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Analysts expect taxation reforms in Budget
Core sector growth slows to 2.3% in May
Tata Sons gets new CTO
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Analysts expect taxation reforms in Budget
New Delhi, June 30 In addition, General Anti-Avoidance Rules (GAAR) could be postponed and more deductions allowed on personal investments to boost savings. To boost savings, the Finance Ministry is considering doubling the exemption limit for investments by individuals in financial instruments to Rs 2 lakh. Analysts at Kotak Institutional Equities expect the government to set financial year 2015 fiscal deficit target at 4.3% of GDP and announce medium-term plans for fiscal consolidation. According to a note, the key announcements could include taxation reforms with focus on implementation of GST over the next 1-2 years, comprehensive medium-term policy and short-term benefits for manufacturing, measures to tackle inflation, including overhaul of the current food procurement and distribution framework and medium-term policy for housing. Since the government will have to balance India's low economic growth, weak fiscal position and high inflation, the note says that no major taxation changes to revive growth are expected barring higher deduction on personal investments to encourage more savings. GAAR may be postponed by 1-2 years from the current implementation date of April 1, 2016. Motilal Oswal, chairman and managing director, Motilal Oswal Financial Services, says to raise resources, the government may announce steps like increase FDI caps in defence, insurance, raising ceiling for debt investment by foreigners, incentivising huge investments in infrastructure, affordable housing and townships, divestment in PSUs and SUUTI holdings and even a tax amnesty scheme on the likes of VDIS '97 can be expected. According to Crisil Research, the task of fiscal consolidation for this government will not be easy. While there is a scope for switching expenditure from unproductive subsidies to spending in growth-critical areas such as infrastructure, health and education, there is a little room to cut overall expenditures. Therefore, to sustainably reduce fiscal deficit, the government must raise revenues as a share of GDP. It added that to raise tax rates at this juncture is not prudent because it will severely hurt growth. Instead, the government must focus on implementing structural reforms such as the GST, which will lift tax revenues, lower the cost of doing business and boost growth. Gaurav Gupta, senior director, Deloitte India, for Consumer Business Sector (FMCG, Retail) says "This is going to be a tricky Budget for the new government as expectations from both corporates and citizens are high while the government will need to triangulate between inflation, budget deficit and investment. Coupled with it is low rain forecast that could impact the FMCG and retail industry through reduced demand and increase in commodity prices." More rebate on personal investments likely
* Analysts expect taxation reforms, including GST, sops for manufacturing, measures to tackle inflation and a policy for housing *
General Anti-Avoidance Rules could be postponed and more deductions allowed on personal investments to boost savings *
No major taxation changes are expected to revive growth barring higher deduction on personal investments
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Biz talk The third edition of North India’s premier business event, Invest North will be held in July. Zubin Irani, chairman, CII Northern Region and president, Building & Industrial Systems (India), United Technologies Corporation, talks about the event, investment potential of the northern region and steps required to attract more investments. Q: What are the plans for Invest North 2014? A: Northern region comprising eight states and one Union Territory accounts for 30.7% of the geographical expanse, is home to 30.5% of Indians, and is the largest contributor to the national GDP at 25.9%. However, the Northern states have traditionally not been aggressive in terms of proactively reaching out to investors and showcasing the investment opportunities they offer. While we do see this changing, a lot needs to be done. For us at CII Northern region, facilitating investments for growth and employment generation has always been a key agenda. Hence, CII Invest North 2014. The 3rd edition of CII Invest North is scheduled for July 24-25 in New Delhi. This edition will showcase and explore the investment opportunities and sector-specific opportunities in the northern states. So far, Himachal Pradesh, Haryana, Rajasthan, and Uttarakhand have confirmed their participation as partner state. Uttar Pradesh, Punjab, Delhi and Jammu & Kashmir are expected to confirm shortly. Overseas Indian Facilitation Centre (OIFC), a body jointly promoted by Ministry of Overseas Indian Affairs and CII, is the institutional partner. We have also approached DIPP to participate as partner ministry. As far as international participation is concerned, CII is reaching out to