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Budget 2017-2018

A good combination or a permutation to stay ahead in the upcoming election?

Union Budget 2017-18

Amidst much chaos and expectations the Union Budget for 2017-18 was finally brought out in the open by honourable Finance Minister Arun Jaitley. This also marked the minister's fourth annual budget presentation. All eyes and ears were on this budget, as the same was looked upon as the determining pivot on which the future of the Indian economy depended post the Demonitisation drive undertaken by the PM Narendra Modi, on 8th November 2016.  While the budget this time was surely historic in many ways, one being the same getting announced quite ahead of time, the other of course was Demonetisation.

Counting in the legitimate demands and keeping in mind the future of India and its economy in mind, the Government has certainly focused more on the growing pillars of the emerging economy, that includes giving special attention to the underprivileged, backward and the rural segments. The Budget has certainly understood the importance of the hard working middle class professionals and the small turnover businesses.

Transparency was the key USP of the budget presented by the BJP government in its fourth year. From curbing corruption at every scale to unburdening the honest hard working masses, the budget surely was a historic breather of the Indian population. Also this was the first time since Independence that the Union budget combined the Railway budget too and was presented along with the earlier today during the Parliamentary session.

Creating a smooth education backbone backed by smooth skill developments, the Government has also opened doors to increase employment in the country. Medium and small enterprises provide maximum employment. 2.85 lakh companies making a profit of less than Rs 1 crore. For MSME companies, income tax reduced to 25% if turnover is less than Rs 50 crore. 96% of India's companies will get this benefit of 5% tax reduction. In order to promote the Make In India initiative further and push India ahead in the Ease of Doing platform, this budget eased out the corners and have brought in a considerable change in Custom Duties of several items, including Customs duty of LNG being halved to 2.5%.

Also to benefit the retail market and to assist the brands on the investment front, FIPB has been declared to be abolished, which in turn will further the liberalisation  of the FDI policy.  This Budget based on 3 agenda -- Transform, Energise, Clean India (TECIndia), also gave us a clear projection that there will be a sure progress in the GDP of India owing to the tectonic changes that the country has overcome and witnessed through the last few months of stringent alterations. The budget presented by the FM was focussed on boosting and imparting holistic economic growth and hence to a greater extent this was a good budget. The finance minister has been to spend more in rural areas, infrastructure, and poverty alleviation and yet maintain the best standards of fiscal prudence. 
 

Keeping the foreign investor confidence high, the Finance Minister left the long-term capital gains tax on equity investment, STT and other taxes untouched, tweaked domestic transfer pricing rules and exempted some FPIs from indirect transfer provision. He also further clarified the GAAR rules. As for the Textile and Apparel industry, in June 2016, the government had already approved a Rs 6,000-crore special package for the textiles and apparel sector to create one crore new jobs in 3 years, and attract investments of US $11 billion and generating  US $30 billion in exports. This package has certainly been of great importance as insipred from the same, a similar package has been proposed for the Footwear and Leather industry in this budget. Also in order to bring in Legislative reforms to be undertaken to Simplify, Rationalize and Amalgamate the existing Labour Laws, FM Arun Jaitley while presenting the General Budget 2017-18 in Parliament today said that the Government is keen on fostering a conducive labour environment wherein labour rights are protected and harmonious labour relations lead to higher productivity. Legislative reforms will be undertaken to refine the existing labour laws into 4 Codes on (i) wages; (ii) industrial relations; (iii) social security and welfare; and (iv) safety and working conditions.

 The Finance Minister Shri Jaitley further said that the Model Shops and Establishment Bill 2016 has been circulated to all States for consideration and adoption. This would open-up additional avenues for employment of women. The amendment made to the Payment of Wages Act, is another initiative of our Government for the benefit of the labour and ease of doing  business.

