In his last full budget before general elections in 2019, Finance Minister Arun Jaitley reduced corporate tax for 99 percent of the companies to 25 percent.
In keeping with his earlier announcement of reducing corporate taxation rate to 25 per cent, the finance minister made the change for companies with turnover of upto Rs 250 crore, up from Rs 50 crore announced during his last year budget speech. He said this would take care of almost 99 per cent of the companies and would have an impact of Rs 7,000 crore on government finances. Only about 250 companies would have a turnover above the cut-off level. An ID on lines of Aadhaar would also be set up for companies.
Jaitley also proposed to increase customs duty on mobile phones from 15 per cent to 20 per cent, on some of their parts and accessories to 15 per cent and on certain parts of TVs to 15 per cent. “This measure will promote creation of more jobs in the country,” he said.
The finance minister’s focus was on rural india and agriculture announcing a number of schemes and incentives.
RETAIL
Govind Shrikhande, Customer Care Associate and Managing Director, Shoppers Stop
“The increase of almost 10 percent in custom duty on products like perfumes, toiletries, sunglasses and footwear would have a significant impact on consumption. This coupled with the introduction of 10 per cent LTCG tax… in the equities market may dampen consumer sentiment.”
Kishore Biyani, Group CEO, Future Group was quoted by Economic Times as saying
“The steps announced in the budget will help attract larger corporate investments in the sector and make it more attractive for players like us to establish stronger linkages between the farmers of rural India and consumers of urban India. India is home to almost every climatic zones the world has, and therefore has the ability to produce almost every food produce. Investments in processing this produce will go a long way in helping more than half of the country’s population earn more for the hardwork they put in their fields.
The Union Budget does well to bring back the focus on what could be the two largest drivers of India’s economic transformation for the next couple of years – the agriculture and food processing industry and the growth of the MSME sector, that includes large employment generators like textile, footwear and leather industry.
Our experience has shown that not only is there a huge demand for such products in urban India, but this focus on value addition can bring in significant increase in farmer’s income.”
Sanjay Sethi, CEO & Co-founder, ShopClues
“With a deep focus on the social sector, this year’s budget has ensured that India will be clocking a healthy growth rate. We are happy that, Finance Minister has given a boost to infrastructure spends and to the MSME sector. The MSME sector is the backbone of our economy and this boost by the Government will ensure higher production and consumption.
With a focus on technology, the Finance Minister has provided great support to the digital industry. The government’s decision to create 500,000 wifi hotspots in rural India will enable broadband access to those with no or little access to the realm of the internet. This will help grow the digital commerce industry and encourage more people to adopt cashless economy.”
Sharad Venkta, MD & CEO, Toonz Retail
“The Financial Minister has remained focused on fiscal prudence even after announcing few popular measures like free health insurance and actions to increase farming income. FM has considered everyone starting from the bottom of the pyramid to the president of India, however, seems to have a forgotten person in between which is typical middle class. Almost no practical benefits for the typical service class which is the largest customer in the retail industry. Few of the actions like LTCG may be sentiment dampener.
In all this budget has missed a big opportunity post demonetization and GST to take steps to encourage consumptions.”
Nikhil Aggarwal, CEO, Campus Footwear
“We Welcome the increase in custom duty from 10 to 20 per cent on footwear industry, a great move to boost “Make in India” by the finance minister and we congratulate him for the same. Also Rs 2,600 crore allocation to the leather and footwear industry, will auger well for job creation in the country. Budget 2018 has a lot for the 40 per cent of the agricultural and rural population base, the national health cover and MSP is a fantastic step, which would result in generation of disposable income and inclusive growth for years to come.”
Jithendra Vummidi, Managing Director, Vummidi Bangaru Jewellers
“We feel that Budget 2018 is focused on boosting rural growth and to strengthen the economy. The government’s initiative to formulate a comprehensive Gold Policy to develop gold as an asset class is a welcome move. We are also pleased with the government’s step to establish a system of consumer friendly and trade efficient system of regulated gold exchanges in the country. Consumers may benefit from the revamped Gold Monetization Scheme. With the bulk of gold demand coming from Tier 2 and tier 3 cities in India, the budget’s impetus to boost rural and farm incomes will in turn benefit the gold sector and help in boosting the sales and revenue.”
