Auto industry on safe highway
The auto industry, which is already going through a churn given the multiplicity of players, had no reason for cheer. If anything, they must be breathing a sigh of relief since no major tax impact was imposed on them in the recent budget. Excise duty, which was being expected to be brought down, remains unchanged. The only segment to be affected by the budget is the multi-utility vehicle (MUV) segment, where the excise duty has been hiked marginally by 2 per cent. This will clearly affect Telco, Mahindra & Mahindra, Bajaj Tempo and Maruti Udyog who are leading players in this segment and who will see the prices of their products go up by upto Rs. 8,000. Barring this, life after the budget for the auto industry is likely to be smooth.
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Three cheers for infrastructure
One sector that is highly enthused with the new budget is the infrastructure sector, where the finance minister has announced several measures to boost investment.

The tax relief on capital gains for those investing in bonds of the National Highway Authority of India is likely to ensure a steady flow of funds that is required to complete several important road projects.

In the power sector, the setting up of a special fund for renovation and modernisation of power plants is likely to see several states take up renovation projects that will ultimately yield better power to the states. The industry is, however, disappointed with the inability of the government to grant infrastructure status for LNG and natural gas.

The telecom sector is pleased with the reduction in the duties on components used in the production of telecom equipment. Also greatly pleased with the budget are the cellular phone players who are likely to see their subscriber base expand with the lowering of duties on handsets.

The sops granted to the road infrastructure and housing sectors, is likely to see a lot of activity in the cement industry. Further, tax reliefs on mergers and acquisitions is likely to see major players like Gujarat Ambuja and India Cements, which have used this route for consolidating their position in the industry, benefit a great deal.
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No cheer for pharma industry
With the expected sops on original research and development not materialising and with the introduction of tax on exports, major pharma players like Ranbaxy and Dr. Reddy’s, which spend heavily on R&D and have a large export tunrover, are likely to find the going tough.

Leading executives from the industry, while bemoaning the lack of imaginativeness in the budget, have hoped that the government will issue necessary notifications in the near future on the basis of the report of the task force set up by the government some time ago to look into the needs of the industry.
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Boost for venture capital funds
The new finance bill announced by the finance minister yesterday, spells music for the venture capitalists. In a bid to encourage knowledge based industries, the finance bill has provided several sops to the venture funding industry.

While not fully adhering to the Chandrasekhar committee (appointed by Sebi) recommendations, that venture funds be exempted from tax and be treated as a pass-through, the finance minister adopted a mid-way stance and.

Under the new dispensation, a venture fund or company will be liable to pay a flat 20 per cent tax on the income distributed by it. Further, this tax will also be applicable on all income of a fund not distributed within a specified period. The finance bill also made it clear that any income of a venture fund or company derived from investment made in a venture capital undertaking will not be taken in the computation of the total income for taxation.
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