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Industry experts react to Budget 2018: cheers for agri push, mixed response to corporate taxation

The push to the agriculture and health sector in the Budget has been hailed by industries but they expressed mixed reactions to the corporate taxes levied. Here are some of the reactions.

Mamta Wadhwa, Vice President, Frost & Sullivan

The impact of 2018 budget is positive for Agriculture and Food Processing sector, affordable housing sector, health insurance industry and the textile sector.

Demand for agriculture-related products such as fertilisers, crop protection chemicals, micro irrigation equipment will go up. Since the focus will be on technology and modernisation, warehousing and logistics industry will also get benefitted. Financing for these sectors will increase. We will also witness an increase in exports of processed foods with the setting up of many testing labs.

The affordable housing sector will continue to grow in the coming years. We will see increased growth in low income/ small budget houses in tier 1 cities, and growth in housing in tier 2 and 3 cities. Consequently, the related industries in the supply chain – Steel, Iron, Cement, Construction Materials, and Transportation, will witness growth.

This will boost the health insurance sector, health service providers, and also the pharmaceutical sector in general. Overall healthcare expenditure will get a boost. Share prices of most of the pharma companies like GSK, Glenmark, Divis Laboratories went up when this announcement was made by the Finance Minister during the Budget.

The Government has proposed an outlay of Rs. 7,148 crore for the textile sector, especially for the apparel and made up segments in 2018-19. This will give much needed impetus to the apparel and fabric sector in the country. This sector is highly fragmented with a lot of small and medium enterprises (SMEs), and growth has been volatile in the last 3 years due to weakening of rupee, GST and demonetization.

This announcement is likely to stabilise the SMEs in this industry, and lead to employment opportunities. Demand for yarn and filaments will go up. India is a net exporter of apparels and this will give a further boost to this industry. Also, suppliers of printing inks, dyes, and pigments will benefit from this initiative.

For the above mentioned industries, the impact of 2018 budget is positive.

Joydeep K Roy, Partner & Leader – Insurance, PwC India


India is clearly moving towards a framework of National Universal Health Insurance scheme. This would be a precursor, and an experiment, and, therefore, it looks like this would need to be a Public-Private partnership between the government and the Insurance companies. The most appropriate thing to do would be for the government to partly subsidise the premium payment and leave the operationalisation and risk-carrying to Insurance companies, which today are well established both from the point of view of risk capitalisation and also on operational maturity. The only weak link here would be the health provider network (hospitals and clinics), which needs to fall in line to offer suitable services on a single protocol and IT system network. The next big step in health Insurance in India, would be to bring the health provider network under regulations and discipline which will enable the actual service delivery under one National Standard.

The individual exemption limits for paying health insurance have been increased to Rs. 40,000 (from Rs.25,000) for the taxpayer and to Rs. 50,000 (from 30,000).  This means that an additional Rs. 20,000-35,000 can be favourably looked at by individuals for allocating to health insurance premiums. India still looks at tax benefits for insurance premium payments and this would, therefore, be an effective stimulus towards increase of penetration of Health Insurance.

However, the health and general insurance companies will need to look at offering attractive features for people to increase their sum insured levels to match up to these levels of premia. Normally people do not want to take very high sum insured policies and are satisfied with 5 lakh sum insured policies which may not fill the entire exemption limit. In that case,people will need to look at additional policies like critical illness policies (fixed benefit policies) normally offered by life insurance companies. So it is an opportunity for the life insurance companies also.

A lot of work can be done here to look at enriching the features of health policies and also looking at covering extended families here and senior citizen covers need to be favourably looked at – for which companies need to invest in Analytics and Preventive Chronic Care mechanisms to maintain favourable loss ratios.

Hemal Zobalia, Partner, Deloitte India  – Infra & energy Industry 


Budget 2018 demonstrates the Finance Minister’s intent to boost investments in rural development, education, healthcare and social sectors. The Budget recognises the role of “Infrastructure sector” as growth driver of the economy with an estimated investment requirement of massive INR 50 lakh crore. All time high allocation has been made to rail and road sector. The Finance Minister again shown interest to develop smart cities and bullet trains, but more action is expected at the ground level. Provision for rationalizing linkages of coal to power to railways have been made to make it more efficient. As a welcome step, move to shift from ‘AA’ to ‘A’ grade ratings corporate bonds as eligible for investments will provide additional avenue to the corporate to raise funds for the infrastructure projects.    

