|Wednesday, March 1, 2000,
Sops for IT, telecom
& entertainment sectors in Budget
A mix of positives and negatives
Collateral for SSIs up to 5 lakh
Rs 15 crore aid for HP
NEW DELHI, Feb 29 (UNI) Mr Yashwant Sinha today gave a big boost to the information technology sector,telecommunications and entertainment to promote fast emerging convergence revolution .
Customs duties have been reduced from 20 per cent to 15 per cent on computers, mother boards and floppy diskettes. Duties on micro-processors, memory storage devices, CD Roms, integrated circuits and micro-assemblies and graphic display tubes for colour monitors for computers have been reduced from 5 per cent to nil.
Customs duty has been reduced on specified capital goods for manufacture of semi-conductors and ICs from 15 to 5 per cent.
Presenting the Budget, Mr Sinha said the IT sector leads the current excitement .
In telecommunications, basic Customs duty on specified raw materials for manufacture of optical fibres has been reduced from 15 per cent to 5 per cent. Cellular phones witnessed a steep duty cut from 25 to 5 per cent. This will improve their availability through proper channels and curb the menace of grey market.
The duty on battery packs of the cellular phones has been reduced from 40 to 5 per cent.
Proposing these reductions, Mr Sinha said "to become an economic superpower we must get connected,domestically and globally".
Internet service providers were also benefited as concessional rate of 5 per cent basic duty applicable to specified telecom equipment has been extended to them also.
Duty reduction has been extended to the entertainment industry as the Minister reduced Customs duty on cinematographic cameras, and other related equipment from 40 to 25 per cent.Colour positive films in jumbo rolls and colour negative films in certain sizes will be exempted from CVD apart from the benefit of duty reduction from 15 to 5 per cent.
Blow to exports: The sofware industry is generally upset with the Budget proposals which will take away concessions on their export income which contributes bulk of their revenue.
The Indian infotech industry excelled in the past earning close to $5 billion in the export market.
The Budget will phase out the export income concession in five years with 20 per cent of it going straight away this year.
President of Nasscom Dewang Mehta said the consolation is that the concessions would go away only in five years and not in one shot. However, he said he is happy with the increase in the holding limit for FIIs and initiatives on the venture capital.
IT giant NR Narayana Murthy said companies like Infosys Technologies who pay most of their taxes abroad might not be severely affected. However, other companies not covered under the double-taxation agreement regime would see their bottomline erode.
good balancing act
CHANDIGARH, Feb 29 The Budget was described as a good balancing act by members of the PHD Chamber of Commerce and Industry at an interactive session at the Press Club here today.
Mr R.K. Saboo, former President, PHDCCI, said the Budget emphasis on rural development would result in wider purchasing power thereby increasing industrial activity. He said if the Finance Minister is able to control the deficit within the limit of 5.1 per cent as proposed, it would be a great achievement.
Mr Ashok Khanna said that the Chamber had been for long emphasising on abolition of collateral for the tiny sector and opening of more SSI bank branches. He added that the manufacturing sector has been brought into focus, which will give the sector its proper share.
Mr Satish Bagrodia said in the garb of rationalisation adopted by the Finance Minister, all items below 16 per cent have been increased to 16 per cent and surplus tax has been categorised as special tax. The increase of rate of tax on distributive dividend would have a cascading effect and increase the manufacturing cost. The increase in taxes on export would reduce investible funds and thus affect exporters.
Mr Beant Singh, Resident Director, PHDCCI, suggested that the government should have announced specific measures to control expenditure. Mr Subhash Kohli, President, Industries Association of Chandigarh, said the increase of taxes from 10% to 20% on dividend will risk a re-emergence of double taxation.
Mr S.S. Sandhu, President, Mohali Industries Association, said that the Budget was good for the growth of industry and relief to SSI and tiny units by abolishing collaterals up to Rs 5 lakh was a positive step. By making the Banks answerable to third party in case of SSI sector, the Finance Minister has fulfilled the outstanding demand of the industry.
Mr D.S. Sandhu, President, Income Tax & Sales Tax Association, observed that although the Budget did not have anything for the upper middle class to cheer about, it was a good balanced Budget.
CHANDIGARH, Feb 29
Escotel Mobile Communications Limited today
launched its unique Internet-to-cellular messaging
service in its circles. The service allows Escotel
customers to receive e-mail messages directly on their
cellular phones, free of cost, from anywhere in the
CHANDIGARH, Feb 29 Industry in the North is terribly disappointed with the Union Budget 2000-01.
According to Mr I S Paul, Chairman, CII Chandigarh Council, fiscal deficit of Rs 11,275 crore is a worry to the Indian economy. There is nothing in the Budget that reveals the Governments intention to control expenditure or mobilise funds for infrastructure development. The Finance Minister has also not spelt out any clear-cut programme of disinvestments
Mr Sachit Jain, Chairman, CII (NR) Textile Committee, felt that the increase in excise duties in the textile composite sector would lead to further duty evasion and unfair competition. I am disappointed that there has been no reduction in ad-velorum excise duty from 8% to 4% on woven fabric. Unfair treatment towards composite fabric makers vis-a-vis independent process houses continue, Mr Jain added.
