For exporters and importers, Budget 2014 gives many statements of intentions and some facilitation but no specific reliefs. They need to remember that the Budget has come within a few weeks of the new government taking over and hope for better days ahead due to several initiatives that are not specific to exporters or importers.
The finance minister affirmed his government's commitment to revive Special Economic Zones (SEZs) and investors' interest, to develop better infrastructure and to effectively and efficiently use the available unutilised land. He talked of engaging with states to take exports to a higher growth trajectory and proposed an Export Promotion Mission to bring all stakeholders under one umbrella. He announced extension of the existing 24x7 customs clearance facility to 13 more airports in respect of all export goods and to 14 more seaports for specified import and export goods. He also spoke of implementing an "Indian Customs Single Window Project" to help importers and exporters lodge their clearance documents at a single point, and to get required permissions, if any, online from other regulatory agencies.
Other budget initiatives can bring efficiencies to benefit all. Such as a new investment allowance at 15 per cent to manufacturers investing at least Rs 25 crore in any year in new plant and machinery till 2017, in addition to the existing allowance to those investing Rs 100 crore or more during 2013-15. Plus, broadband connectivity at village levels, equity, quasi equity, soft loans and other risk capital for start-up companies, setting up product-specific clusters, more and better ports, airports, roads, power plants, gas pipelines and reforms in finance, insurance and capital markets.
There might be disappointment that the threshold limits for taxing small manufacturers and small service providers remain unchanged. Minimum Alternate Tax and Dividend Distribution Tax continue for SEZs. The customs/excise tariffs remain complicated, with no end to cess for various purposes. A plethora of exemptions continue - in fact, more have been added. There is no simplification or rationalisation of tariffs or the processes. On the contrary, fresh restrictions by way of six months' time limit for taking Cenvat credit and barring large taxpayers from transferring credits to their own units have been stipulated. Serious attempt to make it easier to do business is missing. Most proposals in indirect taxes merely respond to representations of select interests and amount to nit-picking, with no clear visible strategy. However, allowing domestic companies to seek an advance ruling on taxes, enlarging the scope of the Settlement Commission, setting up a high-level committee to regularly interact with trade and industry and ascertain areas where clarity in tax laws is required are steps that will help all sections of trade. So, too, for the commitment to issue clarifications within two months and amendments to excise valuation laws to enable acceptance of price even when goods are sold below cost.
In a difficult economic situation, the minister has committed himself to aim at a lower fiscal deficit of 4.1 per cent of gross domestic product, tried to attract more investment in infrastructure, assured states about fairness while bringing in the national Goods and Services Tax and made many similar statements of intentions. Overall, the maiden budget of Arun Jaitley deserves to be looked at with the indulgence that performance of a debutant usually gets. The next one should be more reformist.