Rohan Bhargava, Co-founder, CashKaro.com
“This year’s budget is more focused on driving growth in the traditional sectors of the economy and spend seems directed towards infrastructure, telecom, health, education. These are overall very relevant areas for our country to develop further and will have far reaching impact on industry and ease of living. However, the Budget lacks specific initiatives to directly boost Startups and corporates. We were hoping to see more details on simplification of tax structures, allocation of Startup India Fund, dissolution of Angel tax, extending tax holiday period, but many such topics have been completely left out by the Budget and perhaps may be addressed in the Annexure.
The proposal to extend the 25 per cent corporate tax rate to MSMEs with turnover upto Rs 250 crore (earlier Rs 50 crore) who are in dire need of support is a good one. The promise to revamp online loan sanctioning facility for MSMEs is encouraging. Additionally, the decision to ease EPF payments for women workers from 12 to 8 per cent for the first three years of employment shall boost employment of women in various sectors of the formal economy.
Setting up 5 lakh WiFi hotspots in rural areas is a progressive step though we were hoping for larger measures to boost Digital India. Ultimately, these are big and fancy numbers which surely sound promising. Our Government’s ability to execute these plans will determine whether India can really become the US $5 trillion economy we have set out to be.”
Ravi Saxena, Managing Director, Wonderchef Home Appliances
“A welcome budget with boost to food processing, infrastructure, healthcare for poor and needy, education and employment opportunities. 5 per cent reduction in corporate tax for MSMEs will boost compliance and investment. Important steps have been taken towards ease of doing business”.
Sushil Matey, Director-Marketing, Livpure
“The budget this year sees the government putting more focus on Make in India initiative. This will in turn help in improving India’s business. For the MSME sector, the budget brings big relief by lowering the corporate tax rate to 25 percent. With the renewed focus on rural wages and job opportunities, the budget will definitely help in generating employment and spur growth in the consumer durable sector.”
Neelesh Talathi, CFO, Pepperfry
“Union Budget 2018 is all about building India for the Future as it strikes the right balance between staying financially disciplined and investing for the longer term. The budget continues to boost the MSME sector with a slew of initiatives to address stressed assets, improved capital flows and lower taxes reducing the cost of doing business. We are pleased with the continued emphasis on Digital India including bringing 5 Crores for rural Indians online through 5 Lakh Hot Spots or the early investments in newer technology areas like National Programme for Artificial Intelligence or Block Chain Technologies. We believe that initiatives like e-assessments can be a game changer in improving India’s Transparency Index ranking facilitating a further flow of FDI into our country.”
Jagdish Lulla, CFO, Spykar Lifestyle
“The Budget 2018 has mainly focussed on measures for uplifting education, healthcare along with rural development and infrastructure. It has layered a base for a stronger agriculture sector. There has been an increase in the allocation for the textile industry and this industry will also benefit from reduction in Corporate tax since most of its units fall in this segment. India is looking to bring in social security reforms. There are no immediate benefits for the retail sector. The LTCG announced is on expected lines. No announcement of any changes in the personal tax slabs which would have lead to more disposable income, though is a dampener.”
Ishaan Sachdeva, Director, Alberto Torresi
“The footwear industry is in a recovering phase after a slow financial year 2017 in terms of sales. The rate of the consumption went down and the growth was stagnant after demonetisation and implementation of GST. I believe that the budget could have been better for our industry, as in the current scenario it would be difficult to for the footwear sector to rebound sales and consumptions.”
