry is laden with
high debt.
Reduction in taxation this sec-
tor will help operators to invest
more in Capex investment. And
as a result consumer tariff will
not go up. Commoditizing voice
calls and offering tiered data
tariffs would shift the business
model from a voice to a data
centric one. So their will be fall
in average revenue per user.
SAMSUNG, MICROMAX, INTEX,
FOXCONN.( All the mobile man-
ufacturing will get affected be-
cause of GST ,because as if now
mobile manufacturer use to get
state wise exemption, but now
there will be only one tax i.e.
GST.)

It is expected that the Govern- The government initiative of

ment will work on cyber litera- cyber literacy with stakeholders
cy. to increase the cyber literacy
will decrease the number of
prey to fraudsters.

There are chances that GST will According to analysts and in- BHARTI INFRA TEL, VODACOM,
dustry experts, telecom tower VIOM NETWORKS AND ERIC-
be more than 15%.
companies could miss out on an SON.
over Rs 2,000 crore annual sav-
ings opportunity on their diesel
bills with petro-products re-
maining outside the framework
of the goods & services tax
(GST) regime. And hence call
charges data rates may go up.

The industry is expecting a clar-
ification that spectrum acquired
and put to use prior to April 1,
2016 would be eligible for de-
preciation under section 32 of
the Act.
Expenditure on Technology ad-
vancement.
The industry believes that spec-
trum is in the nature of an in-
tangible asset and is thus, cost
incurred for acquisition of the
spectrum is eligible for tax de-
preciation under section 32 of
the Income-tax Act, 1961 (Act).
Technology enhancement will
lead to significant capital ex-
penditure and it will bring in the
latest class to the Indian cus-
tomers.
AIRTEL, IDEA AND VODAFONE
ETC are telecom companies will
be benefitted due to following
reasons: (a) Allocation of spec-
trum being a sovereign function
should not be taxed. (b) Non-
applicability of withholding tax
provisions on payments made
for spectrum trading/sharing.
Tax depreciation on spectrum
acquired prior to April 1, 2016.
 IT/ITES
OUR EXPECTATIONS
Higher budget allocation to im-
prove infrastructure including
telecom and internet.
Investing in increasing the cyber
security.
Abolish TDS which is leading to
precious working capital stuck
with Government for years
awaiting refunds, thus increas-
ing borrowing cost and im-
pacting growth.
Improved over-ground towers
and underground fibre cable
networks.
Easy loans (3-4% per annum )
should be provided by banks for
the purchase of personal com-
puters and cost of PC should be
allowed for deduction under
Section 80C of Income Tax Act.
Extension of the duty differen-
tial scheme to all ITA goods,
specifically for personal com-
puters (Desktop, Laptop).
-Jagannath Abhishek & Dhaval Nathwani
SECTOR IMPACT AFFECTED COMPANIES
Internet is the enabler of RELIANCE COMMUNICATIONS,
growth. A higher bandwidth can AIRTEL, VODAFONE, IDEA.
push the Digital India campaign
further. Infrastructure status to
digital payments network in ru-
ral areas promotes financial in-
clusion and payments.
Would enable secure online PAYTM, MOBIKWIK,
transactions and payments be- FREECHARGE, ITZCASH.
tween citizen and government
agencies.
Moving to tax and duty pay- ALL.
ments from sales to collection
basis would abolish the collec-
tion of upfront and reimbursing
later kind of taxes (TDS and SAD
on hardware). Currently TDS
refunds take 3-4 years im-
pacting working capital availa-
bility to grow business.
Increasing the number of Wi-Fi AIRTEL, BSNL.
hotspot which currently is very
low in the country.
Will increase the PC penetration INDIVIDUALS AS WELL AS ALL IT
and hence transform the coun- COMPANIES .
try to a digital and knowledge
economy trough the adoption
of PCs.
Comprehensive listing of CPE PC MANUFACTURING COMPA-
goods for Duty Differential NIES LIKE DELL, HP, LENOVO,
Scheme would further promote ACER AND HCL.
and implement Make in India
initiative. Representatives
sought that this scheme must
continue to exist in GST regime.
 IT/ITES
OUR EXPECTATIONS
Extend weighted deduction in-
centives for (a) research and
development expenses, and (b)
skill development expenses by
including software develop-
ment / IT in the relevant defini-
tions, given the importance of
such expenditure for the sector.
