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Industry players appreciate Jaitley's balancing act in Budget 2018-19

Business Finance


Industry players have by and large appreciated Finance Minister Arun Jaitley's balancing act while presenting the Budget proposals for fiscal 2018-19.

Hari Menon, Co-Founder and CEO, Bigbasket, said, "This year's union budget seems promising for the welfare of farmers, a segment that bigbasket is closely associated with. The announcement of Operation Green to boost produce will be a major enabler for players like bigbasket as we focus on organic produce in a major way. Developing and upgrading rural haats into gramin agriculture markets is another positive step. bigbasket has always endeavored that its efforts and activities benefit the farmer and further, its consumers. And thus, the increase in the Minimum Support Price of all crops to at least 1.5 times that of the production cost is in conjunction with these efforts. bigbasket is directly engaged with about 1,800 farmers presently growing to 3000 this year and thus, the government's focus on the farm sector and the fact that the centre wants to help farmers produce more is a plus for us.

"The passage of the Goods and Services Tax (GST) Bill in the Rajya Sabha last year was a very progressive step with players like us accruing a lot of benefit. It has brought a definite relief from a key issue faced by the e-commerce segment that of cascading taxes; ensured seamless movement of goods across the country; and brought in efficiency and transparency in the manufacturing sector. The implementation of GST has also helped us in effectively selling unique products in one state to the same communities in another state. As expected, skill development and job creation; and infrastructure have all been given due importance

The Union budget could be seen as adoption of middle path this year with a balanced mix of politics and economics. Keeping the rural and agri-sector as the central focal point, the government extended much needed support to the distressed farm sector.

"Strengthening rural, infra, textile, digital and leather industries will not only boost job creation but will also improve the consumption pattern in the economy. Incentivizing the MSME sector will strengthen the financial muscle of the sector. The sector is also likely to witness more growth and expansion after its formalization post GST. An improvement in the MSMEs sector will also boost the angel funding and VC environment in the country.

Government's Digital India campaign will get a further push with an increased spending even at the grass root level.

Sashi Reddi, Managing Partner, SRI Capital, an early stage venture capital firm said, "I am thrilled that the government continues to make bold and sensible steps. I wanted three things from this budget- Imposition of LTCG tax at 10 percent, treating non-listed equity on par with listed equity and get rid of the 'Angel tax'. One out of three is still pretty good. Mark my words-there will be no big crash in the stock markets. People understand that this was the sensible thing to do."

Vikas Katoch, Founder and CEO, Adomantra, said, "If this is not a people's budget, then what could be? With the budget announcement of 2018, the government's bravest and the boldest step of uplifting India and stepping on the path of Digital India just got another huge boost. The government's decision of doubling the fund allocation to Rs. 3073 Cr as a part of the digital India initiative and the stratagem of providing internet services to 5 crore rural citizens through 5 lakh Wifi Hotspots could be the golden gateway for Mobile OTT and OTT players to reach out to the untapped audience of the country."

"Digital Video advertising would now be able to shift its ambit from the modern India to the traditional Bharat. Adding on to the existing Government initiative of introducing broadband services on more railway stations and trains shall invigorate the entertainment and digital advertising industry, bringing a paradigm shift in the face of this industry," Katoch added.

Welcoming the budget announcement by the government, Puneet Chandra, Founder and CEO of Skootr said, "I personally feel that the budget will give a big push to managed office spaces. With incentives to the MSME sector, considerable number of MSMEs in the country will grow and expand their footprint. The financial boost towards the MSME sector, will also lead to a demand in the commercial real estate and managed office space for expansion."

"The reduction in corporate tax rate will be invariably proportional to the commercial real estate sector. Reduction in corporate tax to 25% for companies with turnover of upto 250 crore will give more financial muscle to focus towards development of their office infrastructure. We expect an increase in demand for managed office spaces from the IT sector specially, post this announcement," he added.

Commenting on the budget, Mr. Raghvendra Pratap Singh, Co-Founder, i2i Funding, India's second largest P2P lending firm said, "The Budget 2018-19 has been extremely encouraging for the startups, mainly operating in the Fintech sector. The government has shown a keen interest in evaluating the policy framework and formulating an institutional model to create a conducive environment for the development of the industry. Besides, government's willingness to promote the use of blockchain technology to encourage digital economy may prove to be a growth catalyst for the P2P lending industry."

