Analysis of Union Budget 2016-17

1
TABLE OF CONTENTS
Foreword..........................................................2
Macro Economic Backdrop............................3-5
Union Budget 2016-17................................6-13
Railway Budget 2016-17............................14-16
Industry Allocation Sectors

Airlines............................................................ 17
Media and Entertainment............................... 42
Airports........................................................... 18
Mining and Minerals....................................... 43
Auto Ancillaries............................................... 19
Non-ferrous Metals.................................... 44-45
Automobiles.................................................... 20
Oil and Gas...................................................... 46
Banking & Financial Services...................... 21-24
Paper.......................................................... 47-48
Cement............................................................ 25
Petrochemicals................................................ 49
Chlor Alkali................................................. 26-27
Pharmaceuticals.............................................. 50
Coal................................................................. 28
Pipes........................................................... 51-52
Construction............................................... 29-30
Ports................................................................ 53
Consumer Durables......................................... 31
Power......................................................... 54-55
Education......................................................... 32
Real Estate.................................................. 56-57
Engineering & Capital Goods...................... 33-34
Roads and highways................................... 58-59
Fertilizers.................................................... 35-36
SEZ................................................................... 60
FMCG ......................................................... 37-38
Steel................................................................. 61
Gems & Jewellery............................................ 39
Telecom Services........................................ 62-63
Hospitals and Healthcare................................ 40
Textiles........................................................ 64-65
IT and ITES....................................................... 41
Impact Symbols
Positive
Negative
Neutral
Foreword
The much awaited Union Budget for 2016-17 can be treated as being progressive and time appropriate having
announced a raft of measures, policies and reforms catering to nearly all the sections of the economy. The budget
aims at bringing about structural changes that can help transform the countrys economy. The focus on the rural &
social sector and on skill development will help us rightly tap our demographic dividend.
On expected lines the government has continued with a focus on developing infrastructure. The higher public
spending along with the reforms would help stimulate private investments. It is commendable that the government
has been able to rise up to the challenge and adhere to the fiscal consolidation roadmap that it had outlined.
Although the measure and policies are to raise growth, the focus here has been more on sustainable long term
growth which need not necessarily see any significant increases in the immediate future. The measures announced
to strengthen and deepen the corporate bond markets are hugely welcome and will go a long way in facilitating
infrastructure financing. It is hence quite encompassing.
We have analyzed here the implications of the measures announced today at both the macro and micro levels to
provide a complete picture of what the Budget means to us. A detailed sectoral analysis has been provided for
critical sectors. We trust that you will find this useful. We would also welcome any feedback from our readers.
With best wishes
D R Dogra
MD & CEO - CARE Ratings
Macro-Economic Backdrop
Economic Survey for the year 2015-16 shows that Indias economic growth has been steady and robust in 2015-16 as in 201415, despite being faced with a volatile and weak external environment. The countrys economy is seen to be amongst the most
stable and amongst the best performing, helped by the moderation in inflation, governments fiscal consolidation measures
and expenditure incurred towards building infrastructure. The survey although optimistic about the economic potential and
opportunities, brings to the fore the challenges faced by the country in sustaining growth in a worsening global economic
landscape. It also calls attention to the need for planning for the risks that could impact growth viz. currency re-adjustment in
Asia and capital controls that could be undertaken to curb outflows from emerging markets.
The survey sees the long term growth potential of the country at 8-10%, that can be achieved by promoting competition,
investing in health and education to reap the benefits of Indias demographics and focus on the agriculture sector.
The key highlights of the survey in terms of performance, initiatives undertaken, challenges & proposed strategy and prospects
have been summarized here
(A) Macroeconomic and Fiscal Performance

GDP growth in FY16 is projected to increase to 7.6%, from 7.2% in 2014-15, mostly driven by growth in the industry and
the sustained high growth in the services sector.
Agricultural growth, although likely to be low for the 2nd year in a row is estimated to be better than that of last year.
Industry has shown significant improvement on account of acceleration in manufacturing.
Low levels of inflation have come to prevail owing to the decline in commodity prices viz. crude oil and confidence in price
stability has improved. WPI has turned negative in this fiscal to register growth at -2.8% declining from 2% in FY15. CPI
inflation has halved in the last three years to decline from high levels of 10.2% in FY13 to 4.9% in FY16 (until Jan16).
Despite falling exports, a declining import bill helped trade deficit decrease to $ 106.8 billion in Apr-Jan16 period this
fiscal.
The Current Account Deficit (CAD) has declined to 1.4% of GDP (Apr-Sep15) and foreign exchange reserves have risen to
US$ 351.5 billion in early February, 2016.
Indian trading environment has seen substantial improvement with FTAs doubling to 42 since mid -2000s and several
mega-regional trading agreements with worlds largest traders (USA, Japan, EU)
Saving and investment have not shown improvements
The rupee has depreciated vis--vis the US dollar, like most other currencies in the world, although less so in magnitude
and at the same time appreciated against a number of other major currencies.
On the fiscal side
Improvements have been recorded in indirect tax collection efficiency, quality of spending and fiscal consolidation.
The government tax revenues for 2015-16 are expected to be higher than budgeted levels.
Capital expenditure has increased by 0.6% in 2015-16 at both the state and central level.
In commitment to the fiscal consolidation path laid out by the government it is estimated to contain Fiscal deficit at 3.9%
as mentioned in the budget estimates.
Table 1: Snapshot of Macro-economic Indicators (%)