Reduce withholding tax rate of
10 percent on payments to
SMEs and Start-up software
companies, given the low mar-
gins in the sector.
Reduce the margins under the
transfer pricing safe harbour
rules (currently, between 20 to
30 percent) to help SMEs.
Grant tax credit for Equalisation
Levy to foreign companies by
entering into reciprocal agree-
ments with countries that im-
pose similar levies to avoid situ-
ation of double taxation.
-Jagannath Abhishek & Dhaval Nathwani
SECTOR IMPACT AFFECTED COMPANIES
As IT enabled services industry ALL MEDIUM TO LARGE COM-
embrace the influx of enterprise PANIES.
applications and cater to the
modern business requirements,
the sector expects unvarying
support from the Government
to promote R&D practises in the
country. To maintain its leader-
ship position, the sector looks
forward to continued support
from the Government to not
only ensure the financial viabil-
ity of the sector but also to trig-
ger a wave of innovation partic-
ularly on the backdrop of the
digital demand from global or-
ganisations. expenditure drives
economic growth.
Withdrawal of withholding tax ALL .
for overseas service purchases
increases the competitiveness
of IT businesses from India.
Will increase profitability. SME'S.
Overcome the menace of dou- FOREIGN COMPANIES.
ble taxation.
 IT/ITES
OUR EXPECTATIONS
Clarify that transfer of funds
from head office located in India
to branch office located outside
India and vice versa for meeting
day to day expenses should not
be subject to service tax.
Continue the focus on ease of
doing business and thrust on
development of technological
infrastructure.
Fostering digital literacy, im-
proved connectivity and access
to technology supported by rad-
ical government process re-
engineering and larger budget-
ary allocation for such initia-
tives.
Continued support to Start-ups
under the Start-up India initia-
tive.
-Jagannath Abhishek & Dhaval Nathwani
SECTOR IMPACT AFFECTED COMPANIES
Lesser taxes for companies hav- ALL.
ing foreign operations and vice
versa and thereby eradicating
the problem of tax evasion.
Would encourage foreign play- ALL
ers to set shop and thereby
bring in a technological edge.
The demonetisation measure DIGITAL PAYMENT GATEWAYS.
has triggered a positive impact
on adoption of digitization and
Digital India has set foot in a
true and meaningful sense. On
this backdrop, Government sup-
port in terms of tax rebates,
concessions for new-age tech-
nological innovations would
serve a long way towards fur-
ther enhancing Indias position
in the global Intellectual Proper-
ty (IP) landscape.
Job creation and subsequent STARTUPS.
employment growth.
 Agriculture
-Saheb Singh Bhatia & Anirudh Mohta

OUR EXPECTATIONS SECTOR IMPACT AFFECTED COMPANIES

Agricultural Land leasing Bill High allocations in agricultural
should be enacted by Niti Ayog credit will help the farmer to
to ensure secured ownership shift their focus towards high
value agricultural product rather
rights of land owners without
traditional rice wheat cropping
compromising on security of system.
tenure to tenants.
Investments aimed at improving Greater access to cashless trans-
the agricultural productivity as action is expected which will
tax free this will encourage the help the farmers to purchase
farmers to invest in mechaniza- seeds, fertilisers, other agricul-
tural inputs with ease.
tion and high yield variety
seeds.
Software and mobile application
Direct Benefit Transfer Scheme
to link the farmers and consum-
should be expanded to fertilizer er this would form a sub task of
subsidy programme. broader objective of NATIONAL
AGRICULTURAL MARKET more
Tax incentives to manufacturers
efficiently.
and the farmers for mechaniza-
tion in agriculture.
Profitability threshold of Indian
Take up the challenge of four
agriculture will raise above 45%
coloured revolution, to ensure and will double the agricultural
income security for farmers. production.
Good investments in Micro and
drip systems and focus on high
value agricultural sectors like
horticulture, fisheries, livestock
etc.
Concessional HYV Seeds to be
provided to raise the profitabil-
ity of the farmers and also Indi-
an agrochemical company to
get quick registration and pa-
tents of their products.
