The Union Budget 2020: Industry feedback

Soon after the finance minister Nirmala Sitharam unveiled the Union Budget 2020-21 on 1 February, the ruling party issued a statement that "Alleviation of poverty, wealth creation, agro reforms, inclusive education, and an all-round approach towards holistic development of the working class form the core of Union Budget 2020-21 as India continues to move towards becoming a USD5 trillion economy."

30 Dec 2020 | By Rahul Kumar

One Budget highlight was the cut in import duty on newsprint to 5% from 10%. The government in the last budget had imposed 10 per cent basic custom duty on newsprint and lightweight coated paper. According to an industry expert, "there has been a 22% dip in newsprint consumption in the past 12 months. The alarm bells were ringing. The situation is dire."

Meanwhile eight industry leaders have had this to say.

Cosmo Films, Neeraj Jain, CFO
Budget 2020 looks a balanced one with focus on transforming the economy. Various steps taken to reduce regulatory compliance and creating environment for ease of doing business will strengthen MSME sector and will give a boost to overall economic growth.

The overall measures announced will spur the revival of the economy and increase consumption. The proposed focus on education, infrastructure, data processing and healthcare will be positive for economic growth.

Max Speciality Films, Amit Jain, CFO

Though the budget is not as per the expectation of the industry but some of the points such as abolishing the Dividend distribution tax, abolishing the face to face meeting in CIT (Appeals), providing tax incentive for affordable housing, promotion of cashless economy by increasing the tax audit limit to Rs. 5 crore, if less than 5% transaction are in cash would definitely increase the investment and would pave a way for corruption free society. Further the budget also focuses on stringent laws for passing/availing the fraudulent ITC, which I feel was very important.

Coutloot, Jasmeet Thind, co-founder
With technologies like AI, IoT and data analytics transforming the world, and cutting across streams, the Union Budget 2020 has introduced some ample changes that will certainly benefit the start-up community. The finance minister announcing that entrepreneurs from rural areas will be offered additional opportunities to learn and develop their skill sets is definitely a moment to rejoice.

Stressing on digital connectivity throughout the country the Rs 6000 crore allocated for the same under the BharatNet program, we are happy that aspiring entrepreneurs and small businesses from suburban and rural areas will be able to scale their business outside of their towns. We will continue to offer our support to enable them to achieve their goal and own successful businesses.

Fujifilm India, Haruto Iwata, managing director
We congratulate the government on presenting the Union Budget 2020 for the common man and it’s encouraging to see that the government has taken the lead to deliver on its promise of excellence in healthcare. The government’s “TB Harega, Desh Jeetega" initiative to eradicate tuberculosis by 2025 is a significant step towards building a healthy Society. India being the highest recorder of TB cases in the world makes it imperative for us to understand the high risk of catching the disease. The government’s vision aligns with our mission to raise consciousness and promote advanced diagnosis and treatment of tuberculosis among patients.

Additionally, the government’s impetus on boosting the domestic manufacturing of electronics and medical devices in the country will reinforce the commitment towards raising awareness for early detection in India. Apart from this, the announcement to boost Artificial Intelligence is a great step to strengthen the usage of technology in the field of healthcare while intensifying the quality with accessibility and affordability. We believe that the government has put forward a progressive budget with a strong vision to take India’s social, economic and overall well-being to greater heights.

Heidelberg India, Samir Patkar, president
The fiscal deficit target for FY 21 is kept at 3.5% of GDP. There are ambitious disinvestment targets and allocation for the development of infrastructure like transport etc. There are schemes focussed on electronics, chemicals used in mobiles, electronic equipment and semi-conductors. These may benefit the packaging industry.

Emphasis on technology innovations like AI, quantum computing and 3D printing sends a positive thrust to the printing industry and speciality chemical industry.

The make in India push for consumer products and retail sector by increasing customs duty on imports of toys, footwear, electronics and other less technology-driven products would provide necessary boost for allied industries like printing etc to help the manufacturers to meet their packaging requirements as well as for marketing their products.