countries through their embassies/high commissions and investment facilitation agencies of other countries. So far, Indo British Trade Council, Hong Kong Trade Development Council and India Bangladesh Chamber of Commerce & Industry (IBCCI) have confirmed as overseas institution partners. Q: What will be the focus areas of the event? A: The primary focus will be to showcase investment opportunities in the Northern states. We will have dedicated state sessions, to be addressed by respective Chief Ministers or Industry Ministers. We will have a brain-storming session on ‘Ease of doing business’ with specific reference to Northern states. The objective is to share best practices and deliberate on the roadmap for improving the regulatory environment. Q: What are the investment opportunities in northern states that need to be showcased? A: The Northern states with their varied resource base and competitive advantages offer investment opportunities across a broad spectrum of sectors. While Delhi offers world-class physical infrastructure and connectivity; Punjab, Haryana and Uttar Pradesh are major contributors in agriculture, food processing and manufacturing; Himalayan states of Jammu & Kashmir, Himachal Pradesh and Uttarakhand have abundant water resources and picturesque locations ideal for tourism industry. Rajasthan is a mineral-rich state and is also one of the leading tourist destinations in the country. Some of the sectors with immense opportunities in North include infrastructure, agro-based industries, food processing, pharma, textiles, automobiles, light engineering and services like IT/ITES, biotechnology, BPOs/KPOs/ LPOs, tourism, medical tourism and healthcare-based industries, among others. Given the Indian government’s thrust on the manufacturing sector because of its employment generating nature, coupled with the proposed Delhi Mumbai Industrial Corridor, Eastern and Western Dedicated Freight Corridors — which will compensate for the logistics disadvantage of the northern states due to their landlocked nature, this sector can also play a critical role in shaping the investment landscape of the region. Q: The region is lagging behind the west and south regions as far as investment and industry is concerned. What do you think? A: Yes, if we look at FDI, Northern region received 28% of the total FDI in the country (April 2000 to March 2014) which is much less as compared to 48% for the western region. The southern and western states have proactively marketed their value proposition well and have also responded swiftly to the needs of industry. This has created a strong brand for them. CII Invest North 2014 aims to bridge that gap for the northern states by providing a platform to them to showcase their potential. The other challenge hampering the region is its landlocked nature. However, with the proposed Dedicated Freight Corridors providing high-speed connectivity to eastern and southern ports, North’s logistical disadvantage would be taken care of. Q: What can be done to improve the investment climate in the northern region? A: The regulatory aspect related to ‘Doing Business’ at the state level needs to be looked at. Some of the things that deserve priority attention are: use of IT to simplify processes for approvals and compliances, address land-related issues, labour reforms and better inter-departmental coordination for faster approvals. Q: What can state governments in the region do to attract more investments? A: Besides improving the regulatory environment, what is required is a mission mode focus on creating physical infrastructure, education and skill development, and above all, a policy of strong dialogue & consultations with all stakeholders.
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Core sector growth slows to 2.3% in May
The segments that recorded negative growth last month were crude oil, natural gas, refinery products and steel. The performance of eight core industries during the April-May 2014 on the whole has remained subdued at 3.3% level, thus, infrastructure constraints continue to hold performance of the nation, apex industry body Assocham said today. "The regulatory issues linked to the fixing of the price of gas have been affecting the performance of oil and gas sector," said DS Rawat, secretary-general, Assocham.
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Tata Sons gets new CTO
New Delhi, June 30 In this new role, Katragadda will be responsible for technology at the group level and share his expertise in managing R&D operations, leveraging cross-company synergies, creating technology strategies for white spaces, and acting as an evangelist for innovation across group companies. Prior to joining Tata Sons, Katragadda has served as managing director of GE India Technology Centre, leading GE's India technology team of over 5,000 engineers and scientists.
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Cipla inks pact to acquire 51% stake in Yemeni firm CPI-IW up 2 points in May SBoP donates ambulance
to Red Cross Society
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Biz talk
New Delhi, June 30
