Tamil Nadu Bureau
"Proposals fall short of expectations despite the buoyancy in the economy"
CHENNAI: The reactions of the frontline chambers of commerce and industry and corporates of Tamil Nadu to Union budget 2007-08 were mixed.
They appreciated the focus on education and infrastructure, while expressing disappointment at the budget falling short of expectations despite the buoyancy in the economy.
Thiagarajar Mills Limited managing director and former southern region chairman of the Confederation of Indian Industry T. Kannan said proposals on education and infrastructure need to be applauded, but there was not enough for corporate India to boost investment.
Both he and CII-Tamil Nadu chairman and Lakshmi Machine Works wholetime director S. Jayavarthanavelu said there were reasons for the textile industry to cheer at the extension of Technology Upgradation Fund scheme, duty cuts on manmade fibres and increased allocation for textile parks.
Describing the budget as "not growth-oriented," Southern India Chamber of Commerce and Industry president S. Ramanathan said barring in the areas of agriculture and health, the Finance Minister failed to infuse enthusiasm . The increase in the excise duty exemption limit for small-scale industries was below expectations, he said.
Chairman, Tamil Nadu State Council of the Federation of Indian Chambers of Commerce and Industry and Farida Group, M. Rafeeque Ahmed welcomed the increase in the limit for SSIs and cut in peak customs duties. However, continuation of service tax on exports was disappointing. He welcomed the cut in duties on footwear components, but said the industry was disappointed that there was no reduction in excise duty on machines used for tanning and shoe-making.
The leaders were addressing mediapersons after the budget viewing sessions organised by the respective bodies.
At the SICCI meeting, past president of the chamber R. Veeramani said the budget did not have positive features for tourism and hotel industry at the national level.
Chairman, Taxation Committee of SICCI, M.R. Diwakar said inclusion of the works contract in the service tax net would have a negative impact.
The increase in the education cess to three per cent came even as questions lingered on whether the existing two per cent was reaching the targeted segment, he said.
Adding insult to injury
At the FICCI meeting, Tirupur Exporters Federation president A. Sakthivel welcomed the measures for the textile industry. The benefits, however, could be neutralised by the increase in the cess.
Adviser to FICCI president P. Murari said given the constraints on Finance Minister, he had done a good job. The positive feature was the emphasis on agriculture.
But the fringe benefit tax on employee stock options (ESOPS) "adds insult to injury" given that industry was opposed to the FBT.
CII leader and TVS Electronics Limited director Gopal Srinivasan said while the stability in excise duty for the hardware industry was good, there was little in the budget to provide clarity on the government stand on continuation of STPI status (tax benefits) for the IT industry.
Apollo Hospitals managing director Preetha Reddy welcomed the higher allocation for health, but expressed disappointment at the non-inclusion of the healthcare sector in the list of areas where venture capital funds would get the pass through status.
Saint Gobain Glass India Limited managing director B. Santhanam hailed the proposals on skill development, while Hindustan Motors Limited managing director Ravi Santhanam said an expected reduction in excise duty on cars did not materialise. Managing director of WS Industries (India) Limited Narayan Sethuramon said the budget augured well for the power sector.
Madras Chamber of Commerce and Industry president A. Sankarakrishnan in a press release said the budget was growth oriented and might spiral greater currency flows. However, "it has failed to address the issue of inflation. Certain rationalisation of tax levies should have been attempted ... [whereas] multiplicity of levies would necessarily result in additional compliance and collection cost."