Sunay Gandhi, Founder and CEO, Pristine Fire
“The jewellery industry has a significant role to play in the country’s overall economy. While the customs duty on cut and polished colored gemstones and diamonds has gone up to 5%, we are looking for a positive outcome from the budget since the government has announced the formulation of a comprehensive Gold Policy to develop gold as an asset class. Gold exchange is also expected to be regulated by the federal government. The Gold Monetization Scheme will be revamped so that people can open gold deposit accounts in a hassle-free manner. These provisions are expected to promote buying and investing in gold jewellery. However the customs duty with 60 percent of gold demand coming from rural India, the budget’s focus on boosting rural and farm incomes could benefit us since Pristine Fire commits to bring the plethora of jewellery designs accessible to the patrons living in the remote corners of the country.”
Karan Behal, CEO, PrettySecrets
“The Corporate tax reduction from 30 percent to 25 percent for MSME’s with Rs 250 crore turnover seems positive.The allowance of 100 percent FDI for single-brand retail and the changes in the local sourcing norm are also welcome changes for the apparel industry to support the Indian textile segment. However, having no relief in GST, will, in turn, affect the business, since, despite the 5 percent GST, the additional tax on manufacturing increases the total cost of products.”
FMCG
Krish Iyer, President & CEO, Walmart India
“I must compliment Prime Minister Modi and Finance Minister Jaitley for intense focus on fiscal prudence in this budget. There is a huge focus in this ‘New Bharat’ Budget on inclusive growth and farm sector and despite that fiscal deficit targets have not been compromised.”
“Another pathbreaking focus in this budget is on Healthcare with the announcement of a Flagship National Health Protection Scheme, providing annual health insurance cover of ₹5 lakh per family supporting more than 10 crore vulnerable families.”
Arvind Mediratta, MD and CEO, Metro Wholesale India
“The corporate tax rate reduced to 25 per cent for companies with turnover up to Rs 250 crore in the financial year 2016-17, will also majorly boost the micro, small and medium business eco-system. This will augment the ease of starting own businesses while helping existing business also.”
Vivek Gambhir, Managing Director and CEO, Godrej Consumer Products Limited
“This aam aadmi rural focused budget to build ‘New India’, reinforces the Government’s pro-inclusivity, pro-growth, pro-reform agenda. It is largely positive for FMCG; proactive efforts to drive demand and increase consumption should revive growth. Over the last couple of months, as GST implementation is settling down, we are seeing FMCG growth come back on track and these initiatives will provide an additional fillip, especially to rural. However, the need of the hour is to ensure that these initiatives get translated into tangible results through faster implementation and better on-ground execution.
Improving income of agriculturists through initiatives such as MSP at 1.5 times the cost of produce, and Kisan Credit Cards for fisheries and animal husbandry, will help put more money in the hands of people in rural areas. Accelerating rural infrastructure projects will improve connectivity and thereby FMCG distribution networks. We hope to see much-needed job creation from increased infrastructure investments of 50 lakh crore rupees, boost to MSME and focus on skilling and education. Investments in women and child development and the potentially transformative introduction of a flagship National Health Protection Scheme will drive more inclusive growth. The standard deduction of 40,000 rupees for salaried tax payers will increase disposable income for the middle class and drive demand for mass products.”
Dhirendra Singh, Chairman, Manpasand Beverages Ltd.
“With the union budget 2018, the Government has shown a commitment towards reviving rural economy. Measures such as increasing farmers’ income and doubling investments in food processing sector will have a positive impact on industries that are connected to agriculture and allied sectors. The budget proposes to adopt a cluster approach for agriculture and it is a welcome move which will lead to better connectivity of produce and markets. By promoting agro-processing and agri-logistics, the Govt. has provided a fertile ground for streamlining and formalising the supply-chain sector. This will lead to direct linkages between farmers and food processing sector. A 100 per cent tax reduction for the likes of farmer producer companies is a welcome move as it will bring in more players in the business of post harvest value addition.”
Mansoor Ali, Chief Sales & Marketing Officer, Hamdard
“The budget for this year is focused on rural development and on availability of disposable income for the lower income class. This will give a definite boost to the consumption economy.Changes like creation of Agri-Market Development Fund with a Rs 2,000 cr corpus and increased allocation for food processing for this fiscal are welcome and will bring significant cheer. Any boost to the rural sector plays a crucial role for the FMCG sector, therefore the decision to enhance rural demand and the emphasis on farmers is a welcome move. Overall, I believe that this budget will help in constructing the long term prospects of the country’s consumption story, especially in the rural and semi rural markets.”
