| Sectors | CRISIL | Angel Broking | Dun & Bradstreet |
|---|---|---|---|
| Roads & Highways | Increase in public funding for the sector has the potential to boost execution of national highway projects by about 5,800 km annually and create a robust construction opportunity for EPC companies. Higher fuel cess for roads will provide significant opportunity for construction companies. |
Positive for all road developers (IRB Infra, ITNL, Sadbhav Engineering and Ashoka Buildcon) as it would provide more opportunities on the order inflow front for them. Also, road focused EPC players (MBL Infra, KNR Construction) would benefit from increase in award activity. |
Proposed rise in outlay is likely to modernise and improve the connectivity within all parts of the country. Revision in corporate tax is expected to reduce the tax burden of infrastructure companies, thereby fueling their growth. |
| Railways | Public investment in infrastructure (especially railways and roads) can create large complementarities for private sector investments. Spending on rail, road and ports will crowd in private investment and support manufacturing activity via backward and forward linkages. |
Higher allocation is positive for EPC companies focused on railways (MBL Infra, Simplex Infra), as it will create opportunities in the segment. | Hike in the outlay on development of railways is likely to modernise and improve the connectivity within all parts of the country. Budget is expected to have significant positive impact on the sector. |
| Airport/Port | Addressing on-ground issues such as clearances and land acquisition becomes extremely critical to ensure a sharp increase in project execution. Spending on rail, road and ports will crowd in private investment and support manufacturing activity via backward and forward linkages. |
Airport/Port developers would have to spend higher capex, as service tax component gets added now for the construction works. | Setting up of NIIF will enable infrastructure financing companies to reduce their dependence on banks and other financial institutions and leverage the extra equity for financing of the projects. |
| Cement | The governmentÂ’s focus on infrastructure should result in a sustained recovery in demand, but the execution capability of funding institutions/players has to be scaled up appropriately. The rise in duties and tariffs is expected to have a muted impact on total cost. |
‘Housing for all by 2022’ is positive for the cement sector, as it is expected to boost cement demand from the housing segment. Higher rural allocation to translate into higher construction activity, thereby will benefit the cement sector on a whole. Rise in excise duty is marginally negative for cement companies. |
Increase in excise duty on cement will lead to an increase in the manufacturing cost and a consequent increase in the price of cement. The cement industry will be affected by its impact on demand. However, the GovernmentÂ’s thrust on infrastructure augurs well for the sector. |
| Power | Announcement of five new UMPPs for conventional power — with all approvals in place will ensure faster execution. Healthy growth in capacity additions and augmentation of T&D infrastructure will reduce power deficit to about 1 per cent by 2018-19. |
With an increase of Rs 100 per metric tonne, there will be an impact of Rs 5,000 crore on Coal India (~500MT production).However, it is expeted that it will be passed on to the power producers. Setting up of 5 new UMPP with linkages already in place will be a positive for power generating companies. |
Setting up of new power plants is positive and is expected to generate renewed interest in the sector. Rise in clean energy cess would impact costs, as coal being a major input for thermal power plants. |
| Telecom | Excise duty hike on mobile handsets would result in increase in their prices, which would somewhat impact the rate of growth in smartphone adoption. The hike in the service tax rate would inflate the bills of postpaid subscribers. |
Faster execution of National Optical Fibre Network Programme (NOFNP) for networking 2.5 lakh is positive for Finolex Cables. Rise in excise duty of mobile handsets can increase handset prices. |
NOFN project is expected to improve the market size. Reduction in royalty and fees for technical services would help Indian companies to access better technology knowhow for domestic manufacturing. Removal of customs duty on optical fibre cables is positive for telecom companies. |
