The upcoming Budget will be presented at a time when the Indian economy is going through a turbulent phase. The Indian industries are not only facing the heat of the global slowdown, but also a steep hike in raw material and oil prices, rise in transaction cost, exchange rate fluctuations, etc.
Looking at the current scenario, Lakshmikant Gupta, Vice President–Marketing, LG India, shares his recommendations and expectations from the Budget 2012-13:
India is a land of potential; the rest of the world today considers the market to be one of the most-preferred investment locations and competitive in manufacturing, but the government has not yet reached the desired-levels of world-class infrastructure, simplified rules and regulations for foreign investments, and an easier, more stable tax system.
The factors hindering enhanced foreign investments today are ever-changing norms, regulations, and a complicated and cumbersome tax regime. The government needs to work on this to portray a more investor-friendly India. If properly implemented, no one can stop the country from being a leader among emerging economies.
Today, the industry is under tremendous pressure, not in terms of growth, but in sustaining businesses. The Industry looks towards the government for adequate relief measures, which can weather the slowdown impact and also create demands.
The government must take some much-needed steps in the Union Budget 2012-13 to immediately overcome the challenging situation. These are:
• Implement GST and rationalise taxation on an all-India basis for simplified transactions.
• Make provisions for additional incentives for manufacturing products with high export potential, thus making Indian products more competitive in the International market.
• Relax Corporate Income Tax to encourage future investments and to compensate high overheads and transaction costs for Indian industries.
• Make provisions for additional Customs and Excise incentives for the manufacture of energy-efficient and ozone-friendly products, thereby meeting India’s global commitment to the environment.
• Retain stimulus package for another 2-3 years till the economy is back on growth track. Customs and Excise Duties must be kept at the same levels with selective reductions.
Within this, the specific demands for the Consumer Durable Industry from the Budget are:
• Customs Duty on panels for LCD and LED TVs should be done away with; end-user condition should also be waived.
• Customs Duty for R&D items should be reduced to zero to promote R&D activities in India. This is particularly important for the air-conditioning, refrigeration and electronic industry.
• Customs Duty relaxation should be allowed to units manufacturing energy-efficient products.
• Customs Duty relaxation should be allowed to raw materials such as steel, copper, aluminum and resin, in manufacturing of products. This will, in turn, benefit end-consumers.
• Customs Duty on Magnetron should be reduced to zero without IGCR condition. Magnetron is one of the costliest parts in a microwave.
• Incentivise infrastructure projects – seaports, airports, railways and roads – to encourage more investment and reduce transaction cost. Also, the government should make rural-road projects more commercially viable for private participation.
• Encourage investments by introducing major investor-friendly policies.
• Formulate policies to control interest rates and thus help boost demand.
• Relax personal Income Tax to enhance disposable income of the common man and thus boost demand.
• FTA for CBU is letting in thousands of LCD/LED into India that every traveller to Thailand or the Middle East gets here. Components should also be included and help manufacturers, who have set shop here, to be competitively priced.