 Agriculture
OUR EXPECTATIONS
To offset the demonetisation
effect the government should
announce new schemes in this
budget such as increasing the
farm land coverage by redevel-
opments of barren lots. Pra-
dhan Mantri Krishi Sichai Yojana
should be focussed and good
allocation should be done.
Increased allocation in Acceler-
ated Irrigation Benefit Pro-
gramme.
Increased allocation in organic
farming as well as soil health
programme.
High allocation in animal wel-
fare Pashudhan Sanjivani, e-
Pashudhan Haat , budget em-
phasis on UNIFIED AGRLICUL-
TURE MARKETING scheme.
-Saheb Singh Bhatia & Anirudh Mohta
SECTOR IMPACT AFFECTED COMPANIES
Some incentives in R&D in agri- JAIN IRRIGATION, PARIXIT IN-
culture will boost the growth DUSTRIES LTD.
and also reduced excise duty
will help the farmer achieve
greater productivity.
It is expected that finance minis-
ter will cut the production cost
for the domestic manufacturers
and subsidy will be included for
the users and buyers of fertilis-
ers, tractors etc to encourage
their use this in turn will lead to
a wide spectrum of applications
and ease of acceptance of new
age equipment's, agrochemicals
and fertilisers.
Several states levy taxes and
duties on trading of farm pro-
duce and they may not want to
forego these. Punjab, for in-
stance, do not want to lose
the Rs.5,000 crore they earn
from this route.
 Automobile
OUR EXPECTATIONS
Consumers want taxes to be
lowered on passenger and com-
mercial vehicles.
Rationalise and simplify the tax
structure for the automobile
industry, inter alia, by subsum-
ing multiple levies and rational-
ising tax rates. GST rollout.
Boosting rural consumption, de-
mand and lower interest rates
on auto loans.
Incentivise exports and develop
infrastructure to boost the sec-
tor.
Lowering of excise duty.
-Arundhati Pol & Sunny Gehani
SECTOR IMPACT AFFECTED COMPANIES
Improvement in customer senti- HONDA CARS, MARUTI SUZUKI
ment and boosting consump- INDIA LTD. , HYUNDAI MOTOR
tion. It'll mean lesser tax income INDIA LTD. , TOYOTA.
for the government.
GST rollout, which is slated to ALL THE PLAYERS IN THE AUTO-
be from 1st July 2017, will sim- MOBILE SECTOR.
plify the taxation policy bringing
efficiency and ease of doing
business in the sector. This is
highly dependent of GST being
rolled out this year, which can't
be counted upon. The automo-
bile sector may be disappointed
in this regard.
The demand for two wheelers HERO, HONDA, TVS AND MOST
has fallen by 22% as a fallout of BIKE COMPANIES IN INDIA.
the Demonetisation move. The
rural sector consumption has
taken the biggest hit. Some in-
centives to boost demand will
help bring the two-wheeler
growth on track. Increase in
government expenditure.
It'll help in attracting more forex MOSTLY ALL THE PLAYERS IN
reserves. The sector won't just THE SECTOR.
be left at the mercy of domestic
demand and it'll give the sector
the legroom to grow.
This will give a push to the MOSTLY ALL THE PLAYERS IN
stalled industry growth in the THE SECTOR.
automobile sector due to falling
demand. Lesser tax income to
the government.
 Automobile
OUR EXPECTATIONS
A well regulated incentive
scheme for scrappage of old
cars (>10 years old).
Higher cost savings on Hybrid
and Electric vehicles. Lower tax-
es on hybrids, mild-hybrids and
electric vehicles.
The expectations are the gov-
ernment will revise the
weighted deduction for ex-
penditure on scientific research
to the earlier level of 200%.
-Arundhati Pol & Sunny Gehani
SECTOR IMPACT AFFECTED COMPANIES
The owners get a deal. The gov- HONDA CARS, MARUTI SUZUKI
ernment gets more money INDIA LTD. , HYUNDAI MOTOR
(excise duty, etc.). Automobile INDIA LTD. , TOYOTA.
production (hence jobs and
GDP) goes up. The steel industry
gets good quality scrap which
would otherwise have to be im-
ported. As a result, foreign ex-
change is saved. The entire
economy gets a boost. It has to
be implemented in a way that
doesn't antagonise the govern-
ment. Most people who use old
cars are pensioners who can't
afford new ones. It is essential
to keep their interest as a priori-
ty and that the process is car-
ried out with due diligence.