Mr K L Khurana of Ranbaxy was critical of taxation on exports earning and enhanced dividend taxation. According to Mr Khurana, the Budget did not evoke any positive sentiments.
Mr Jagjit Singh, Chairman, CII (NR) SMEs Committee, said that the Budget did not demonstrate any growth-oriented measures for SSI. He, however, welcomed the liberalisation of venture capital funds.
Others who expressed
their disappointed on the Budget include Mr Balraj Singh
Hora of Fujitsu India, Mr R M Khanna, Chairman, CII (NR)
Taxation Committee; Dr M J Zarabi, CMD, Semiconductor
Complex; Mr Ashok K Tandon, MD, Milestone Gears; Ms Neena
Singh of HDFC Bank; Mr Krishan Goyal, MD, Modern Dairies
Ltd; Mr K K Sharma, Asstt. Vice-President, IndusInd Bank;
Mr V K Sharma, Director Technical, DCM Ltd; Mr K
Sachdev, President & CEO, Gates India Pvt Ltd; Mr S P
Raja of PNB Housing Finance; Mr A L Aggarwal, President,
Chandigarh Chamber of Industries; Mr Arjun Bhandari,
Manager, Deutsche Bank and Mr Pankaj Varma of SBI.
A mix of
positives and negatives
NEW DELHI, Feb 29 The millenniums first Budget evoked mixed reaction from the industry with remarks of excise proposals confusing, proposed fiscal consolidation not enough for a balanced and good Budget.
The Budget hides a lot. I am not being negative but not enough positive as well. CII President Rahul Bajaj said.
The Budget proposals contained a lot of confusion on excise rates.
Positive, good and balanced Budget, remarked the President of FICCI, Mr G.P. Goenka.
He said the Budget would give a boost to the information technology and telecom industry. The Governments firm decision to reduce its stakes in PSUs, was a positive signal of corporatising these units.
The move to reduce the Governments stake in banks to 33 per cent is a very good move, Mr Goenka said.
The dividend tax on companies an increase in surcharge in income tax, no major change in the personal income tax, growing fiscal deficit, the FICCI President said were the areas of concern.
The Governments failure to contain the fiscal deficit was a matter of concern for the industry and the country.
Mr K.S. Mehta, President of the PHDCCI, said the import liberalisation, reduction in the peak Custom duty rate and higher incidence of excise duty will adversely affect the domestic manufacturers, who will be required to face unrestricted flood of imported goods.
Wide ranging changes in the excise duty structure aimed at revenue bias will apparently add to complication. The sudden shifting to single central excise rate of 16 per cent while retaining the earlier special excise duty rate structure will create hardship to many industries who come in this bracket besides resulting in cost push inflation. Even the mass consumption basic goods will become dearer, he said.
Welcoming the Governments measures on the telecom sector, Mr Shashi Ruia, the Chairman of the Essar group, said this will really give a boost to the sector and the countrys telecommunication industry will grow at a rapid pace.
Mr Sunil B. Mittal, the CMD of Bharti Telecom, said the IT industry, especially the hardware sector, has been given a boost. The reduction in Customs duty will provide an impetus to the sector.
Expressing disappointment with the Budget, Mr Vikram Thapar, the Vice-Chairman of Karam Chand Thapar and Bros (Coal Sales) Ltd said the Finance Minister has not given any clear indication on downsizing the Government.
NEW DELHI, Feb 29 (PTI) The Government has decided to dispense with the collateral security requirement for the tiny sector for loans up to Rs 5 lakh to improve the credit flow to small scale industrial units (SSIs), Mr Yashwant Sinha said today. Maintaining that the existing composite loan scheme of SIDBI and banks help small borrowers by providing working capital and term loans through a single window, he said adding that to promote cash flow to small borrowers, the composite loan limit was being increased from Rs 5 lakh to Rs 10 lakh.
The Finance Minister said a new credit guarantee scheme for SSI had been formulated and a provision of Rs 100 crore made in the Budget.
The scheme will be implemented through SIDBI and cover loans up to Rs 10 lakh from the banking sector. The guarantee loans will be securitised and tradable in the secondary debt market.
The project limit under
SIDBI for the National Equity Fund Scheme has been raised
from Rs 15 lakh to Rs 25 lakh, he said, adding that the
Technology Development Modernisation Fund Scheme of SIDBI
has been extended by another three years.
crore aid for HP
NEW DELHI, Feb 29 The Centre has sanctioned Rs 15 crore assistance for horticulture and allied activities in Himachal Pradesh, the State Horticulture Minister, Mr Narinder Bragta, said here today.
These activities include mushroom development, drip irrigation and area expansion of fruit crop during the year 2000-2001.
He said the National Horticulture Board has sanctioned Rs 20 lakh to set up nurseries for production of new fruit varieties in the State.
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