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Budget 2018: Excellent for Building Materials Industry

Asutosh Shah, managing director, Duravit India, believes that the Budget has done enough to develop the construction side of the business

Budget 2018-19 has brought much good news. I would rate it as excellent for the building materials industry (BMI). I think the proposals have done complete justice and will lift demand for almost all items of the sector. Following points are noteworthy in this regard:

  • Infrastructure spending will rise from Rs 3.96 lakh crore to Rs 5.97 lakh crore (almost 50%); when implemented, it will create huge demand for steel, cement, ceramic and all building material items.
  • The mission to provide every home with a toilet has got a further boost with the continuing focus on and budget allocation for Clean India. This has a direct impact on the demand for ceramic tiles, sanitary ware and fittings.
  • The continuing thrust on affordable housing is good news for the sector. This offers sustainable development opportunities for building materials.
  • Development via rural spending will broad-base the BMI market, and this will benefit all stakeholders located in far and wide corners of the country.
  • Further allocation for road development will also bring many indirect benefits to the sector.
  • Many companies within the BMI sector fall in the Rs250-crore turnover slot. Therefore, income tax liability in such cases reduces to 25% from 30%. This also offers direct benefit to entrepreneurs.

I believe the Budget has done enough to develop the construction side of the business, and the benefits will gradually be seen as demand picks up. It’s good in particular as there’re no proposals to change excise duty/ other indirect taxes which may lead to sudden changes in cost of the products. In fact under GST, uniformity of tax rates across the country will bring many benefits via simplicity. Besides, the recent reduction of GST rates to 18% before the Budget has helped reduce prices and that is already helping in demand generation.

The realty sector is reeling under a lot of pressure due to several useful but disruptive steps taken last year. While all measures are positive for the future, the sector needs attention and short term relief to be a contributor to the economy, society and exchequer. With partnerships between state and centre, one can put realty in particular on the high growth path. This will be a win-win for everyone. Of course, this will also bring a lot of opportunity for building materials on a long term basis. Rationalising stamp duty to make it consistent with GST will bring back investor confidence in this sector.

From my point of view, skill development is very important for the building materials sector. While I do not have any specific proposal to offer, a lot could happen with skill improvement. Maybe this can be addressed within or outside the budgetary proposals. This would also be the key to Indian companies becoming globally competitive.

‘Make in India’ is a very important, relevant and industry-friendly mission. More concrete steps in this direction could have helped to address the problem of the unfavourable gap between our imports and exports. On the whole, however, the Finance Minister has done very fine balancing in an election year without making it populist. To me this is a welcome change. ')}


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