New Delhi, February 17
The special emphasis in the Interim Budget on boosting manufacturing and the message of fiscal stability by adhering to the fiscal deficit target has brought cheer to the industry while sectors that have not got sops are feeling disappointed.

Sidharth Birla, president, FICCI, said the statement made by the Finance Minister was balanced and largely on expected lines. “While industry expections were limited from an Interim Budget formality, the emphasis laid on turning around the growth trajectory and reviving the manufacturing sector in particular are well received", he said.

CII welcomed the focus on manufacturing. Kris Gopalakrishnan, president, CII, said the importance of the manufacturing sector has been highlighted which is a key to reviving the economy. The reduction in excise duty on sectors such as automobiles, capital goods and consumer electronics is indeed welcome, as this will help revive demand in these sectors.

Consumer durables manufacturers say the cut in excise duties will boost demand. Soon Kwon, managing director, LG India, said it is a positive step to improve the market conditions and will boost the manufacturing sector. This will generate a positive consumer sentiment and encourage new buyers in the consumer durable sector.

“Post the budget announcement regarding excise duty cut, we are observing the market dynamics and reviewing various aspects regarding pricing”, he said.

The real estate industry was disappointed by the lack of announcements. Anil Kumar Sharma, president, CREDAI NCR, said the Interim Budget seems to have overlooked the suggestions forwarded by the real estate developers.

“Apart from some respite in duty for construction sector and Rs 2,000 crore for the Urban Housing Fund Allocation, the budget was silent on the issues presently being faced by the real estate sector”.

Sachin Menon, National Head - Indirect Tax, KPMG, said the budget gave the much-needed relief to the capital goods, consumer durables and auto sector at a time when the demand is low. This would spur the demand in the interim provided the benefit is passed on, he said.

Views are, however, divided on the efficacy of the duty cuts in such a short period. Naresh Takkar, MD & CEO, ICRA, said the absence of major expenditure announcements ahead of elections and focus on fiscal prudence is reassuring. “The targeted reduction in excise to support the languishing sectors is welcome, although the extent of revival may be inhibited by the short time frame and the sluggish economic activity and weak sentiments”, he said.

There may be some hikes in the cheaper mobile handsets. Sanjay Kumar Kalirona, Business Head-Mobile, Intex, said the rise in excise duty, for the sub-2k category, to 6% with CENVAT credit, from 1% the year before could lead to an increase in the overall cost of mobile phones priced below Rs 2,000 as mobile handsets are largely imported.

Analysts have cautioned on the risks for growth going ahead. Arun Singh, senior economist, Dun & Bradstreet India, said the implications of a lower fiscal deficit with reduced capital expenditure planned for a slow growing economy needs to be evaluated cautiously. The provisioning of food subsidy from FY15 and the likely implementation of the 7th Pay Commission from January 2016 would be the two major roadblocks towards attainment of fiscal consolidation going ahead, if the economy does not recover at the pace expected.

New Delhi, February 17
There was some good news for the beleaguered auto industry in the Interim Budget presented by Finance Minister P. Chidambaram as he announced a duty cut on the SUVs, cars and the two-wheelers which would help bring down the prices and boost growth.

Chidambaram proposed to slash duty on SUVs from 30% to 24%, while in large and mid-segment cars it has been reduced from 27-24% to 24-20%.

Excise duty on small cars, motorcycles and commercial vehicles has been cut from 12% to 8% and appropriate cuts are to be done on chassis and trailers.

The announcement came as a major relief for the automobile industry which has been reeling under stress for the past almost two years due to high interest rates and fuel costs with the sales falling every month.

Greeting the proposal, the automobile industry, keen to see the sales back on course, immediately announced that the duty cuts would be passed on to consumers, which would help bring down the prices of the cars and two-wheelers.

Industry experts said prices of small cars, motorcycles and SUVs are likely to come down by 3-4% immediately. Automobile industry is seen as a key element in the economic growth.

"We could see vehicle prices go down by 3-4%. I presume most automakers will pass on the entire duty cut to consumers. Almost everybody will do it immediately because nobody is going to buy the cars now without price reduction," Mahindra & Mahindra president - automotive Pawan Goenka said.

“From where the industry is today, the Budget announcements are quite positive and should give relief to the auto industry by boosting demand. If these initiatives are maintained in the final FY15 Budget, it should be a much-needed positive stimulus for overall manufacturing sector in India”.

Vikram Kirloskar, president, SIAM, while welcoming the move said, SIAM would like to thank the Finance Minister for recognising the need for a more moderate tax structure for the automotive industry and for accepting its tax-related recommendations.”

“We believe this reduction in excise duty will reduce the acquisition price thereby making vehicles more affordable. It will improve the consumer sentiment and hopefully revive the demand for vehicles,” Kirloskar added.

Kris Gopalakrishnan, president, CII, said, “On behalf of CII, I must thank the Finance Minister for recognising this need and reducing excise in some of the most affected sub-sectors of manufacturing. The reduction in excise duty on sectors such as automobiles, capital goods and consumer electronics is indeed welcome, as this will help revive demand in these sectors.”

Jeo King, head, Audi India, also welcomed the move and said, “We are happy with the proposals made in the Budget. We welcome the steps taken to support the automobile industry. We will definitely pass on the duty cut benefit to our customers.”

Apex engineering exporters body EEPC said Finance Minister P Chidambaram's proposal to lower excise duty on cars and two-wheelers in the Interim Budget will boost the exports of key engineering goods.