Web Exclusive | July 2014
Shot in the arm for manufacturing
TV Narendran, MD, Tata Steel (India and South East Asia)
The 2014-2015 union budget, presented by Arun Jaitley, reflects the pragmatic outlook of the government. The budget has been presented within a short span of the new government taking office, however, it has managed to successfully address key concerns regarding economic growth. The government has taken the initial steps in the direction of sustainable economic revival and growth. This will help create an environment of confidence and trust amongst the business community and investors.
While the target of 4.1 per cent fiscal deficit seems ambitious, it depicts the positive intent of the government in reviving the economy. We applaud the government’s decision to revive growth particularly in manufacturing and infrastructure sectors. We welcome the government’s resolution to end the speculations and debate around the goods and service taxes and approve the legislative scheme which would enable introduction of GST within the course of the year. We congratulate the government on its decision to ensure speedy resolution of pending issues on iron ore mining and the introduction of an amended MMDR Act, 1957 to facilitate the resolution. This will help provide much needed clarity around mining policies. Increase in the import duty of stainless steel from 5-7.5 per cent will give the domestic industry much needed protection and boost. Besides, the government’s intent to set up a high-level committee to interact with the industry to bring about changes in tax laws if required expresses the government’s desire to collaborate with the industry and work towards creating a collaborative environment that benefits all.
The extension of the investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs 25 crore in any year in new plant and machinery for the next three years signifies a positive step in incentivising industrial and manufacturing growth. Besides, the government’s emphasis on developing 100 smart cities and assigning a sum of Rs 7,060 crore towards the development in the current fiscal indicates a significant opportunity for the domestic industry.
However, we are disappointed with the expected increase in the rate of royalties for minerals. It would lead to an additional cost burden on an already capital intensive industry. Overall, the budget has been positive with respect to meeting industry expectations. We look forward to the execution of the economic reforms advocated in the budget and to work with the government to help revive and drive the economy.