| Mining | Budget proposals will have negligible impact on the sector. | Rise in Clean energy cess will increase the cost of coal. Negative for Hindalco and Sesa Sterlite among others. |
Launching of ambitious programmes for new and renewable energy will give a boost to the metal and mining sector. Increase in clean energy cess on coal will have a negative impact for the steel industry. |
| Real Estate & Construction |
Rationalisation of capital gains tax for the sponsors exiting at the time of listing of REITs is positive for developers. The increase in service tax will be marginally negative for the real estate sector. |
‘Housing for All by 2022’ is positive for all real estate EPC players including Ahluwalia Contracts (India). Establishment of NIIF would help housing finance companies to raise funds at cheaper rates and benefit real estate developers. |
Announcements made by the Government, related to infrastructure, will have direct and indirect impact on the construction and real estate sector. Overall, the Budget is marginally positive for the construction and real estate sector. |
| Oil & Gas | The overall impact is marginally positive. Increase in road cess on petrol and diesel has been completely offset by the decline in basic excise duty and removal of education cess. Exemption in special additional customs duty will not have any major impact. |
Reduction in basic customs duty for styrene monomer is positive for PVC and Styrene producers such as Finolex Industries, Styrolution ABS (India), Supreme Petrochem. | Rise in investment can be seen in the E&P activities due to reduction in the corporate tax. The impact of the customs duty change has more or less impact on the price of petrol and diesel. The overall impact of is expected to remain neutral. |
Oil & Gas
- Increase in effective rates of additional duty of excise/customs levied on petrol and high speed diesel oil from Rs 2 per litre to Rs 6 per litre.
- Decrease in basic excise duty on branded petrol by Rs 3.46 per litre, on unbranded petrol by Rs 3.49 per litre, on branded diesel by Rs 3.63 per litre and on unbranded diesel by Rs 3.70 per litre.
Real Estate and Construction
- The Government has set a target of 60 mn housing for all by 2022. It will require 40 mn houses in rural areas and 20 mn houses in urban areas.
- Allocation of Rs 224.07 billion for housing and urban development.
- Proposal to rationalise the capital gains regime for the sponsors exiting at the time of listing of the units of Real Estate Investment Trusts (REITS) and Infrastructure Investment Trusts (InvITs). The rental income of REITs from their own assets will have pass through facility.
Telecom
- The Central Plan outlay to the Department of Telecommunications has gone up from Rs 135.01 billion in FY15 to Rs 228.85 billion in FY16./
- To accelerate the ´Digital India´ campaign, the National Optical Fibre Network (NOFN) project will be expedited across the country.
- Rate of income tax on royalty and fees for technical services reduced from 25 per cent to 10 per cent to facilitate technology inflow.
- Reduction in customs duty on telecom grade optical fibre cables.
Road and Highways
- Proposal to increase the outlay on development of roads by Rs 140.3 billion.
- Connect each of the 178,000 unconnected habitable locations by roads.
- Complete 100,000 km of roads currently under construction plus sanction.
- Allocation of total of Rs 457.5 billion to the sector.
Railways
- Proposal to increase the outlay on development of railways by Rs 100.5 bn.
- Excise duty on rails for manufacture of railway or tram way track construction
- material exempted retrospectively from 17-03-2012 to 02-02-2014, if not CENVAT credit of duty paid on such rails is availed.
Ports
- Proposal to corporatise public sector ports.
- Service tax exemption to construction, erection, commissioning or installation of original works pertaining to an airport or port withdrawn.
Cement
- Increase in freight rate of cement by 2.7 per cent.
- Proposal to build 60 million houses by 2020. Each house to have a toilet and road connectivity.
- Proposal to build 60 million toilets.
- Completion of 100,000 kms of roads a top priority.
- Proposal to sanction and build an additional 100,000 kms of roads.
Power
- New Ultra Mega Power Projects (UMPPs) to be set up.
- Target of renewable energy capacity revised to 175000 MW till 2022, comprising 100000 MW solar, 60000 MW wind, 10000 MW biomass and 5000 MW small hydro.
- Clean energy cess increased from Rs 100 to Rs 200 per metric tonne of coal, etc. to finance clean environment initiatives.
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