G Piramal, chairman, Nicholas Piramal India Limited
The most redeeming feature of the Budget is keeping
the fiscal deficit of 2007-08 well below the FRBM target
at 3.3 per cent. The proposal also contains some novel
thinking such as Reverse Mortgage Scheme to be implemented
by the National Housing Bank, companies allowed to issue
exchangeable bonds for unlocking group company shares,
The finance minister needs to be complimented for having
reversed the sunset clause already built in the statute
in respect of weighted deduction on R&D. Against
all fears that the tax holiday benefits in respect of
industrial units set up in backward regions maybe withdrawn,
it is heartening to note that such benefits in respect
of J&K have been extended for five more years.
To tax the Venture Capital Funds by taking away the
Pass-Through Benefit in respect of non-specified areas
will bring about additional burden on the consumers
and will not encourage Venture Capital Funds thereby
starving the mall entrepreneurs of seed capital. The
biggest challenge faced today by corporate in India
is attrition of employees and ESOP has proved to be
time tested tool for retaining the employees. Bringing
this under FBT is deplorable. Increase in the tax rate
of distribution of dividend and education cess could
have been avoided.
Extending service tax for lease / license of immovable
properties meant for commercial purpose will be inflationary
and is not in the right direction.
Swati Piramal, director, Nicholas Piramal India Limitied
Budget 2007-2008 is a good year for the pharma sector.
Weighted deduction under section 35 (2A,B) for 150 per
cent is continued for next five years for approved in-house
R&D facilities of industries in the Bio Pharma sector.
This is a very positive development for increasing investment
the India''s knowledge economy. Reducing service tax
on clinical trials, clarification of FPT on free samples,
encouragement of venture capital, funding in biotechnology
and NCE research are very positive steps.
allocation in the healthcare has been a long awaited
move. Increased spending on TB, Malaria, HIV and vaccines
is also important news.
Gautam Vir, MD and CEO, Development Credit Bank
The finance minister had a clearly tough task on hand
as he walked into the budget session - two states election
results going against the government, inflation and
finally a meltdown in the global stock markets.
His biggest moves on inflation include a reduction in
the excise duties on crude items, which will help reduce
the government indirect deficit, as well as open up
space to reduce oil prices further. His other moves
include a reduction in peak customs duties from 12.50
per cent to 10 per cent, with sharp reductions in some
the excise duties in areas like cement have been tweaked
in such a way that there is an incentive for companies
to reduce cement prices. On the other hand, there is
a clear appreciation that the inflation is a supply
side issue, and a number of measures towards improving
farm output have been set out. There is a clear stress
on fertilisers, seeds and irrigation, which would go
to boost farm output.
banking sector had a mixed bag of fortune. There were
large hopes that the tax relief for bank deposit interest
would be increased to help banks garner more deposits.
Instead of that, there has been an increase in the dividend
distribution tax on money market mutual funds.
there were no significant measures announced to increase
the market liquidity to fund the expected sharp growth
in the economy. This was a bit surprising as the economy
is expected to continue to grow at 9 per cent this fiscal
too, and the market is short liquidity.
there were no special measures for funding infrastructure,
which was also an expectation from the banking industry.
On the other hand, despite large allocations for agricultural
sector and other schemes, the government deficit is
well under control and targeted at 3.3 per cent of the
it is good budget, balancing growth needs with inflation
control measures, which also continues the reforms in
terms of customs and excise duties rationalization.
Puri, chairman and managing director, Moser Baer India
The Budget has been very positive on agriculture and
the government must give incentives to ensure that corporates
get into this sector and set a chain reaction in notion
to improve the infrastructure including logistics and
Rao, chief financial officer, CEAT Limited
This is predominantly an agriculture-oriented budget;
the finance minister spoke for almost 45 minutes on
agriculture and related schemes. This is because agriculture
sector has posted a poor growth at 2.3 per cent against
expected growth of at least 4 per cent.
We hope that the additional levy of 1 per cent education
cess to fund primary education will be cenvatable so
that the cost impact on inputs gets neutralised.
The differential levy of excise duty on cement companies
is unlikely to result in reduction in price of cement
in retail market. This would escalate cost of construction.
However, the reduction of CST from 4 per cent to 3 per
cent will have a positive impact on inputs to the manufacturing
Sunil Gupta, director, Gupta Synthetics Limited
The Union Budget is lacklustre and has no special benefits
for the synthetic yarn industry - in fact, several demands
of the industry have been ignored.
The Budget has effected duty cuts on important raw materials
like PTA and polyester fibres to 7.5 per cent, from
the earlier level of 10 per cent, so this is a positive.
However, the excise duty on monoethylene glycol and
caprolactum still remain at 12.5 per cent. We expected
the Minister to address this anomaly, but this has not
happened. There is also a natural calamity tax of 2
per cent, which still remains.
Anirudh Bhuwalka, MD and CEO, Asia MotorWorks Limited
It was encouraging to hear that VAT will be effectively
implemented. With the FM initiating the process of phasing
out Central Sales Tax (CST) with reduction in the CST
rate from 4 per cent to 3 per cent, wef from April 01,
2007 will definitely mark the beginning of the process
of a very significant tax reform measure, which is critical
for success of VAT. The automotive industry suffers
on account of cascading effect of taxes and multiplicity
of taxes at various levels, this process will naturally
give a boost to developing a national common market.
Anil Agrawal, director, Sanwaria Agro Oils Limited
The finance minister has stressed that agriculture sector
is the main focus of the government and this is very
promising for us. A very good thing is that the government
did not levy excise duty on edible oils, as was expected
in some quarters. Import duty on food processing machinery
has also been reduced. With the service tax also not
increased, and zero excise duty on bio diesel, this
is a good budget for us.
