Finance Minister Pranab Mukherjee presented the sixth budget for the coming financial year beginning April 2011. The industry was delighted to receive the "positive" and "growth-oriented" budget.
Experts take on the budget:
Increased food storage capacity will reduce wastage and increase margins
“ The budget’s stated intention to create 150 lakh metric tons of food storage capacity can potentially catalyze the formation of more retail warehousing. This would potentially encourage the construction of more modern warehousing facilities, and benefit the retail supply chain by reducing the cost of business operations via increased shelf life of perishable products, reduced wastage and increased margins”, Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India.
The inclusion of specific items in exemption list of excise duty will reduce gap between wholeslae and retail prices and improve supply chain
“The eligibility of specific items in storage and warehousing facility for exemption from excise duty and excise duty cut on farm machinery to 2.5% is a welcome initiative and should help in bridging the gap between the wholesale and retail prices through improvements in the supply side. The continued focus of the Honorable Finance Minister on introduction of Goods and Service Tax should be welcomed by the retail sector. Keeping in perspective the current inflationary pressure and the roll out of DTC and GST in the near future, the budget was on expected lines”, Prashant Khatore, Tax Partner, Ernst & Young.
Reduction of Central Excise duty on LED and total exemption of CVD will directly affect the LED lights category
“The Central Excise duty on LED is being reduced to 5% and CVD is being fully exempted but this is directly going to effect the LED lights category. I do not see an effect on LED TV as of now as LED panels are not manufactured in India and LED is one of the component in the panel,”Mr. Pranay Dhabhai, MD, AKAI India.
Allocating substantial funds for farm development, approval of 15 more mega food parks, recognition of cold chains and post-harvest storage as an infrastructure sub-sector, need to review Agricultural Produce Marketing Act and introduction of investment linked deduction to businesses engaged in fertilizers will certainly help controlling inflation and at the same time give a boost to retail sector. Enhanced direct tax exemption limit will add to the purchasing power in the economy and provide necessary impetus to the retail and consumer product segment.
The increase in effective minimum alternate tax may upset the retailers who have still not reached their break even stage. However, the increase seems to be in line with the upcoming Direct Tax Code and also is neutral considering the current rate.