Expectations of cement industry from Budget 2016

While the phased reduction in corporate tax rates as promised by the FM is expected, there are concerns about removal of deductions available.

By Deepak Khetrapal  
Wednesday, February 24, 2016

The most significant expectation from the Union Budget is a framework which brings back the confidence and energy of the investors, so that capital-formation and investment is revived. Without a major improvement in this policy framework, the 'Make in India' campaign will struggle to take off.

While the phased reduction in Corporate Tax Rates as promised by the FM is expected, there are concerns about removal of deductions available.

To encourage investments in large, and therefore long-gestation and risky, projects, support through appropriate incentives is a must. Large investments and employment creating initiatives need the support of appropriate tax-breaks.

The favourable situation of low energy and commodity prices needs to be leveraged by going a little easy on the fiscal-deficit discipline and creating infrastructure and manufacturing facilities fast.

Specifically in the cement sector, justice and fairness is called for, as cement despite being an essential commodity is one of the most heavily taxed commodities as if it is a luxury product. Therefore taxation on cement must be brought at par with the steel sector.

Also import duty on inputs for cement is higher than on the finished products and this needs to be addressed.

Bigger allocation for the much required irrigation projects and infrastructure must be made.

Targeted schemes to boost housing sector will also help cement demand to regain growth. This demand growth in the current year is languishing at just over 2 per centFurther, as a boost to the usage of renewable energy and saving natural resources like coal and oil, the co-generation of energy by the cement Industry through usage of recovered waste-heat needs fiscal incentives.

(The author is MD, Orient Cement)

 

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