On the direct tax front, the infrastructure sector did not get any relief on its long term standing demand of abolishing MAT or introducing group taxation provisions. However, 25% corporate tax rate has been extended to companies having turnover upto INR 250 crores in FY 2016-17. The benefit of lower corporate tax rate is curtailed by increase of cess rate from 3% to 4%. Also, long-term capital gains tax on equities at rate of 10% has been proposed which would impact Infra/energy companies planning IPO. On the indirect tax front, Social Welfare Cess of 10% has been proposed on import of goods by replacing existing Education Cess of 3%.

For oil and gas industry, rationalization in duty and cess structure has been proposed for petrol and high speed diesel. To promote renewable energy sector and provide impetus to indigenous manufacturing of solar panels, cells and modules, it has been proposed to fully exempt customs duty on import of solar tempered glass including anti-reflective coated solar tempered glass. For ease of doing business, a single point of reference has been proposed to be established for importers, exporters and officers for regulating customs matters. A new Customs Advance Ruling Authority with Appellate mechanism has been appointed which will be useful for avoiding unnecessary litigation. 


Milind Kothari, Managing Partner, Head-Tax and Regulatory services, BDO India:

The announcement in the area of health care is clearly path-breaking for the sheer size, coverage and the amount committed per family. This ushers India firmly in the next generation of social security as it moves aggressively towards a progressive developing economy”  


Anil Talreja
Partner, Deloitte India

The Finance Minister has, in his speech, laid out a powerful report card by referring to the commitments made by him with regard to the farm and consumer sectors in the earlier years and not only giving the status of the outcome of various measures but also announcing various measures to promote this key sector.

He has re-iterated the Government’s promise of doubling the income of the farmers by 2022 and also announced various additional allocation and funds in this sector.

With 150% increase in MSP for crops, support to organic farming, doubling the expenditure allocation to INR 1,400 crores for food processing sector, state of the art facilities to 42 food parks, liberalisation of agricultural exports, allocation of INR 10, 000 crore to fisheries, animal husbandries and related infrastructure, this budget is in true sense a Roti-Kapada and Kisaan budget.

Perhaps for the first time there is a special attention to the ancillary sector including infrastructure which will help the overall consumer and farm sector. The focus of these measures to ensure that the farm produce reach the ultimate consumers from the farms with maximum returns for farmers, introduction of facilities and technology leading to reduction in wastage in the sector, a boost to the fishery, aquaculture and animal husbandry sectors.

Abhijeet Biswas, Managing Director & Co-Founder, 7i Advisors LLP says, “As part of the rural push, the government has addressed the crop burning issue and made allocations to help the farmer. This will have a twin benefit on rural India as well as environmental changes”

Food Processing Minister Harsimrat Kaur Badal says the government’s decision to double the Ministry’s budget allocation to Rs 1,400 crore for next fiscal will boost farmers income and generate million of new jobs. “Thank you, @arunjaitley Ji, for Doubling the Budget Allocation for Ministry Of Food Processing. This will immensely benefit farmers in availing various food processing related schemes and increasing their income. Will also generate millions of new jobs,” Ms. Badal tweeted. In another tweet, Ms. Badal welcomed the government’s decision to increase farmers income by giving 1.5 times cost incurred to farmers as MSP. “No more potatoes on streets and crop-selling at loss,” she said.

Dipankar Chatterjee, Ex-chairman CJI, East and senior partner, L B Jha & Co says, “Finance Minister has gone beyond hand-outs and doles for agri sector, by laying base for a stronger agri sector. Any rise in farmers income as a result of these measures will also eventually help corporates , although they did not get the nudge to investments they had expected…,

Sanjay Jain, Chairman, Confederation of Indian Textile Industry


Allocation for Textile Industry increased from Rs. 6000 cr to Rs. 7148 crore – thanks to govt but falls much short of what was needed to take care of backlog of ROSL & TUF and current year requirement. Textile sector, which has over 95% units in the MSME segment with annual turnover of less than Rs. 200 cr, will benefit with reduction in Corporate Tax to 25 % from 30 %, will bring better fund flow to the units

South India Mills Association


Allocation of Rs.7,148 cr to boost apparel and madeup exports, 12% EPF for first 3 yrs, and extension of fixed term employment for all segments (earlier only for apparel and madeups) welcomed.

