The upcoming budget for the year 2017-18 will be unique for multiple reasons and there is big expectation from every segment of the society. With the halwa ceremony held yesterday and the date of the budget announced on February 1, industry experts from different segments are demanding issues relating to tax relaxations, cashless economy to reviving the economy off the lows. This budget will have the railway budget merged with the general union budget.
The Real Estate industry has witnessed several positive movements in 2016. Real Estate sector contributes close to 12 – 15% of the GDP and is connected to many ancillary industries. The budget is a precursor for the year and a platform to announce policies. However, apart from the budget, the government’s initiatives like demonetization and reduced interest rates are positive developments which will benefit the sector largely. We are optimistic that the upcoming budget will address the issue of the much-needed reality reforms.
Already announced demonetization has been one of the wise choices but post this announcement, the realty sector expects a friendly budget for the industry. We expect real estate to be given an industry status coupled with seeing more transparency in the working of the realty sector after RERA’s implementation. This will improve the buyers sentiment and encourage them to invest in real estate. Government’s move on rate and upcoming budget will hopefully lower the interest rates further. Not only this, RERA’s implementation will have an indirect impact on the new launches as they are expected to decline which will have a direct impact on high sales of already existing inventories. RERA will accelerate consolidation of industry and will result in decreased supply. Business will move from unorganized small sector to organized big players.
In 2017 the focus of Indian real estate will largely be on affordable housing to give momentum to the ongoing sales in the market. Recent amendments in the Real Estate Investment Trusts (REITs) have resulted in growth reason being easier access to capital for faster project completion. Largely, those staying in rental accommodation will benefit with affordable housing getting a push from the government from time to time with policy changes.This rationalisation of the tax regime for REITs in Budget 2016-17 will help make it a reality.
We expect that government will focus on the issue of land costs being high. Lowering down the costs for land acquisition will boost many private players. If the government does so, there will be many new launches and quick delivery of projects by the private players.
In 2016, for affordable home segment, government had already cut the interest rates but government need to also drive their attention to the housing segment with the ticket size of 1 cr and above, especially the luxury segment.
- Himanshu Kanakia, Managing Director, Kanakia Spaces
For the IT industry, the demonetization had no impact as most of the business was traditionally being run cashless. However the IT and engineering industry of India has been going through different challenges and would be looking forward to the upcoming budget to get some relief and support from the government.
First and foremost is the GST, which has been a major talking point and a bone of contention between central and state government. This week the center and state government have been able to come to a consensus of rolling out the GST from 1 July 2017. This common agreement on the implementation date definitely gives the industry much needed clarity and some additional time for preparation of this huge reform.
Another issue that has been in discussion with government for a long time is the incentivizing of R&D. While India has been able to incentivize the manufacturing related R&D in India as being innovation, this has not been done in the IT sector so far. To make sure India transforms into a digital economy and embraces innovation, it is important that the government announces the R&D incentives for the IT & Engineering Industry as well during this budget. This has been already done in many countries like UK & Ireland.
There have been concerns around the unusually high safe harbor margins (ranging between 20%- 30%) and this has to be revised to a lower rate which is more realistic based on the APA (Advance Pricing Agreement) data. Safe Harbor margins are high in transfer pricing and have not been adopted by the IT companies from India.
The software product development industry has been largely dominated by SMEs which has been suffering with the 10% TDS levied on all software transactions, which has cascading effect. The upcoming budget should address this issue to make sure government provides the required boost to the software product SMEs.
Overall, industry and individuals have high expectations from this Union Budget and we hope to see some good initiatives that will give an additional boost to the economy and eco-system.
- BVR Mohan Reddy, Founder & Executive Chairman, Cyient and Former Chairman, NASSCOM
We expect the government to bring in measures that will boost consumer sentiments and announce a policy roadmap that would fulfil potential of the auto industry. India requires critical thinking about environmental pollution and should be receptive of new technologies adopted by automobile industry. There is a need to revisit the existing import duty structure for hybrid vehicles. We are expecting that the Union Budget 2017 will introduce more incentives or schemes like Faster Adoption and Manufacturing of Hybrid and Electric (FAME) scheme to promote eco-friendly driving and mobility.
- Tom von Bonsdorff, MD, Volvo Auto India,
“First and foremost, we hope that the Union Budget is singularly focused on concrete measures to revive the economy and boost consumer sentiment. Demonetization particularly has left a trail-blaze of depleted consumer confidence in its wake. So we hope that the FM’s briefcase has the antidote our nation needs for an upswing in sentiments.
Secondly, we hope that the Government provides much-needed clarification on the GST front. We look forward to hearing about a precise timeline, fixed & final GST rates and the exact mechanism and structure for the input-tax credit.”
- Govind Shrikhande, Customer Care Associate & MD, Shoppers Stop Ltd.
The shadow of demonetisation has affected car sales, much more so in the premium and luxury segments than the mass market ones. The upcoming budget can bring in relief for the automotive sector with:
a) Further rationalisation of income taxes which would increase the disposable income in the hands of tax payers, especially the middle class
b) Continued investment into road and city infrastructure which will not only help car owners but is also a massive employment generator
c) Clarity on GST implementation and overall stable policy outlook will bring in the much needed optimism and positivity into the economy in general. People will be more prone to spending on larger items like cars when they have faith in long-term sustainable growth rather than on-the-spot announcements like the demonetisation one.
Additionally, monetary policy can support fiscal policy with continued intervention on interest rates, making loans cheaper and more attractive. This is especially important in a market like India where 3 out of every 4 car buyers take a loan to buy their car.
- Dhruv Chopra - Chief Marketing officer, CarWale
“We are very positive about the upcoming union budget. Over the years, we have seen many positive moves aimed at fueling domestic tourism. These initiatives have a long-term impact on international destinations as well because it is the first step in a chain of travel buying habits that eventually result in a long-haul trip. As you get people traveling domestically, it becomes a lifestyle, leading to an overall growth in the travel market – both domestic and outbound. Curiosity, coupled with habit, will eventually lead these domestic travellers into our target pool. Positive taxation, of course, will help propel domestic tourism forward. We look forward to positive taxation on airline tickets and airport services to make the proposition of flying domestically and internationally more accessible to all Indians.
We have also noticed and appreciate that the Indian government is now allocating funds towards the preservation of heritage, history, architecture and other experiences that makes India incredible. This is certainly admirable and I think India is leading the region in this regard. Historically and culturally, it makes good sense to protect India's precious heritage. It also makes good business sense because it is one of the pillars of India's tourism product. As someone who cannot get enough of India, I hope this continues in the years to come.”
- Hanneli Slabber, Country Manager, South African Tourism India