Budget 2015: Expectations and wish list
With the Budget round the corner everyone, from the common man to the corporates and foreign investors, are expecting the Modi government to roll out a reform-oriented Budget. There is a general euphoria surrounding the upcoming Union Budget 2015 as this is the first full-fledged budget of the new government. There are expectations galore from all quarters for the government to take concrete action to revive investment, increase growth and generate employment.
A definite policy needs to be spelt out regarding the services sector for its sustained growth which is a major contributor to the economic growth. There is an overall positive sentiment around the government plans to announce incentives and concessional tax rates to encourage multinational companies to set up back offices in India, which would generate employment and boost growth in the services sector.
India's retail sector has undergone many changes in the last decade and is regarded as one of the major contributors to the economy. It accounts for 14-15 per cent of the GDP and employs about 40 million people.
Thus, industry experts are hoping that this Budget should make provisions to recognise the sector's contribution to the economy and plan for further growth to boost business and employment.
The focus of the government should be on promoting e-commerce, innovation and entrepreneurship. The overall sentiment of the sector is tax relaxation at industry levels. This will increase buying power which will boost the consumer goods and services industry. A cut down in excise duty will give a thrust to the "Make in India" campaign. Policy reforms and relaxations will support promotion of FDI and support the "Make in India" campaign. It will also eliminate the unnecessary issues that various states face with regard to inter-state billings by e-commerce companies. The entire retail fraternity has set its eyes on the seamless roll out of GST, hoping that it marks the beginning of a new era for retail in India.
The Indian media and entertainment (M&E) industry is one of the fastest growing industries in the country. This industry has played a significant role in creating awareness on many issues that impact the masses. Currently, this industry is paying multiple taxes including service tax, entertainment tax, among others. The high rates of entertainment tax and lack of uniformity in tax rates across different states has added to their miseries. A uniform, simplified and single-point taxation across product categories under the ambit of GST will benefit the entertainment sector. Any reduction in import duty on set top boxes from the current 5 per cent will benefit all media companies as it will reduce cost burden and spur rapid digitisation. The need of the hour is to grant Infrastructure Status to the cable DTH industry. The DTH industry is the most heavily taxed and wants a relief from the government in terms of a waiver of 12.36 per cent service tax till the rollout of GST and rationalise other taxes imposed on the industry. This will bring parity amongst parallel players and will ensure a healthy competition in the sector.
E-commerce companies have been functioning at suicidal prices, going great lengths to build their customer base and develop their infrastructure and logistics. This all boils down to the fact that they are resorting to selling at prices lower than their purchase price to lure more and more customers. But this will not be feasible in the long run and requires an urgent attention of the government. E-commerce companies require more and more funding options. Since most of the E-traders, are multi-brand retailers, they have high hopes from the government in regards to 100 per cent FDI for their sector. This would help to build logistics faster and better. Easier funding will ensure that they stay firm on their ground and do business with ease. The introduction of GST will spell lots of exciting opportunities for the SMEs and retailers. The consolidated Goods and Service Tax along with IGST mechanism for handling inter-state trade and commerce shall address these issues and facilitate more and more e-commerce business in a hassle free manner.
While, the telecom industry is gearing up to explore the vast opportunities available in the sector, it is hopeful that the Union Budget introduces the much needed tax reforms to provide an impetus to the sector. Since there is a spectrum crunch in the country, the Budget should remove limitations with regard to spectrum trading and sharing needs in order to achieve the objective of efficient utilisation of frequency airwaves. The government needs to make available spectrum at a price which can make mobile services affordable for masses. The telecom sector is ridden with multiple taxes and levies such as excise duty, custom duty, service tax, revenue share, spectrum charges, TDS, etc. The Budget should ensure that the service providers are not burdened and provide growth opportunities for LTE and 3G. These relaxations in terms of taxes and levies will help the sector to sustain the cost pressures. Building an affordable device ecosystem for masses is the key in achieving the government's broadband vision. The government has to develop an infrastructure where ensuring mobile access will be the most important lever in delivering basic citizen services such as education, healthcare and banking to all. The government should provide internet handsets at subsidised prices, so they are affordable for mass consumers. Another issue which the telecom sector wants the government to address is tax incentives for the industry to pursue the Go Green Initiative. The Industry expects reprieve from the government as Tax Incentives in Income Tax to invest in the 100 smart cities initiative of the Government.
The carbonated soft drinks industry is a key segment of the food processing sector in India. It is a significant user of agri products and, with its high labour intensity, contributes significantly to agricultural growth and employment. This sector has pinned its hopes on the government to provide relief in CENVAT and State VAT rates and the central excise duty. This move shall give a push to the industry and have a significant positive impact on India's development.
The nation is eagerly waiting to see the reforms that the Budget would make across economic, industrial and fiscal fronts. The new government has shown some promise so far in highlighting few crucial elements for improving the current economic scenario, enhancing the investor sentiment thereby leading to country's overall development. The measures and reforms taken in this Budget will be crucial for successful implementation of the programme and everyone will be watching this with bated breath.