Sardar Taranjit Singh, MD, JIS Group


“I welcome heartily the government ‘s   plan and focus to move classroom black boards to digital boards. I also welcome the emphasis to be given to training of untrained teachers and allocation of 1 lakh crore for education research. Its also very commendable about the plans if coming up with 24 new Medical colleges. Also commendable is the plan of at least one medical college every three constituencies.”

Rakesh Bhargava, Director, Taxmann

Finance Minister clarifies that Cryptocurrencies shall not be deemed as legal tender and strict actions might be taken against investors in Cryptocurrencies. However, he also mentioned that Govt. can explore ways for using the blockchain technology for digital transactions. If it is not considered as legal tender, whether any transaction in it will be subject to GST or not is yet to be clarified.

– Pallavi Singhal
Partner – Corporate Tax, PwC India

Direct tax collections seem to have set-off the shortfall in overall tax collections. The anti-tax avoidance measures undertaken by the Government – demonetization and measures to curtail circulation of cash – have borne fruit and the direct tax collections have shown a robust double-digit growth in the current fiscal. Additionally, the statistics of increase in tax compliances is a testimony to the success of the various measures adopted to contain black money.


Pallavi Singhal, Partner – Corporate Tax, PwC India, says “The rise in the stock market in the recent past has been unprecedented. In order to garner additional revenues, the Government has proposed a 10% tax on long term capital gains tax on equities as expected. As per the statistics laid down by the FM, the exchequer should be richer by around 36,700 crore, which is substantial as compared to STT collections (introduced in lieu of LTCG a few years back) which has been around 7,500 crores. Existing investors can however breathe a sigh of relief since the gains till Jan 31, 2018 have been grandfathered and small investors have been provided with an exemption from the tax on gains below one lakh. Given that it impacts mutual fund investments as well, it would be interesting to watch the response of the stock market in the near future.

Abhishek Goenka, Partner & Leader, Corporate & International Tax, PwC India


Corporate tax rate of 25 percent will now be available to companies with turnover of upto Rs 250 crores.  Disappointed with no across board reduction and this kind of patch work is unhelpful.

Monish Panda, Founder, Monish Panda & Associates (law firm

The Finance Minster in his budget speech has again confirmed that the Government does not recognise crypto currency and will take all steps to stop usage and circulation of such crypto currency. This clearly indicates that the Government will now either come out with a legislative mechanism or make suitable amendment in existing legislation to ensure that dealing and trading in crypto currency is made illegal and to penalise entities and individuals who are involved in trading and circulation of crypto currency. We will have to wait and watch as to what will be final framework of such legislation, if such legislation is introduced.

Ajay Pandey, MD & Group CEO, GIFT City


The Union Budget 2018 is a growth oriented budget. The announcement of setting up of Unified Regulator for IFSC in India would help India achieve its full potential in the Global Financial markets. Globally, most of the financial centers host Unified Regulator in the same Centre which helps it to promote the financial center. Government of India’s initiative duly supported by all existing regulators would go a long way in establishing GIFT IFSC as a Global Financial Hub.

Rajaji Meshram, Director, Infrastructure, Government and Healthcare Services, KPMG in India

Union Budget 2018-19 allocates INR1.48 lakh crore for capital expenditure in Railways, the highest ever allocation in the history of Indian Railways. The focus of investment is on safety, electrification, track doubling/tripling and rolling stock such as train sets, wagons, coaches and locomotives. The announcement of setting-up first train set in 2018 is a welcome step as train sets have better acceleration characteristics as compared to conventional locomotive hauled trains. Station redevelopment programme has also got a decisive push with a target of 600 stations. Investments have also been announced for suburban railways in Bangalore and Mumbai cities. The paradigm shifting High Speed Railway project between Mumbai to Ahmedabad was formally launched in September 2017. The announcement of setting up of a specialized institute focused on high speed railway technology is well timed as the HSR project enters the construction phase. The Budget also announced modernisation of good sheds which is important for increasing railway modal share in freight traffic.

Nilaya Varma, Partner and Head, Government and Healthcare, KPMG in India

Finance and capacity together with accountability at city level is paramount for India to meet its urbanisation challenge. Government’s initiative of credit rating by Urban Local Bodies should be seen as a means and not an end by itself. We should link credit rating to a comprehensive programme of revenue augmentation and capacity building curated for each city.

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