Mukherjee Babu's Budget 2012 didn't go well with industry leaders!

The much waited budget was at last announced by the Finance Minister Pranab Mukherji on 16th February. Indian Business houses, Foreign Investors/ SMEs all have waiting expectantly for a positive budget .While it may be good for some, it has disappointed a lot of sectors.

On the face of it the budget 2012 seems to be positive for Indian Media and entertainment industry. Entertainment industry seeks relief from the high taxes. It seems that the government has finally recognized the importance of M&E industry.

Going by the world economic condition and the overall mood of the country it seems to be a tough year ahead. Also increase in cost of commodity products; Gold, diamonds, platinum, cigarette, pan masala, tabacco, foreign bicycle and car, cement, hotel stay, hotels and restaurants, beauty parlors and spa, airways travelling, phone bill, TV, AC, refrigerator, coaching, buying house, watch, bank draft and courier seem to reaffirm there is no respite for the common man.

According to the budget for 2012-13 citizens have got relief in some products such as (Less cost commodity products- LCD-LED, Matchstick, medicines for Aids-Cancer, solar energy lamp, branded silver jeweleries, natural gas, LNG, uranium, aircraft parts, tiers, construction machinery, research equipments and mobile.

We spoke to some Industry Stalwarts on their reaction to the budget whether it's a pain or a gain.

Tarun Katial, CEO, Reliance Broadcast Network Ltd. for TV industry believes that the TV Broadcast and Distribution industry will hugely benefit from the success of the mandatory digitization initiated by the Government. We look forward to necessary fiscal incentives in the form removal/ reduction of multiple taxes and levies and regulations which ensure transparency and power of choice to the end customer.

Katial for Radio Industry believes that the advertisement in free to air mediums like radio should be treated differently and lower or nil service tax should apply for the same. We also seek clarity in tax amortization rules for intangibles like license fees paid by radio broadcasters which need to be amortized over the license period."

With the national broadband plan envisaging 160 million broadband connections including 60 million wireless broadband connections by the year 2014, It would have been good, if this growth path would have got some support through easing of taxes on internet and broadband services. He says, "Given this overall context, if the Indian telecom industry is declared as an infrastructure industry that too would immensely benefit the entire ecosystem."

Apparel Export Promotion Council appreciates the various progressive measures taken in the Union Budget 2012-13. Chairman AEPC, Dr. A Sakthivel feels that, "Extension of relief for R&D activities and testing laboratories and exemption upto 150% for expenditure on skill development in manufacturing sector as also allocation of Rs 1000 cr for National skill development programs are steps in the right direction. Apparel industry also welcomes the initiatives for improving infrastructure facilities like roads, ports and ICDs, which have been major bottlenecks for exports." The Council also welcomes the Rs 5000 cr allocated for venture capital and exemption of capital gains tax for purchase of new plant and machinery by SMEs. The Council looks forward to the Government's intent to implement GST by August 2012.

Custom duty relief to shuttles-less looms and processing machinery is welcome. The Council also welcomes the extension of concessional rate of custom duty of 5% to new textile machinery. "However, the Council was expecting zero customs duty for special machineries for manufacturing synthetic garments and processing of fibers, which could have increased our export competitiveness," Dr. Sakthivel added.

Vinita Bali, Managing Director, Britannia Industries Ltd says, "The Finance Minister has presented a mixed budget with fundamentally positive steps in some areas, not enough in others & large concern areas like the projected fiscal deficit of 5.1%. A few of the positives of the budget include raising the plan outlay for agriculture by 18%, initiatives for R&D in agriculture, allocations for improving warehousing and storage facilities for agricultural produce. All of these, executed well and on time, will address the supply side on food and agriculture that will drive domestic demand and consumption, which is one of the key priority areas. Similarly, some of the specific measures to create maternal and child nutrition programs is an essential step in ensuring that the unacceptably high levels of malnutrition are addressed"

Sunil Duggal's CEO Dabur India Ltd said, "Mr. Pranab Mukherjee's Union Budget 2012-13 is neither a populist nor a reformist act. It's more directed at maintaining a status quo rather than providing that much required thrust to take forward the reforms agenda."

There are some positives in the Budget by way of a 2% cap on subsidies and its progressive reduction over the next few years, greater focus on Infrastructure, promise to curb black money and capital market reforms. This shows that the Finance Minister has recognised the areas where we need to push ourselves in the coming years. It is heartening to see that the government has recognised the importance of infrastructure for future growth and is taking steps to augment infrastructure across the board, be it power, roads or civil aviation.

However, the lost opportunities far outweigh the positives. There is no consensus or move forward in permitting Foreign Direct Investment (FDI) in multi-brand Retail and Aviation. This is surely a missed opportunity. Also, the hike in Service Tax rate, a 2% increase in standard Excise Duty and the doubling of customs duty on Gold are being seen as highly Inflationary steps that may threaten to hurt consumerism. The hike in personal Income-Tax exemption slab to Rs 2 lakh was much below expectations.

George Menezes ' COO, Godrej Appliances believes that the budget this time is below our expectations. We were expecting some tax relief from the government on sale of appliances in the rural areas to boost rural growth or a tax subsidy for appliances that come under energy efficient 5 star ratings. Further, due to Excise and Counter Veiling Duty increase, all brands will be under severe pressure and eventually end consumer will suffer. The home appliances sector which showed consistent growth at CAGR of 12-15% in the previous years has now practically seen no growth this year. With cut throat competition in our industry, market prices are constantly getting eroded due to severity of the competition and all brands are facing severe pressure on the bottom line. As against an expected stimuli for propelling consumption in the Home Appliance space where penetration levels are pathetically low vis-à-vis other comparable BRIC economies, here we have a situation where taxes have gone up further which will further dampen growth."