"Imposing 10 percent long-term capital gain tax on equity investments may create some level playing field for the P2P lending industry. So far, the favourable tax treatment on long-term gains on equity investments made them a preferred choice for the investors. Now, those who are ready to take higher risk for earning better returns may also think of investing in P2P lending projects which have a better risk profile as compared to equity-oriented investments," he further added.

Multi Family Office & Private Wealth Management Company Client Associates, however, felt that budget 2018-19 would impact financial investors negatively. It listed its concerns as follows:

1. 10% tax on dividends from equity schemes: It will impact arbitrage funds, which used to enjoy almost tax free status due to daily dividend option. Now post tax arbitrage returns will get compressed by 10%, but these would still be better than liquid funds and most of the ultra short funds.

2. LTCG on equities, but with grandfatheree status: While investors will pay 10% on incremental long term equity gains from here on, the expected returns from Indian equities is still better than other asset classes. We don't think this will drive away investors from the market. Hopefully STT be removed in due course too.

3. SEBI to ask large corporate's to use bond markets for 25% of borrowing: This should augur well for the bond market development.

4. Government to ask regulators to allow investment mandates to expand beyond AA to A rated bonds: This will increase interest in A rated bonds, and will benefit credit opportunities funds as institutions chase yield by incorporating A rated bonds in their portfolios.

5. Corporate tax rate of 25% for firms below 250 cr revenue This is 5% tax cut is a positive for many of our owners in our universe, although the cess increase from 3% to 4% is taxing.

Desi Valli, the founder and CEO of Netree, a leading retail engagement platform and the world's first connect-promote-transact platform for retailers, praised the Union Budget 2018-19, with reference to the MSME sector on account of meeting their credit demands.

Valli said, "Allocation to the MSME sector in the form of capital support and interest subsidy by 2022, and expanding the cap of corporate tax of 25% extended to companies with turnover up to Rs 250 crore in FY 2016-17, will make the economy robust. This will invite many smaller players to join the formal sector and bring transparency with thrust on technology assimilation and digital payment integration in all processes. Union Budget's resolve to promote the digital economy, will be a game changer in terms of promotion and transactions."

He added, "The Union Budget 2018-19, is focused, forward looking and growth oriented. Focus on rural infrastructure, agriculture, education and healthcare, will usher a new era of development in India. Government's sustained focus on the digital payments and ease of doing business, will boost retail growth in India".

Yevgen Sokolnikov, CEO and co-founder of boodmo, co-founder, an auto component marketplace start-up company, in India, said, "I am happy to note that India is giving special attention and treatment to medium and small enterprises (MSMEs), which is said to have been due for long. I expect that businesses like ours having technology interface, will gain owing to the country's renewed focus on digital transactions and ease of doing business".

Hemalatha Annamalai, South Chapter Chief, SMEV and CEO & Founder Ampere Electric Vehicle Pvt Ltd, said that SMEV welcomed the Union Budget 2018-19. "I am sure that simplifications in indirect taxes will ease compliance requirements for the MSMEs and also, electric vehicle companies in India", she said.

While applauding government's focus, Annamalai said, "The budget intends active measures for promotion of rural infrastructure and agricultural for the country and thus, increasing income of rural people. And then, the renewed thrust to MSMEs to the tune of INR 3,794 crore in the form of capital support and interest subsidy by 2022 will surely help meet the credit demands of many companies. Considering India's Electric Mission 2030, continued govt initiatives towards both rural and MSME empowerment, will help achieve mass percolation vis a vis EVs in the country."

"The focus on incentives to technology and R & D will be big booster to the innovative companies," she said.

Expressing concern of the industry Hemalatha said, "High tax (GST) on the EV components still remains a big concern for the industry, which this budget must revise to 5% for all the EV components. Also, clarification on the extension of FAME scheme for the two wheeler EVs needs immediate government attention."

Sumit Peer, Founder and CEO, Aurelius, a consultative insourcing solutions company, said, "Taxes led to lot of stress amongst MSMEs. But as government aptly recognises the MSME players as critical players in the Indian eco system, the tax reduction to 25% from 30% will be a great relief. The revised steps to work on stressed accounts and NPAs can help the MSME sector to leapfrog along with dedicated funds and different interest rates.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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First Published: Fri, February 02 2018. 14:10 IST