Budget from their perspective:

Sanjay K Jain, MD, TT Textiles: The union budget this time was a welcome in many ways, higher allocations for infrastructure spends, better allocations for the textile industry etc truly indicates a paradigm shift. But frankly speaking for the last few years the Union Budget has actually focused more on the power loom segment, this time around we expected a  special package or allocation for the knitwear industry, which did not happen. Indirectly owing to the overall focus of the budget and the dimensions the same promises to explore hint at benefitting the apparel sector in the longer run. But speaking about direct benefit, we certainly do not have a breakthrough for the textile industry as a whole. The economic advantages given to MSME and to the higher income companies will surely benefit the companies concerned within the textile and apparel segment.

Mohan Krishna, MYBRA  Lingerie Pvt. Ltd.: This budget is essentially a feel good budget. According to me this is a political budget. The entire mould of the budget follows a pattern to attract the lower income group and will therefore mean a positive projection for the vote bank. Growth and employment has almost come to a halt followed by the sudden demonetization move. The budget is good, but will it ensure that employment in several man-centric industries will look up in the time to come? Improvements in the small business area like poultry etc and even in the retailer sector is almost nil. The real prospects of the budget projected towards the garment and textile industry is expected to surface with the coming of GST during July-August. Of course we can hope that there will be at least a 15% growth post that with the GST streamlining several aspects of taxation.

Dharmesh Jesani, Owner Partner, Natural Nightwear: The budget certainly did not pronounce anything specific as far as the textile and apparel industry is concerned. But this is certainly a good budget, owing to the focus it had and how in every way the same was linked to guaranteeing prosperity at the lower rung of the society and giving economic freedom to the earning members of the population. Doesn't these reforms directly link to an evolving change in our sector too? Yes! it does. But on the same I would want to specify that the ill effects of demonetisation is still well pronounced and we are still reeling under the same. The market is still to a greater extent and we can only hope that some changes will come with a growth once the GST is rolled out and we are freed off the unnecessary duties and excise we are subjected to pay at present.

 

Chandrima Chatterjee, Advisor, Apparel Export Promotion Council (AEPC): The industry is happy by the due recognition given in the Economic Survey, which has reemphasized on  Apparel  sector for generating jobs that are formal and productive, and recommended reforms in labour and tax policies to make the Apparel sector globally competitive.  Similar need for reforms has been highlighted by the industry earlier. We are happy to note the relief offered to the MSMEs by reduced tax for small companies with a turnover of up to Rs 50 crore to 25%. 85% of the apparel industry may be benefited by this proposal. I am also happy to note the renewed focus on Skill development with  100 India International centres proposed across the country. We expect apparel & hosiery industry to benefit from this. However, no specific relief was offered to counter the demonetization impact.  We hope that the proposed GST roll out will not add to the problems and  taxes will be reimbursed without blockage of working capital and the industry is not loaded with paper work and procedural delays due to the multiple city/ multiple location transactions that it has.  The hosiery industry being small, will be greatly impacted by this.

Sanjay Dawar, Director, Bodycare Creations: As you may already know, the 2017 Union Budget had macro focus on the farming sector, the rural population, the youth, the poor and underprivileged health care, infrastructure, the financial sector for stronger institutions, speedy accountability, public services, prudent fiscal management and tax administration for the honest! Also, by announcing several reforms, there has been an increased focus on few sectors such as packaging, dairy processing, textile, footwear and leather etc. Budget 2017 proposals seem to be encouraging for players in the consumer business. Just like many other manufacturing and retail players, I too believe that the tax reduction to 5% on income Rs 2.5L-5L and tax reduction announcement from 30 per cent to 25 per cent for small companies with an annual turnover of Rs 50 crore will definitely boost retail and consumption. Likewise, the lingerie and intimate apparel sector may witness growth.

Businesses like us are banking on the fact that with the amended tax brackets the ultimate consumer would be benefited in terms of the tax saving hence increased purchasing capacity, this will provide a boost to business sector (basically and assumingly to luxury, fashion and lifestyle products). Demonetisation has already enabled a big tilt towards modern retail and the measures proposed in the Budget will further accelerate the pace. The e-commerce aspect (both sale and purchase) of the lingerie industry is expected to rise.

Overall, it appears to be a progressive budget, as of now!

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