Oliver Mirza, Managing Director & CEO, Dr. Oetker India
“We welcome government’s move to reduce Corporate tax from 30% to 25% for companies with revenue of up to 250cr. This initiative will give a boost to company revenue and allow businesses like us to invest more in expansion leading to employment generation, which is a primary focus for the government. This move will also provide a great stimulus to the government’s initiatives like ‘Make in India’ and ‘Startup India’. Tax benefits combined with increased allocation to the food processing sector will give a great impetus to the overall FMCG industry.”
Sanjana Desai, Head of Business Development, Desai Brother’s Ltd (Food Division – Mother’s Recipe)
“The Union Budget 2018-19 is largely positive for FMCG. As anticipated by the FMCG sector, Government’s thrust on boosting the rural economy is welcoming. Increased allocation under various schemes such as MNERGA, rural infrastructure and others will not only increase rural income through employment generation by these projects but will also improve connectivity giving a boost to rural/agri businesses. Furthermore, doubling the investment in food processing to Rs. 1400 crore will which is growing at an average rate of 8% per annum is a great move and will promote establishment of specialized agro-processing financial institutions in this sector. Additional allocation of Rs. 500 crore to launch Operation Greens will promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management to provide basic vegetables to consumers all throughout the year. Apart from this, government’s focus on organic agriculture is definitely in support of the health & wellness industry.
Result of these measures will witness increase in rural consumption, improve overall rural economy and have a trickling effect on the corporates.”
Vivek Nirmal, Joint Managing Director & CEO, Prabhat Dairy
“We are glad at the government’s proposal for funds allocation which would help dairy farmers involved in animal husbandry. This move is a boost to dairy farmers as it will further enhance the yield from animals, quality milk and hence, more income for farmers.”
Varun Berry, Managing Director, Britannia Industries
The budget is focused on infrastructure and rural development and large scale employment generation. This provides a springboard to spur consumption and lead to faster growths across sectors.
While overall expenditure is projected to grow at 10 per cent during the year, development related spending is expected to grow faster at 13-14 per cent with spends on affordable housing growing at 30 per cent and on railways at 22 per cent. These spends could generate large scale employment which could thereby lead to a healthy and sustained consumer economy.
Simplification of the entire gamut of indirect taxes with the implementation of GST appears to have lightened the entire budget process significantly.
The reduction of corporate tax rate from 30 per cent to 25 per cent will have a positive impact on the growth trajectory of industry, though Companies contributing 90 per cent of tax collection are still waiting for their share of relief.
It is interesting to note that the Government’s resolve to improve tax compliance is bearing fruit. For the first time Personal Income Tax collection (at 3.3 per cent of GDP) is expected to be more than Corporate Income Tax (at 2.8 per cent of GDP).
While Long Term Capital Gain Tax could have a marginally negative impact on stock markets, the levy was expected and is not seen as being unfair.
A note of caution could be that while MSP increase would improve farmers’ earnings, it may lead to unintended inflation if it is not carefully managed.
Overall, it’s been a fine balance of long term measures, reasonably tight fiscal deficit without significant tax levies. We see this as a pro – growth budget.”
Albinder Dhindsa, Co-Founder and CEO, Grofers
“This year’s Union Budget presented by Honourable Finance Minister, Arun Jaitley, laid a strong focus on inclusive development and sustained economic growth. The measures introduced to bolster fields such as agriculture, infrastructure, MSMEs, youth and rural economy, are commendable. The growth focus around ease of living is laudable, and we are hopeful that this will anchor the future growth of the Indian economy and its citizens.
The measures announced today to benefit the farmer community and boost the agriculture sector will be instrumental in maximizing farmers’ incomes while reducing waste and inefficiencies that contribute to inflation. It is heartening to see the Government’s continued focus on education and digital connectivity to aid India’s transformation to become a digitally empowered, knowledge economy. The initiatives to bolster the growth and success of MSM.”
