Budget 2013: Industry reactions

Budget 2013 has been an impetus for infrastructure sector. Industry leaders welcomed the various progressive measures taken in the budget.

Gautam Adani, Chairman, Adani Group

It is a prudent growth-oriented budget with a special focus on improving Healthcare, Education, Livelihood and Infrastructure sectors. The capital intensive manufacturing and infrastructure will get a push on account of introduction of 15 per cent investment allowance, the validity being till 2015 it removes uncertainty associated with next year’s budget. The budget also focuses on measures that will facilitate corporates to access funds through tax free Infrastructure bonds for which the limit has been revised to Rs 50,000 crore, extending the sunset for section 80ûIA for two more years too will help the infrastructure developers. The PPP model for improving domestic coal production, developing ports on the eastern coast of country, tenders for 3,000 km of roads in the next six months etc, indicates a clear push towards propelling infrastructure development in sectors like roads, ports, coal mining and power. The budget has tried to clear couple of grey areas too, specifically GARR, import duty on coal etc. In a nutshell, a series of good interventions to kick start the investment cycle and investor confidence in the infrastructure sector.

Vipin Sondhi, MD & CEO, JCB India

The Finance Minister has rolled out a well-balanced and realistic budget. He has taken steps which will help him deliver on his promise to contain the fiscal deficit to 4.8 per cent for 2013-14, though the maths is still to be seen. Emphasis on infra¡structure sector viz, credit enhancement by IIFCL, PMGSY and award of 3,000 km road projects, building of new ports at Sagar and one in Tamil Nadu, focus on a Chennai-Bangalore and Mumbai-Bangalore industrial corridor and introduction of investment allowance should help revive the investment cycle in the country which would definitely add to growth. The key, however, lies in expediting the execution of infrastructure projects and we hope that Cabinet Committee on Investment (CCI) would help achieve this objective.

Rupen Patel, Managing Director, Patel Engineering

The budget has done a great job of addressing the nation’s priorities of fiscal consolidation and bringing back investment. The Union Budget for 2013-14 has attempted to re-start the growth engine while maintaining fiscal integrity. It’s good to note that infrastructure development has figured prominently. The initiatives to provide support to infrastructure debt funds (IDFs) are commendable, especially as banks are constrained and unable to increase their exposure to infrastructure projects. Enhanced corpus for MGNREGA, PMGSY, RIDF and Indira Awas Yojana are some of the other positives for the infra¡structure space.

The decision to announce 3,000 km of new road projects in the next six months, the proposal to build two new ports (in West Bengal and Andhra Pradesh), one harbour in Tamil Nadu, dredging of national waterways, proposal to create a grid (combining ports, inland waterways and roadways) augur well for the infrastructure sector.

Hemant Kanoria, Chairman, DPSC

Power sector: Finance Minister’s announcement in the Union Budget for 2013-14 to extend tax holiday up to March 2014 is a welcome move for the power sector, which has been facing many bottlenecks in recent past. However, the announcement to impose 2 per cent customs duty on coal import is disappointing as many power projects in the country are suffering from fuel linkage issues.

Renewable Energy: Reintroduction of ‘generation-based incentive’ for wind energy projects in the Budget is a major incentive announcement for the renewable energy sector. The GBI reintroduction will help the sector in terms of motivation for installing additional capacity and reducing power deficit of country. Further, the government’s announcement to provide low cost finance to renewable project should be seen a positive development for sector. It will help the companies to pass on the lower financing cost to end users.

HM Nerurkar, MD, Tata Steel

Given the global economic scenario, the Union Budget announced by the Finance Minister has made a great attempt to achieve inclusive growth and a sustainable economy. We cheer the thrust given to the infrastructure industry through investment allowance of 15 per cent and various steps for mobilising funds for the growth of the industry.

We also welcome the extension of full exemption from export duty for galvanised steel sheets. This will help the steel industry greatly and enable us to be more competitive in the international market. We are also looking forward to the announcement of a PPP policy framework for increasing production for coal which will help reduce imports and achieve raw material security in the longer run.

However, we are disappointed that the steel industry demands to reduce import duty on iron ore and other raw materials for steel were not met.

Rajesh Srivastava, MD, Meinhardt

With the Union Budget 2013 Finance Minister P Chidambaram has given a moderate push to infrastructure sector. In a move to allay industry’s concerns that the government’s austerity drive could gather investments in crucial sec¡tors like infrastructure, P Chidambaram said planned expenditure in the next financial year would be 29.4 per cent higher than the current year. With the budget the Finance Minister has promised long-term debt funds and quick action on new major ports, series of highways, quick approvals to oil and gas blocks, and development of two towns along the Delhi-Mumbai industrial corridor.

Rs 14,873 crore has been allocated to Jawaharlal Nehru National Urban Renewal Mission (JNNURM) which is nearly double the amount from the last fiscal year. But, this inducement will not help resolve the basic sanitation, transport, civic amenities, and education and social security problems for the urban poor. If we evaluate the current scenario this allocation would only cover 10 per cent of modernisation plan across the 65 selected cities.

Overall with the slowing world economy the budget looks realistic with a healthy forecast for a growth of 7.6 per cent in GDP.

Alok Sanghi, Director, Sanghi Industries

As expected this year, Budget has focused on boosting the infrastructure spending. We believe that boost to housing projects, higher spending under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and improving road infrastructure would lead to revival of demand for cement sector. However, tax on cement sector has not been brought down as yet. Neither has government given cement an essential commodity status.

Srichand P Hinduja, Chairman, Hinduja Group

The Finance Minister has delivered a responsible budget with the objective of achieving higher all inclusive and sustainable economic growth. The credible fiscal consolidation map outlined, stability in tax regime and the reform intent will restore supply demand balance, curb inflation and reposition India as an attractive investment destination. Higher investment in agriculture and welfare programmes with focus on empowering women, skill development and strengthening direct benefit transfer scheme will lead to higher standard of living of the people at large. Investment allowance, capacity addition to ports, extension of tax holiday for power sector, appointment of road construction regulator, pricing of coal and gas and measures announced to create a vibrant debt market will boost investments in industry and infrastructure.

Srini Kris, Managing Director, South Asia Operations, URS

Overall, the Finance Minister has delivered a realistic Union Budget 2013 that is focused on economic growth and development. It is an encouraging start to this 12th Plan period. Chidambaram has outlined a series of important steps to boost infrastructure development and encourage private sector investment in partnership with government.

These are all welcome developments. The focus on new ports, urban housing, linking industrial corridors and the Finance Minister’s commitment to create a PPP policy framework for the coal sector are all positive steps. In addition, the new regulatory authority for the road sector should help speed up the implementation of projects. The government’s commitment to evolving a scheme to encourage cities and municipalities to take up waste-to-energy projects in PPP mode is another important step towards sustainable growth.