This will enable the conversion MAHINDRA, TOYOTA, BMW.
of India to a Electric vehicle na-
tion amid the rising hoo-ha re-
garding hike in fuel prices, rise
in carbon footprint and the
need for sustainable transporta-
tion. The lack of infrastructure
and the high initial costs are ma-
jor challenges.
The changing needs of the sec- MOSTLY ALL THE PLAYERS IN
tor require more funds for R&D. THE SECTOR.
Also, with the need for electric
vehicles to be made affordable,
a higher weighted deduction for
expenditure on R&D will enable
the companies to make head-
way in this regard. If the govern-
ment doesn't revise this to
200%, it'll be going back in its
own bid to promote the electric
vehicles.
 Defence
OUR EXPECTATIONS
A budget which will increase the
defence spending, especially on
capital expenditure in order to
buy the required arms and am-
munition.
Finalisation of Strategic Partner-
ship.
Disinvestment of DPSU's.
Export orientation of the com-
panies coupled with the Make
In India Push for Indian orders
should increase the sectoral
growth.
-Hardik Ogra & Keshav Raj Thakur
SECTOR IMPACT AFFECTED COMPANIES
Capital spending will increase ALL DEFENCE COMPANIES.
the business of defence firms in
India and help in job creation.
The quality of products may not
be the best in class and may
take more than desired time.
Give a fillip to the shortlisted ALL SHORTLISTED DEFENCE
firms and make sure that both FIRMS LIKE RELIANCE AND L&T.
private and public sector com-
panies can take part in it. One
company can be an SP in only
segment which may be detri-
mental to interests of major
players like L&T which are pre-
sent in a variety of sectors.
More money with government BEL, BDL ET ALL.
along with better corporate gov-
ernance standards. Loss of con-
trol in a sensitive segment.
Current paucity of orders makes ALL DEFENCE COMPANIES.EX
a case for more exports and FOREIGN FIRMS LIKE LOCKHEED
hence better economies of MARTIN.
scale. Export of weapons is a
sensitive sector and not all
countries could be exported
weapons.
 Oil and Gas
OUR EXPECTATIONS
A proper policy to deal with oil
fields that are up for renewal in
2020 (Pre NELP Oil fields), on
the lines of current policy which
has a provision of 10% profit in
NELP Oil fields.
Make capital expenditure in-
curred by city gas distribution
companies.
Reduction of cess on oil compa-
nies.
Clarity on effect of GST on sec-
tor.
Deregulating gas prices.
Removal of service tax on Explo-
ration activities.
-Hardik Ogra & Keshav Raj Thakur
SECTOR IMPACT AFFECTED COMPANIES
This will ensure that operators CAIRN AND OTHER COMPANIES
who are running oil fields (Pre- WHO HAVE OIL FIELDS IN 2010
NELP Auctions) will have pre- AUCTIONS.
dictability of future revenue
which will encourage the pri-
vate capital to invest in this sec-
tor as it will develop confidence
in the policies of the govern-
ment. This can dent the revenue
of the government as a new op-
erator would be willing to pay
more royalty to the govern-
ment.
Help in proliferation of gas net- DOWNSTREAM COMPANIES..
work in cities which is a desira-
ble objective as it will remove
the reliance from LPG.
Increased profitability of oil ALL UPSTREAM COMPANIES
companies which can be a driv- WHICH BOUGHT OIL FIELDS
er for more investment. Dent on OUTSIDE THE NELP FRAME-
revenue collection. WORK.
GST will not be applicable on ALL UPSTREAM COMPANIES.
petro products which can in-
crease the cost of companies as
they won't get input tax credit.
More market linked prices will GAIL.
encourage production and re-
duce the dependence on im-
ports.
Will increase investment in E&P UPSTREAM COMPANIES.
activities, help in increasing pro-
duction. Current revenue will
have to be forgone by GoI.
Sagar Agarwal
Komal Khetawat
Ayush Aggarwal
Raghav Somani
Finance Club
Akanksha Mittal
Symbiosis Infotech Campus,
Nishtha Halwai Plot No.15,Rajiv Gandhi Infotech Park
Shreshth Mishra Hinjawadi, Phase-1, Pune
Phone No. 9007791248
Akash Thakkar
Emailfinanceclub@scmhrd.edu