No incentives for exports

28 Feb 2007

1

Welcoming Budget 2007 presented by the finance minister, P Chidambram today, as commendable for having exceeded expectations in terms of rural development, education and agriculture , Moon B. Shin, managing director, LG Electronics India, says it is commendable that the economy has seen a GDP growth of over 9 per cent, while providing an impetus to inflation control.

However, the budget 2007 is not very favourable to domestic industry and trade. Also increase in education cess from 2 per cent to 3 per cent will prove to be an additional burden to the common man and corporate alike. Also, the budget has not provided any incentive for exports, acting as a hurdle to India emerging as an export hub. No sops have been announced to curtail the effect of the inverted duty structure.

Specific to LG India, the tax holiday extension for in-house research and development facilities was an extremely welcome step, since we have devoted substantial investments in research and development in India.

Positives aspects of Budget 2007:

  • Inflation control measures
  • Tax holiday extension for 5 more years on in-house R&D
  • Focus on rural development, agriculture, education and health care
  • Reduction in peak import duty from 12.5 per cent to 10 per cent on non agricultural products
  • Reduction in prices of fuel from 8 per cent to 6 per cent
  • Proposal for unification of telecom taxes
  • Reduction in Central Sales Tax from 4 per cent to 3 per cent

Expectations Not Met

  • Removal of inverted duty structure especially in lieu of current free trade agreement regime
  • No major infrastructure development projects announced especially for ports and special economic zones.
  • Sunset clause on export oriented units not extended
  • No incentive for IT and ITES industry

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