The proposals of Union Budget 2020-21 have evoked mixed reactions from captains of the Building Products & Home Improvement (BPHI) and allied industries. They feel that Finance Minister Nirmala Sitharaman could have done more on the real estate and ‘Make in India’ fronts, which are strategic for the growth of the industry.
By Mrinmoy Bhattacharjee
“The Make in India Envelop is Left Wanting”
Rajesh Mehra, director & promoter of Jaquar Group says, “The ease of doing business in the country has improved significantly. But its real indicators in the manufacturing sector are yet to be seen. Boosting the electronics and medical manufacturing market is welcome. However, policies for companies like Jaquar that are pushing the Make in India envelope are left wanting. The industry seeks incentives for local manufacturers, reduction in taxes on eco-friendly and energy-efficient products, and waiver of customs duty on imported inputs to make components.”
Mehra also observes that the Finance Minister’s proposed allocation of Rs 12,300 crore for the government’s flagship ‘Swachh Bharat Abhiyan’ mission is a “crucial” measure towards the country’s collective vision to become Open Defecation Free. “But how the government progresses towards this goal without rationalisation in the consumer durables sector, especially on products like pipes, faucets and sanitaryware, is yet to be seen.”
A GDP Booster
K E Ranganathan, managing director, Roca Bathroom Products Pvt Ltd, welcomes the Finance Minister’s efforts to make more monies available to the common people by reducing income tax rates to spur consumption. He adds, “It is laudable that focus has been given to agriculture with a simple aim to double earnings of farmers. Our farmers are the backbone of the economy, and this intention shows genuine care for them. It is a good Budget with a clear focus to revive the GDP growth and make people of India lead a happy life in 2020-21 and beyond.”
Echoes Keshav Bhajanka, executive director, Century Plyboards (India) Ltd. “I think that the Finance Minister is trying to increase the disposable income of people by proposing a new income tax system and initiatives for the agricultural sector.” He also notes, “The proposed reduction in the compliance burden on MSME sector should help our channel partners.” These steps, he hopes, will bring “slight” economic revival.
“A Lot Hinges on National Infra Pipeline for Cement, Steel”
Dalmia Bharat Group‘s managing director Puneet Dalmia remarks that the Budget has focused on rejuvenating economic growth with many nuts and bolts measures, and it is evident that the government has chosen to take focused steps, besides providing a sector-specific boost, keeping the compulsions of fiscal deficit in mind.
“At the same time, a lot now hinges on the government’s ambitious National Infrastructure Pipeline programme that aims to attract investments of over Rs 100 lakh crore in the next five years. If the 6,500 identified projects are executed well, this one single programme has the potential to significantly alter the Indian landscape, create lakhs of jobs, provide robust business to ancillary industries like steel and cement, and prime the broad economy.”
“Absence of Realty Impetus May Lead to an Extended Slowdown in the Institutional Segment of Our Customers”
“We see no major changes in our operations, except that ensuring GST compliance will become a critical task right down the supplier chain,” says Gaurav Malhotra, managing director, Hansgrohe India Pvt Ltd. From an investor point of view, he adds, the abolishment of the Dividend Distribution Tax (DDT) is a welcome move. “I must, however, mention that the earlier announcement of the corporate tax deductions has been a very positive step for the investors and will hopefully drive further investments. However, the Budget does not offer any significant incentive or impetus for the real estate industry. Hence, it will lead to an extended slowdown in the institutional segment of our customers.”
A Move for Easing Real Estate Transactions
Shrinivas Rao, CEO for APAC region at Vestian Global Workplace Solutions, feels that the change in excise and customs duties or simplification of GST norms may benefit its vendors. However, the change in income tax slabs seems to be a mixed bag for its employees, owing to the variation in deductions across categories and income levels.
Commenting on the real estate industry, he says, “The major impact of budget proposals on the real estate industry is the deduction of interest on loans as well as tax holiday to the developers being extended by one year, thus promoting the development of affordable housing segment. Another change is the tax concession for the difference between the transaction value and the guidance value, which has been increased from 5% to 10% for taxation as income in the hands of buyer and seller, thus hopefully easing real estate transactions. Apart from these, the proposed National Logistics Policy and development of Data Centre Park by private developers will boost the specific segments.”