However, the government has removed 4 per cent counter
veiling duty on edible oils, that used to protect domestic
suppliers from international competition, and no special
measures for export have been announced either. The
surcharge continues at 10 per cent, and the education
cess has also gone up by 1 per cent. With the increase
of the dividend distribution tax, this is a disincentive
Karpe, MD, CA India and SAARC
Budget 2007-08 is more focused towards agriculture,
healthcare and education however it has given e-governance
its due diligence. The central government''s support
of additional Rs200 crore for governing processes gives
a boost to e-governance initiatives across the country.
spend will improve services for the citizens and create
a ripple effect in the domestic IT industry and may
lead to mushrooming of the domestic IT spend. The proposed
Rs33 crore for a new scheme of manpower development
for the software export industry is a definite positive
for the IT services industry.
Ashank Desai, non-executive chairman, Mastek
For the IT sector, the Budget has come as a mixed bag.
The increase in allocation for e-governance is a commendable
measure and should result in benefits for both the sector
and the nation as a whole in the longer term.
the same time, we believe that extension of MAT to companies
that had earlier been promised 10A and 10B exemptions
is likely to have an adverse impact on certain players.
addition to that, the inclusion of ESOPs under FBT will
add to the challenges being faced by employers in knowledge-intensive
industries in attracting and retaining world-class talent.
Piramal, executive vice chairman, Peninsula Land Ltd
The budget this year has the increasing feel of a non-event,
which is positive to some extent. There is a feeling
of continuity and nothing particularly stands out as
a significant or key development. While on the other
hand the initiatives in both agriculture and education
should bear fruit in the long run.
the real estate sector, there is not much of note and
the best news is probably that things have been left
unchanged by and large, although the inclusion of properties
rented out for commercial purposes into the service
tax net is not particularly welcome.
differential rate of excise duty on cement may discourage
the prices from going higher but the true impact will
become clearer only after some time. From a company
perspective the increase in dividend distribution tax
and the FBT on ESOPs was surprising.
Singh, chairman D1 Oils India
This budget is a big boost to the bio diesel industry
and will help the industry grow faster. The bio diesel
industry will benefit from the excise duty exemption.
P Singh, CEO, Venkateshwara Hatcheries Group
We welcome the budget bringing in more agri-focus spending
and the benefit of Venture Capital funding to poultry.
We are also happy with the government''s decision to
ban forward trading in wheat and rice, however we would
have also liked to see the government to ban forward
trading in maize - the most crucial ingredient of poultry
feed - due to which the poultry industry suffers significant
Raghavendra Rao, MD, Orchid Pharmaceuticals
It is a budget with a strong emphasis on agriculture,
education, healthcare and infrastructure. For the Pharma
industry in particular, the exemption of clinical trials
from the service tax, concessional rate of 5 per cent
customs duty for R&D institutions registered with
the Directorate of Scientific and Industrial Research,
and reduction in customs duty for specified machinery
for the pharmaceutical and biotech sectors are welcome
extension of weighted deduction on R&D expenditure
for a further period of five years is also welcome.
The pass-through status granted for venture capital
funds in respect of investments in undertakings in biotech
and R&D of New Chemical Entities (NCEs) also indicates
that the government sees these as sunrise sectors. The
expenditure of FBT on free samples and displays will
prove to be beneficial for the pharma industry.
Barve, MD, HDFC Mutual Fund
With respect to the Mutual Fund industry we are pleased
with the proposal to permit MFs to launch and operate
dedicated infrastructure funds and with the proposal
to permit individuals to invest in overseas securities
through Indian mutual funds.
the budget has maintained continuity of policy in key
areas, however its attempt to tackle higher inflation
seems rather haphazard. On the positive side, it has
tried to adhere to revenue and fiscal deficit targets,
moderate tax structures and attempted to provide an
enabling environment for achieving and maintaining a
higher growth rate.
Raju Vegesna, Chairman & CEO, Sify Limited
The focus on central and state e-governance programmes
will benefit everyone with better governance that is
transparent, efficient and citizen friendly. It is a
little disappointing to see that, despite the need to
ensure more citizens have access to the internet to
participate in e-governance, cyber cafes and internet
access services have not been made exempt from service
tax. Such a measure would have given a boost to the
government''s efforts to rapidly increase internet penetration
and use, as well as contribute to the success of the
e-governance services being rolled out.
measures to encourage small-scale industries, as well
as venture capital funds being given a pass through
status are also welcome steps towards ensuring continued
high growth of the economy.
Mansukhani, chairman, Man Industries (I) Limited
Since the gas pipeline industry has been given the infrastructure
status in this budget, it is now very beneficial for
the pipe industry to grow with more pace. The exemption
of duty for the water pipes of diameter exceeding 200
mm, will bring an all round growth to this sector and
boost the industry.
Lahoty, director, Rapidigm A Fujitsu Consulting
annual budget has left the IT Sector high and dry.
proposal Increase in Dividend Distribution Tax (DDT):
DDT has been raised from 12.5 per cent to 15 per cent
is damaging for the Indian IT sector that is already
loosing foreign direct investments
Service tax has now been levied on commercial rent.
The proposal is very damaging for IT sector as bulk
of software companies operate from leased premises.
Jacob, managing director, Royal Sundaram Alliance
We are pleased that the government has taken into cognizance
the need to increase the ceiling for tax benefits under
Sec 80D for health insurance from the current Rs10,000
premium to Rs15,000 and
Rs20,000 for senior citizens. This will encourage more
people to buy health insurance, safeguarding their future
in times of need and also improve market penetration.