GDP growth
FY13
FY14
FY15
FY16
5.6
6.6
7.2
7.6
Inflation (WPI)
7.4
6.0
2.0
-2.8*
Inflation (CPI)
10.2
9.5
5.9
4.9*
Savings rate
33.8
33
33
n.a
Capital Formation
38.6
34.7
34.2
n.a
4.8
1.7
1.3
1.4#
292.0
304.2
341.6
349.6*
Export
-1.8
4.7
-1.3
-17.6*
Import
0.3
-8.3
-0.5
-15.5*
CAD
Forex Reserves ($ bn)
Source: Economic Survey 2015-16, *up to Jan16, ^upto Dec15 #until H1FY16
(B) Policy Initiatives

FDI has been liberalized across the board and vigorous efforts have been undertaken to ease the cost of doing business.
Settlement of the Minimum Alternate Tax (MAT) imposed on foreign companies aimed at restoring stability and
predictability in tax system.
Major public investment has been undertaken to strengthen the countrys infrastructure.
Major crop insurance programme has been instituted.
Creation of bank accounts for over 200 million people under Pradhan Mantri Jan DhanYojan (PMJDY) the worlds largest
direct benefit transfer programme in case of LPG with about 151 million beneficiaries receiving Rs.29,000 crore in their
bank accounts and the infrastructure being created for extending the JAM (Jan DhanAadhar Mobile) agenda to other
Government programmes and subsidies.
Changes made in the power sector in the last two years - addition of record generation capacity (of 26.5 GW compared
to the average annual addition of around 19 GW over the past five years), moves towards one market in power, reform of
discoms and development of renewable energy .Capacity enhancements have brought down the peak electricity deficit to
its lowest ever level of 2.4%
(C) Challenges and Proposed Strategy

The most critical short term challenges confronting the Indian economy are the twin balance sheet problem the impaired
financial positions of the Public Sector Banks (PSBs) and some corporate houses. This has been impeding private investment
and economic progress.Comprehensively resolving this challenge would require 4 Rs : Recognition, Recapitalization,
Resolution, and Reform
The Chakravyuha Problem - the efficiency in the economy needs to be improved by undertaking several initiatives such
as new bankruptcy law, reviving stalled investment projects, considering PPP. The exit problem faced majorly by public
enterprises can be addressed through strong institutional framework, create independent sector regulators, transparent
privatisation of public enterprises.
JAM(Jan Dhan, Aadhar, Mobile) Trinity Problem - Improve financial inclusion by establishing mobile networks in rural areas.
Increasing the spread of JAM by providing financial connectivity at the last level(rural households). Focus on schemes such
as BAPU (Biometrically Authenticated Physical Uptake) to lower leakages and ensure funds reach the poor.
Health and Education - Investment in human capital by focusing on quality of education in both public and private sector
with the need for good and well-trained teachers. Adoption of technology platforms and innovative models to help improve
service delivery.
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Service delivery - The increased decentralisation of power between centre and state requires clear definition of roles
between centre and state. Focus of centre to be on strengthening regulatory institutions, and facilitating co-operative and
competitive federal structure.Focus of states to be to mobilize resources, improve efficiency in bettering service delivery.
Agriculture - need to create a self-sustaining system with reduced vulnerability to erratic monsoons, market shocks and
variable productivity.
(D) Medium Term Fiscal Framework:

a. Focus on reducing consolidated government debt to GDP ratio from 67% by following a path of aggressive fiscal consolidation
b. The government is constrained to reduce its deficit by two key factors:
i. Implementing the 7th Pay Commission award would increase government wage bill by 0.5% of GDP.
ii. Increased public expenditure towards infrastructural development.
(E)Outlook and Prospects

