Union Budget 2019: What it means Indian industrial sectors

Union Budget 2019: What it means for Indian industrial sectors

7:33 AM, 6th July 2019
Indian Chemical industry

The Indian chemical industry is one of the most significant segments of the economy and is the sixth-largest producer in the world. With the introduction of the Union Budget 2019, Finance Minister of India Nirmala Sitharaman laid down new amendments to spur growth with reduction in corporate tax, zero-budget farming and concessions to housing sector, start-ups and electric vehicles.

Among key announcements, Sitharaman said digital payments will get cheaper, govt will launch an ATM-like One Nation One Card for pan-India travel and a new model of rental laws will be unveiled to boost affordable housing.

The agro-based chemical industry is expected to benefit from the Budget 2019-2020.

Sitharaman said steps would be taken to advance zero-budget farming throughout India, which is currently being practiced in a few states. It considered 'zero budget' because costs of raising the main crop are offset by the income that farmers earn from inter crops. Under this method, chemical fertilizers and pesticides make way for locally available cow dung, cow urine, etc. “The chemical industry in India, which is the sixth-largest producer in the world, is expected to follow an accelerated growth path thereby doubling its global share in the next decade. This reflects the untapped potential of the sector, wherein several MNCs are focusing on the country for their manufacturing hub. With the high importance of the chemical industry in the Indian economy, we expect from the government to address the bottlenecks and growth in the upcoming union budget,” Abhay Udeshi, Chairman of Jayant Agro, quoted saying to Economic Times.

For the Indian pharmaceutical industry, the government had introduced a weighted tax deduction of 200 percent on company expenditure on in-house research and development (R&D) in the 2010 budget, in order to boost innovation in the country. In weighted tax deduction, double the amount spent on R&D is deducted from the profit of the company providing them additional cash to invest in R&D.

“The expectations from the Indian Union Budget 2019 were that of a bold reformist budget, however, it turned out to be an incremental budget at best. The emphasis on start-ups and on the education, sector is a good move. However, there was nothing to fuel growth in the healthcare and pharma sectors, which is disappointing. I was particularly keen on seeing a change in the weighted deduction for R&D which did not happen. A positive policy move of this kind would have spurred R&D and innovation in pharma and other sectors,” Satish Reddy, Chairman of Dr Reddy’s Laboratories told Moneycontrol.

Furthermore, fuel prices on petrol and diesel is increased by 2 per liter.

Sitharaman raised special additional excise duty and road tax on petrol and diesel, saying lower crude prices provide with an opportunity to review taxes on the sector.

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