The Union Budget 2020 looks to boost consumption both in the urban and rural areas through higher disposable funds in the hands of consumers and farmers. This will hopefully drive demand for both commercial print and packaging companies.

There a caveat here. These measures are to be viewed in the context of effective implementation.

Shopmatic, Anurag Avula, co-founder & CEO
At Shopmatic, we are happy that aspiring entrepreneurs and small businesses will benefit from the many initiatives that the finance minister has announced in today’s union budget.We believe that the announcement caters to the rising aspirations of India and is aimed at giving the startup economy a boost!.  Setting up an Investment clearance cell to offer end-to-end facilitation and support to start-ups, will give a strong lift to the country’s aspiring entrepreneurs.         

Rural entrepreneurs are also being offered more opportunities to grow and up-skill, with the government allocated Rs 3,000Cr for skill development. Stressing on digital connectivity, the FM has proposed to bring digital connectivity to 100,000 gram panchayats and allocating INR 6,000Cr for the optical fibre program under BharatNet. The same will strengthen the digital infrastructure that rural entrepreneurs can leverage to promote and sell their products and services.

These are pivotal steps that the economy needs to boost consumerism and cater to India’s growing economy.

Toyo Ink Arets India, Prashant Atre,  managing director
The revival of the economy is the biggest concern in the minds of corporate India & everyone was hoping for some magic to happen through this budget with very little faith that it will actually happen.

Two major takeaways for our industry are: prohibition on the stock lot on most papers and reduction of duty on newsprint. Since the packaging industry is directly proportional to FMCG growth, it will see its impact through growing demands, if it happens soon.

Whatsapp university has rightly said, “Budget is a noble democratic process through which money is transferred from those who work to those who vote.”

Toyo Ink India, KS Murthy, deputy managing director
The Finance Minister presented a budget which we strongly believe will strike a right balance to give an upward momentum to the Indian economy and will certainly, boost the process to reach its target of $5 trillion economy by the end of 2022.   

There have been significant changes affecting individuals and corporate.

Reduction in Corporate Tax rates was announced in September 2019 and no further change has been announced in Budget 2020. Corporate Tax rates for existing companies were reduced from 25%/30% to 22%. The said rate was optional and was available to companies which do not claim certain incentives/deductions. Manufacturing companies incorporated on or after 1st October 2019, a new tax at 15% was also introduced subject to fulfilment of certain conditions. For the printing and packaging industry, it will boost companies to invest more on new developments increasing capacity etc. which is the need of the hour. We as Toyo Ink Group are looking very strong in the Indian market and are in plan to expand and do various innovations in India.

Dividend Distribution Tax levied on dividends distributed by companies has been abolished and dividends shall now be taxable in the hands of shareholders. Again a big boost for MNC’s like us and will also now help existing/new foreign investors to conclude on investing in India.  

On the commitment of ease of doing business, the present Government is committed to eliminating the difficulties faced by the taxpayers in understanding the department officials (no offence to the tax department). As a step towards the said objective, the Bill proposes to insert the Taxpayer’s Charter as part of the Income Tax Act and orders, instructions, directions or guidelines to be made for the administration of Charter. MSME’S will get a big boost if this works well. In addition to this, the Central Government will notify e-appeal scheme in order to impart greater transparency, efficiency and accountability in administering the appellate proceeding. The e-appeal scheme proposes to eliminate interface between the government authority and the assessee and further aiming at optimising utilisation of resources for speedy and effective disposal.

With all these catalysts to boost our current economic scenario this year, we certainly expect India to get back its original GDP growth, and also help all the foreign investors to regain confidence in the Indian market.  

Overall, it is a balanced budget for the corporate.

Xerox Business Services, Ritesh Gandotra, director
If this budget had to be known for one thing, it would be the length and breadth of technology infusion across all aspects. Technology and data are changing the world and the latest Union Budget rightly makes these its mainstay. The focus on data, digital records, connectivity and data security across key citizen services underlines the government’s faith in technology to deliver better governance, a safer society and a more competitive economy. The proposals for building data centre parks and setting up the ambitious National Mission of Quantum Technology and Application are significant announcements to put the technology intent into practice.

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