GDP growth not likely to pick up significantly in 2016-17 and is likely to be in the range of 7.0% - 7.75%. There exists a
downside risks to this projection that could arise from the weakness in the global economy and financial markets and an
unexpected increase in oil prices that could impact consumption.
Foreign demand is likely to be weak, which requires the country to find and activate domestic sources of demand to
prevent the growth momentum from weakening.
The increase in wages and benefits recommended by the 7th pay Commission are not likely to destabilize prices and will
have little impact on inflation. Inflation likely to remain in the range of 4.5-5% for 2015-16.
CAD to be limited to 1-1.5% of GDP for 2015-16
Union Budget 2016-17

The Union Budget for 2016-17 lays down the governments long term growth agenda for the country, emphasizing structural
changes and improvements across segments that would transform the nation and its economy. This is to be achieved while
exercising fiscal prudence and adhering to the fiscal consolidation targets laid down in the last budget. The adherence to the
fiscal deficit roadmap,despite the challenges of higher expenditure that is to be incurred on account of higher wages & pensions
and public investments, shows that the government has envisaged a sustainable growth path for the economy which could be
devoid of any significant increases in growth in the near term.
The budget highlights the continued thrust on growth given the increases and pattern of spending and reform & policies
undertaken. An inclusive growth strategy has been adopted with the farm and rural sector, social sector, infrastructure sector,
employment generation and recapitalization of the banks along with the vulnerable sections being priority areas for expenditure
for the government.
With the borrowing being restricted, there would be no undue pressure on liquidity in the system. All this paves the way for the
RBI to ease its monetary policy by way of additional rate cuts, which could further stimulate growth.
Key Highlights
The 2016-17 Union Budget is based on 9 pillars. The key announcements under each have been included here.
(1) Agriculture and Farmers Welfare:
There has been a significant increase in the allocations towards agriculture and irrigation.
Allocation of Rs. 35,984 crore towards Agriculture and Farmers welfare.
28.5 lakh hectares will be brought under irrigation and fast tracking of 89 irrigation projects.
Long Term Irrigation Fund to be created in NABARD with an initial corpus of about Rs.20,000 crore.
Unified Agricultural Marketing e-Platform to provide a common e- market platform for wholesale markets.
Rs.15,000 crore towards interest subvention.
Incentives are being given for enhancement of pulses production. Rs.500 crore under National Food Security Mission has
been assigned to pulses.
The target for agricultural credit in 2016-17 will be an all-time high of Rs.9 lakh crore.
Rs.5,500 crore towards Crop Insurance Scheme.
(2) Rural Sector:
Rs.87,765 crore allocation for the rural sector.
Rs.2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities. as per the recommendations of the
14th Finance Commission.
Rs.38,500 crore allocated for MGNREGS.
100% village electrification by 1st May, 2018.
National Land Record Modernisation Programme has been revamped.
Every block under drought and rural distress to be taken up as an intensive Block under the DeenDayalAntyodaya Mission.
Rs.9,000 crore allocation for Swachh Bharat Abhiyan.
(3) Social Sector including Healthcare:

Rs. 1,51,581 crore allocation for social sector including education and health care.
Rs. 2,000 crore allocated for initial cost of providing LPG connections to BPL families.
New health protection scheme to provide health cover upto Rs.1 lakh per family and an additional Rs.30,000 top-up
package for senior citizens.
National Dialysis Services Programme to be started under National Health Mission through PPP mode.
Stand Up India Scheme to benefit at least 2.5 lakh entrepreneurs.
Set up of National Scheduled Caste and Scheduled Tribe Hub in partnership with industry associations.
(4) Education, Skills and Job Creation
62 new Navodaya Vidyalayas will be opened.
Higher Education Financing Agency to be set-up with initial capital base of Rs.1000 crores.
Digital Depository for School Leaving Certificates, College Degrees, Academic Awards and Mark sheets to be set-up.
Rs. 1804 crore allocation for skill development.
1500 Multi Skill Training Institutes to be set-up.
National Board for Skill Development Certification to be setup in partnership with the industry and academia.
GoI will pay contribution of 8.33% for of all new employees enrolling in EPFO for the first three years of their employment.
Rs.1000 crore allocated for this scheme.
Model Shops and Establishments Bill to be circulated to States.
Deduction under Section 80JJAA of the Income Tax Act will be available to all assesses who are subject to statutory audit
under the Act as an employment generation incentive.
(5) Infrastructure and Investment
Rs. 2,21,246 crore total outlay for infrastructure
Rs. 97,000 crore of total investment in the road sector to be undertaken in 2016-17.
To approve nearly 10,000 kms of National Highways in 2016-17.
Allocation of Rs. 55,000 crore in the Budget for Roads.
Rs.15,000 crore to be raised by NHAI through bonds.
Amendments of Motor Vehicles Act to open up the road transport sector in the passenger segment.
Reforms in FDI policy in the areas of Insurance and Pension, Asset Reconstruction Companies, Stock Exchanges.
100% FDI to be allowed through FIPB route in marketing of food products produced and manufactured in India.
Comprehensive plan, spanning next 15 to 20 years, to augment the investment in nuclear power generation to be
formulated.
Steps to re-vitalise PPPs - guidelines for renegotiation of PPP Concession Agreements and introduction of Public Utility
(Resolution of Disputes) Bill.
(6) Financial Sector Reforms
Rs. 25,000 crore allocated towards recapitalisation of Public Sector Banks.
Amendments in the SARFAESI Act 2002 - enable the sponsor of an ARC to hold up to 100% stake in the ARC and permit non
institutional investors to invest in Securitization Receipts.
New derivative products will be developed by SEBI in the Commodity Derivatives market.
Enactment of a comprehensive law to deal with resolution of financial firms
Financial Data Management Centre to be set up.
RBI to facilitate retail participation in Government securities.
Statutory basis for a Monetary Policy framework and a Monetary Policy Committee.
General Insurance Companies owned by the Government to be listed in the stock exchanges.
(7) Governance and Ease of Doing Business
Bill for Targeted Delivery of Financial and Other Subsidies, Benefits and Services by using the Aadhar framework to be
introduced.
Direct Benefit Transfer for fertilizer
Automation facilities will be provided in 3 lakh fair price shops by March 2017.
Amendments in Companies Act to improve enabling environment for start-ups.
Price Stabilisation Fund with a corpus of Rs.900 crore to help maintain stable prices of Pulses.
(8) Fiscal Discipline
Fiscal deficit targets retained: 2015-16(Revised Estimate) at 3.9% and 2016-17(Budget Estimate)at 3.5%.
Revenue Deficit reduced to 2.5% in 2015-16(RE) from 2.8%.
Total expenditure projected at Rs.19.78 lakh crore- Plan expenditure of Rs.5.50 lakh crore and Non-Plan expenditure of
Rs.14.28 lakh crore.
1500 Central Plan Schemes rationalised and restructured into nearly 300 Central Sector and 30 Centrally Sponsored
Schemes.
(9) Tax Reforms
The Tax Reforms in the FY15 Union Budget were developed on nine categories namely, Relief to small tax payers, measures to
boost growth and employment generation, incentivizing domestic value addition to help Make in India, measures for moving
towards a pensioned society, measures for promoting affordable housing, additional resource mobilization for agriculture, rural
economy and clean environment, reducing litigation and providing certainty in taxation, simplification and rationalization of
taxation and use of Technology for creating accountability.
As a part of relief to small tax payers, the government proposes for individuals with income less than 5 lakh, the ceiling of
tax rebate under section 87A to be increased from Rs.2,000 to Rs.5,000. The government also proposes to increase the
limit of deduction in respect of rent paid under section 80GG to Rs.60,000 p.a
In order to boost growth and employment generation, the government proposed to reduce corporate tax in a phased
manner, incentives provided for new manufacturing companies and SMEs in the form of lower corporate tax, 100%
deduction of profits for 3 out of 5 years for start-ups set up during April 2016 to March 2019, implementation of GAAR
from April 2017 and complete pass through of income tax to securitization trusts including trusts of ARCs.
In order to promote make in India, suitable changes in customs and excise duty rates on certain inputs, raw materials,
intermediaries and components and certain other goods and simply procedures to reduce costs and improve competitiveness
of the domestic industry
In an attempt to move towards a pensioned society, the government proposes to exempt from service tax the Annuity
services provided by NPS and services provided by EPFO to employees
To promote affordable housing, the government proposes to give deduction to first time home buyers for additional interest
of Rs.50,000 p.a for loans up to Rs.35 lakh sanctioned during FY17 for value of house less than Rs.50 lakh, exempt service
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tax on construction of affordable houses up to 60 square metres under any scheme of the centre or state government
including PPP schemes
Rate of securities transaction tax in case of options proposed to increase from 0.17% to 0.05%, imposing of cess called
KrishiKalyan cess @0.5% on all taxable services, levying of infrastructure cess of 1% on small petrol, LPG, CNG cars, 2.5% on
diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs, increasing excise duty on various
tobacco products from 10% to 15%
In an attempt to remove black money from the economy, the government proposes no penalty in respect to income tax
cases with disputed tax up to Rs.10 lakh will be levied, cases with disputed tax exceeding Rs.10 lakh subjected to 25% of
the minimum of the imposable penalty for both direct and indirect taxes. The penalty for concealing of income to be 50%
of tax in case of underreporting of income and 200% of tax where there is misreporting of facts
As a part of rationalising of tax reforms, the government proposes to abolish 13 cesses, levied by various Ministries in
which revenue collection is less than Rs.50 crore in a year
In matters pertaining to Income-tax Act, Government will pay interest at the rate of 9% p.a against normal rate of 6% p.a
in case there is delay in giving effect to Appellate order beyond ninety days. The government also proposes to change the
procedure to provide for a shift from physical control to record based control for customs bonded warehouses, supported
by sophisticated IT systems
Budget Financial
Summary of Accounts
Rs. Crore
FY13
FY14
FY15
FY16 (RE)
FY17(BE)
Revenue Receipts
879,232
1,014,724
1,101,472
1,206,084
1,377,022
Tax revenue(net to center)
741,877
815854
903,615
947,508
1,054,101
Non tax revenue
137,354
198870
197,857
258,576
322,921
Capital Receipts
582,152
563,894
562,201
579,307
601,038
Recovery of Loans
15,060
12,497
13,738
18,905
10,634
Disinvestment of Equity in PSE's
25,890
29,368
37,737
25,313
56,500
467,356
453,550
445,138
401,929
425,181
7,201
7,292
12,933
11,485
19,094
Total Receipts
1,410,372
1,578,618
1,663,673
1,785,391
1,978,060
Revenue Expenditure
Internal Debt (Market Borrowings)

