Please find below Pre-budget expectations from Murugappa group on the following sectors:
Pre-budget quote from Murugappa Group
– Automobiles (Two Wheelers and Cycles)
With the hope of economic recovery riding strong on the wave of a stable government, industry captains are looking forward to a favorable budget this year. Sharing his views on the expectations for the automobile (two wheeler & cycles) sector, Mr Vellayan, Vice-Chairman and Director-Strategy of the Murugappa Corporate Board, says, “Introduction of schemes like free distribution of bicycles to school going adolescent girls will increase their mobility and independence. Such schemes, in addition to encouraging girl child education in rural areas will also help increase demand for bicycles in India.”
“India has the potential to be an export hub for bicycles. Appropriate fiscal supports like export subsidies, tax exemption from excise duty on steel inputs as well as service tax on input service will help reduce costs and boost sales of bicycles.”
Key recommendations are:
- To initiate environmental friendly projects such as creation of bicycle lanes to reduce pollution and traffic
- Incentives for investment in E-bikes projects to save oil imports. The govt should provide full exemption from excise duty for specified parts in the making of E-bikes and impose uniform VAT @ 4% for E-bikes pan-India to ensure product affordability.
- Special interest to auto component sector in the form of 2% rebate and antidumping duty for Chinese steel will be a welcome measure to boost the performance of the sector.
Pre-budget quote from Murugappa Group
– Financial sector reforms: Insurance Sector & NBFCs
Considering the economic downturn last year and a positive recovery expected in India on the wave of stable government, Mr Vellayan, Vice-Chairman and Director-Strategy of the Murugappa Corporate Board shares his expectations from budget ’09-’10 for the Financial sector
“The Government should extend the scope of tax exemption to all sectors including vehicle insurance and help the insurance industry to penetrate the market with a variety of products to meet the needs of all sections of the society. It should give incentives to rural sector by removing service tax to a notional rate to make it more affordable to common man. ”
“The insurance industry is in need of various reforms, especially motor vehicle insurance and renewal should be made mandatory in terms of both third party liabilities as well as damages. Government should also make suitable amendments to the SAFRESI act to include NBFCs so that this sector can take use of securitization and asset re-construction.”
Mr Vellayan, further added, “General Insurance sector is also awaiting government’s favorable considerations on various taxations. This includes amendment or addition to Proviso in Sec 195-exempting premium remittances made to foreign re-insurers from deduction of withholding taxes. Parity with other assesses to be rendered for insurance companies with respect to long term capital gains on sale of equity shares and exemption from Service Tax of small policies.”
Pre-budget quote from Murugappa Group
Food Industry: Sugar
Considering the economic downturn in last year and a positive recovery expected in India on the wave of stable government, Mr Vellayan, Vice-Chairman and Director-Strategy of the Murugappa Corporate Board shares his expectations to the government, “International Crude prices have again reached USD 70/ barrel which indicates a greater probability of sugar manufacturers of Brazil choosing to produce fuel ethanol over sugar, creating a shortage in international trade. Sugar being a common man’s commodity, it is important to ensure that the supply side restriction does not lead to domestic shortage.”
“Government should provide subsidized natural gas to sugar refineries and introduce fiscal benefits for new technology investments & working capital requirements. This will guarantee reasonable availability of stocks at all times for the domestic market.”
Other Key expectations are:
- Citing the potential supply-demand mismatch, government should let the prices be governed by market forces through partial decontrol of the industry and re-introducing sugar futures trading.
- Government should do away with the release order mechanism which may build supply shortages and push up prices; instead of importing of high cost white sugar from international market which shoots up the domestic prices artificially.
- To improve efficiency in the sugar industry, the government should introduce a package for revival of sick units through disinvestment.
- Power cogeneration is another issue which the government needs to give a level playing field by allowing market determined prices.
Pre-budget quote from Murugappa Group
Agriculture sector and Farm inputs
With the hope of economic recovery riding strong on the wave of a stable government, industry captains are looking forward to a favorable budget this year. Sharing his views on the expectations for the agriculture sector and farm inputs, Mr Vellayan, Vice-Chairman and Director-Strategy of the Murugappa Corporate Board shares its expectations to the government,
“The growth of Agri industry has been constant over many years at the rate of 2.5% and the stock of food grain Vs use ratio is becoming thinner clearly indicating depletion in buffer stocks. To infuse dynamism into the sector, government should introduce a comprehensive package which covers; irrigation, farm input usage, viability of industrial units involved in farm input supply and other services.”
Government should protect the domestic industry against vagaries of imports while ensuring that the country’s food security is uncompromised and reduce India’s dependency on imports.”
Our key expectations from the union budget 2009-10 are:
- Incentives by way of capital support or interest subvention for farm mechanization, drip irrigation and improved irrigation schemes
- Incentives for mining and exploration on scarce raw material sources and encourage overseas investments in this field.
- Government should ease the supply side constraints and help the manufacturing units plan for input resources to ensure that manufacturing units does not suffer losses and scale back their investment plans
- Provide fertilizer subsidies through cash rather than bonds or alternatively give SLR status to subsidy bonds making them tradable at par with other securities.
- Encourage the agriculture related services like soil testing, pesticide services and farm equipments that directly impact farm productivity
- Support environmental friendly projects like compost fertilizer manufacturing and distribution.
- To improve liquidity for the Manufacturers associated with farm-related activities, Government can
- Reduce income tax for cooperatives and
- Exempt income tax of dividend received from overseas investments
Pre-budget quote from Murugappa Group -Corporate
The election 2008-09 has been momentous as the government has got a chance for a second consecutive term after nearly 15 years, bringing hopes of stability and economic revival. In this context, Mr Vellayan, Vice-Chairman and Director-Strategy of the Murugappa Corporate Board shares its expectations to the government, “The upcoming budget and industry demands should coincide towards fiscal incentives for removing demand and supply side gaps in the economy.”
The foremost aims of the budget should be:
- Ensure inclusive growth with special incentives to backward regions,
- Ensure food security through subsidies and
- Provide incentives for demand generation through rural welfare schemes.
“The proposed 100 day plan by the prime minister already includes Rs.3/kg wheat, employment generation through NREGS, export incentives to sectors hit by the economic downturn, social welfare programs for girl child health and education and infrastructure projects. As all these are going to put enormous pressure on the already burgeoning fiscal deficit, one needs to prioritize what is of utmost importance. At the same time government is hard pressed by the FRBM act to ensure fiscal discipline. We are eagerly awaiting the budget 2009-10 to see how the government balances its objectives of demand generation and control fiscal deficit.”
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