FOODSERVICE
Rahul Singh, Founder & CEO, The Beer Cafe, President NRAI
”The Restaurant Industry was eagerly looking at an announcement on re-introduction of ITC for restaurants from the Finance Minister. Ours is the only industry which does not receive this benefit. We have also been requesting for the introduction of a uniform policy that includes Single Window Clearance and Reduction in no. of Licenses required for operating a restaurant for a very long time. We are an industry worth Rs 3,52,000 crore which is expected to grow to Rs 5,52,000 crore by 2022. For an industry of this size generating over 8 million jobs, it is disappointing to see that no specific announcement was made.”
Ashish Bahukhandi, Founder, Dudleys
“I warmly welcome the budget although it doesn’t have much to offer the restaurant industry. But government’s decision of allocation a corpus of Rs 10,000 Crore to fisheries, animal husbandries, and related infrastructure will surely benefit our business as due to high demand and lower supply of meat products, at times we have to purchase food items at a much higher price. I greatly wait for this bill to come into action so that the food industry can match up with the required supply of meat products.”
Rizwan Thakur, CEO and Founder, Chevon Agrotech
“Budget 2018 is an extremely positive step and the action behind the words of this government of promoting the food processing industry. Besides the doubling of allocation for food processing infrastructure from Rs 715 crore to Rs 1,400 crore which is a positive step, the single most important step is expanding the Kisan Credit Card to the animal husbandry activities. Livestock farming is amongst the most stable & substantial revenue source for all farmers & this step firstly acknowledges it as an agricultural activity & will make credit available to the small & marginal farmers as well.
Even the investment of additional infrastructure in the food park shows displays the focus of this government on the organised food sector which will add to increasing the farmer income.
Even the Rs 5 lakh insurance scheme for farmers will go a long way in creating health security & thus encouraging farmers to get into investing in profitable livestock breeding which has a longer gestation at times.”
BEAUTY & WELLNESS
Neeraj Banga, General Manager – Finance, Divine Organics
“Since the Finance Minister has aimed at taxing big corporates, it is a concern of worry for a new start up like us, who wish to give helping hands in the GDP growth. On the other side, the best part of the budget seems to be an unusual comment of the Finance Minister in which he has said that the quatum of taxes paid – both direct and indirect – are insufficient. This gives a fair idea about the Government’s approach moving forward that the main focus will be on collection of taxes.”
Amit Sarda, Managing Director, Soulflower
“For the first time in history a Finance Minister (FM) has spoken about essential oils and organic farming. We wish to thank the Hon’ble FM for giving this sector the recognition and much needed impetus. An allocation of Rs.200 crore although is small, but is a great step in driving India towards becoming the top producer of essential oils. Funding Minimum Support Price (MSP) will see a better rural economy and will help the FMCG consumption to go higher. Another important announcement made today was the setting up of 5 lakh Wi-Fi hotspots which will boost e-commerce penetration in rural India. This is a great step towards creating a Digital Green India.”
TECHNOLOGY
Dr. Rishi Mohan Bhatnagar, President, Aeris India, Chairperson of The Institution of Engineering and Technology – IoT panel for India
“We welcome the clear thrust on infrastructure that this budget has proposed. Addition of new smart cities and a higher allocation for such projects along with emphasis on niche technologies and the Digital India drive are also welcome. I was expecting a reduction in tax on hardware from 18 to 5 percent and a move towards rationalising spectrum license fees for promoting IoT adoption in the country. High capital investment requirement could slow down the IoT adoption momentum in our country and decelerate its evolution as an enabler for various Digital India programs.”
SHOPPING CENTRE
Irfan Razack, CMD, Prestige Group
“The Budget as a whole is balanced and well-rounded, which aims to kick-start the growth of the economy again. A lot of focus has been given to the Agriculture, Education, Healthcare and Infrastructure sectors which is crucial to provide long term benefits to the middle and lower classes. One of the highlights of the Budget is the dedicated emphasis to Tourism as well. With the GST regime, there was limited scope to make any changes to the Indirect Taxes. However, under Direct Tax, some concessions have been made for salaried class where they will have savings of around Rs 40,000 per annum.
