2014 Budget: No added burden for the automobile industry

The 2014 Union Budget was a neutral as far as the automobile industry is concerned and the industry is happy with it. Along with the pre-budget announcement of the excise duty cut extension till December 2014, there weren’t any additional burden for the automakers to suffer with. The finance minister’s hope of finding a solution in introducing the Goods and Services Tax (GST) is promising. The announcement of Rs 10,000 crore fund for funding MSME sector is also a good sign as this will bring in more innovative companies to come up with better products at better costs.

Commenting on the GST introduction, Mr. Arun Jaitley, Finance Minister, said “The debate whether to introduce a Goods and Services Tax (GST) must now come to an end. We have discussed the issue for the past many years. Some States have been apprehensive about surrendering their taxation jurisdiction; others want to be adequately compensated. I have discussed the matter with the States both individually and collectively. I do hope we are able to find a solution in the course of this year and approve the legislative scheme which enables the introduction of GST. This will streamline the tax administration, avoid harassment of the business and result in higher revenue collection both for the Centre and the States. I assure all States that government will be more than fair in dealing with them.”

The finance minister also proposed to appoint a committee with representatives from the Finance Ministry, Ministry of MSME, RBI to give concrete suggestions in three months to examine the financial architecture of SMEs.

He said, “SMEs form the backbone of our Economy. They account for a large portion of our industrial output and employment. The bulk of service sector enterprises are also SMEs. Most of these SMEs are Own Account Enterprises. Most importantly a majority of these enterprises are owned or run by SCs, Sts and OBCs. Financing to this sector is of critical importance, particularly as it benefits the weakest sections. Promotion of entrepreneurship and start-up Companies remains a challenge. While there have been some efforts to encourage, one principal limitation has been availability of start-up capital by way of equity to be brought in by the promoters. In order to create a conducive eco-system for the venture capital in the MSME sector it is proposed to establish a Rs 10,000 crore fund to act as a catalyst to attract private Capital by way of providing equity, quasi equity, soft loans and other risk capital for start-up companies.”

The budget also promised to establish technology centre network to promote innovation, entrepreneurship and agro-industry and to set up a fund with a corpus of Rs 200 crore. A programme to facilitate forward and backward linkages with multiple value chain of manufacturing and service delivery will also be put in place.

Entrepreneur friendly legal bankruptcy framework will also be developed for SMEs to enable easy exit. A nationwide “District level Incubation and Accelerator Programme” would be taken up for incubation of new ideas and providing necessary support for accelerating entrepreneurship.