Not making much difference

The Union Budget 2012-13 has so far elicited lukewarm response from the industry fraternity. Even though the Budget has

given a boost to some industries, the hike in taxation and duties in a lot of other industries has been disappointing.

 

Some of the key highlights that had an impact, majorly, on all the industries are:

 

• Implementation of Direct Tax Code (DTC) deferred. GST to be operational by August 2012.

 

• Increase in service tax rate to 12 per cent from 10 per cent and introduction of a negative list aimed at bringing more services under the tax net.

 

The textiles industry was given a few reasons to cheer this year, which include allocation of `3,000 crore for NABARD to

help handloom weaver cooperative societies to become financially viable; decrease in basic customs duty from 30 to 5 per

cent on raw silk, from 5 to 2.5 per cent on certain textile intermediates and from 7.5 per cent to 5 per cent on certain inputs

for the manufacture of technical fibre and yarn; and excise tax on diapers and sanitary napkins reduced from 10 per cent to

1 per cent. Branded garments will become cheaper despite the hike in its excise duty from 10 per cent to 12 per cent since

the government has raised the abatement from 55 per cent to 70 per cent under the budgetary proposals for 2012-13.

 

INDUSTRY LEADERS SPEAK

 

“The Union Budget is a positive step towards getting the system back on track. Although big reformist measures were not

proposed, the Finance Minister has done a balanced job and has targeted growth across social classes. The middle class

also gets some relief by way of an increase in income tax exemption levels, which potentially can spur demand-led growth

as well. The reduction of duty on branded garments and abatements to the textile sector, although marginal, is a step in

the right direction. Overall, the Budget aims at resilience in the context of the current political and economic scenario.”

 

Gautam Singhania

Chairman and MD, Raymond Ltd

 

“There are clear inflationary implications of Union Budget 2012-13. While the raise in income tax exemption should

provide some increase in disposable income for consumers, it will be offset by the hike in central excise duty from 10 per

cent to 12 per cent. The industry is already struggling with steep dollar exchange rate and various input cost increases

over the last year. Announcement of APA (Advance Price Agreement) is a welcome step, as this is at least a positive step

toward reduction in transfer pricing disputes. Last but not least, customs duty exemption on LCD/LED panel and part of

memory card of mobile phones is definitely a welcome step, though it will only partly affect our costs.”

 

Soon Kwon

President-South West Asia & MD, LG India

 

“The Budget has been a mixed bag. The retailers were expecting the implementation of higher service tax, which would

have raised rentals for the retailers. However, with prices shooting up, the burden has passed on to the consumers. I feel

things would have been better if GST was also introduced at the same time.”

 

Kumar Rajagopalan

CEO, Retailers Association of India (RAI)

 

“The Budget has fully exempted branded silver jewellery from excise duty but has imposed a 4 per cent import duty on

gold bars and gold ore and 10 pr cent on platinum and coloured gems. This has led to a setback in the jewellery industry

and the jewellers’ associations have planned for a three day nationwide bandh to protest against the new excise, custom

duty and consumer tax on gold imports. Also, the downside of this increase in custom duty is that it will lead to trafficking

of gold through illegal channels and will go down with the consumers as they would have to pay more duties. Lastly, the

much awaited reduction/abolition of central sales tax (CST) would favourably impact the expansion of the organised retail

by fulfilling their long-standing demand of benefits under Served from India Scheme (SFIS).”

 

Subhash Verma

Whole Time Director & CEO, Aerens Gold Souk Group