There is no direct benefit to the real estate sector as such. Having said that, Long-Term Capital Gains (LTCG) on securities and shares introduced into the budget, will create a level playing field for real estate, as a lot of people who were investing only in equities will now consider real estate as an alternate investment option, which will help the industry.
All in all, given the limited space that the Finance Minister had, I believe that he has done a decent job of presenting the Budget.”
OTHERS
Aashish Kasad, Partner and Consumer Products and Retail Sector Tax Leader, EY India
“The Budget 2018 has continued to deliver on the Government’s stated development agenda of enhancing the rural economy and doubling the farmers income, supporting the poor and underprivileged, developing the infrastructure, promoting digital economy and prudent fiscal management. There are several positive measures for boosting the agricultural economy including the food processing sector in terms of MSP for farmers for the Kharif crop to be increased to 1.5 times the cost of produce as well as Farmer-Producer Organisations to be entitled for a 100 per cent tax deduction for the AY 2019-20 until AY 2024-25, if their total turnover is less than Rs 100 cr in a year. Further to incentivise manufacturers of apparel, footwear or leather products to boost the employment generation, the employment day criteria has been relaxed for availing the tax deduction. The corporate tax rate has been reduced to 25 per cent for companies having turnover less than Rs 250 cr in FY 2016-17 which should benefit smaller organisations in ploughing back profits to grow the business further. To further promote the ‘Make in India’ initiative, customs duty has been hiked on import of several consumer products such as sunglasses, perfumes and make up, shaving and after-shave preparations, fruit juices and vegetable juices, edible oils of vegetable origin, watches, toys, etc. The expectation of altering the income-tax slabs for individuals which would have generated higher demand through more disposable income in the hands of the consumer, remains unaddressed. Overall, the budget has stayed the Government’s course of driving growth while trying to curtail the rise in fiscal deficit and inflation.”
Anurag Sharma, Director, Akai India
“We welcome the Budget 2018 by the Honorable Finance Minister Arun Jaitley. The increase in custom duty for some parts of TV’s is a clear indication to promote the bid towards ‘ Make in India’ initiative by the Government of India. The domestic manufacturing will be further fuelled with this move and will help the overall health of the economy.”
Kumar Rajagopalan, CEO, Retailers Association of India
“Agriculture, infrastructure, healthcare and rural development seem to be the key focus areas of the Budget 2018. We do not expect any immediate impact on consumption, either negative or positive. There is no real additional money in the hands of the middle class with which consumption can improve. However, the basic necessities of the poor in the country will be met because of the various schemes announced. The proposed reduction in corporate tax to 25% for MSME (medium, small & micro enterprises) companies with turnover up to Rs 250 crore is a welcome move, which will benefit a large number of retailers. They will be able to save on taxes that they would have otherwise paid at a higher rate. Overall, the budget is pro-poor, and one with a long term impact with no immediate benefits for retail sector.”
Ganesh Raju, Partner and Leader Startup, PwC
“Separate policy allowing Venture Capital firms to invest in hybrid instruments is a welcome move. Permitting issue of hybrid instruments such as redeemable shares, optionally convertible debentures etc will enable startup founders have greater control over the company rather than diluting their stake through equity funding in initial stages.”
Rakesh Khanna, CEO, Orient Electric
“This was a balanced budget with focus on rural development, housing, health and infrastructure in line with the Government’s long-term economic vision. While the budget gave relief to MSMEs with turnover up to Rs 250 crore, it failed to address the Corporate tax rate issue for larger corporates. The budget reiterated the focus on rural development which we believe will provide an opportunity for the electrical industry to work with the government. Also, the government’s proposed plan to create a dedicated affordable housing fund in line with its plan of providing housing for all by 2022 is good news for the allied segments. Another welcome move is the announcement of identification of 372-point plan on ease of doing business which will attract investments and improve the overall business climate.”