External Borrowings (Net)
1,243,514
1,371,772
1,466,992
1,547,673
1,731,037
Interest Payments
313,170
374,254
402,444
442,620
492,670
Subsidies
257,079
254,632
258,258
257,801
250,433
69,479
74,896
93,611
95,731
123,368
166,858
187,675
196,681
237,718
247,023
1,410,372
1,559,447
1,663,673
1,785,391
1,978,060
Pensions
Capital Expenditure
Total Expenditure
Revenue Deficit
365,896
357,048
365,519
341,589
354,015
Fiscal Deficit
490,597
502,858
510,725
535,090
533,904
177,428
128,604
108,281
92,469
41,234
Primary Deficit
Receipts
The government has been experiencing slowdown in the growth rate of total receipts. Over the years, the growth in total
receipts of the Centre has moderated from 11.9% in FY14 to 5.3% in FY15 and 7.3% in FY16 (RE). The same is expected to
increase to 10.8% in FY17 (BE). There has been a moderate shift in the composition of the overall Receipts Budget over the last
few years. While the share of revenue receipts rose from 58% in FY12 to 66% in FY16 (RE) that of capital receipts has declined
from 44% in FY12 to 36% in FY16 (RE).
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It needs to be noted that although the growth rates have moderated, the government collected higher receipts in FY16 than it
budgeted for owing to higher revenue receipts viz. tax collections.
Gross Tax Revenue/ GDP

The ratio of Gross Tax Revenue to GDP has been in the range of 10 10.5% till FY15. The same is expected to increase to 10.8%
in FY16. The government plans to increase this ratio by improving efficiency of tax collections.
Rs. Cr.
FY13
FY14
FY15
FY16(RE)
FY17(BE)
Gross Tax Revenue
1,036,234
1,138,734
1,244,885
1,459,611
1,630,888
Gross Domestic Product
9,988,540
11,345,056
12,488,205
13,567,192
15,065,010
10.4
10.0
10.0
10.8
10.8
Gross Tax Revenue (% of GDP)
Major Non-Tax Revenue

Overall, non-tax revenue is projected to increase by 24.9% in FY17 (BE) from 30.7% growth recorded in FY16 (RE) and a negative
growth of 6.9% in FY15. For FY16, there has been significant increase in all the major heads, barring the interest receipts which
declined by 2.8% to Rs.23,142 crore. While FY17 (BE) is expected to witness significant increase (28%) in interest receipts;
Dividend from RBI, Nationalized Banks and financial Institutions is projected to decline by 5.4% to Rs.69,897 crore.
FY13
FY14
FY15
FY16(RE)
FY17(BE)
Interest Receipts
Rs. Crore
20,761
21,868
23,803
23,142
29,620
Dividends and Profits
53,761
90,435
89,833
118,271
123,780
Dividends from PSEs and other Investments
13,354
25,921
31,692
44,366
53,883
Dividends/Surplus from RBI, Nationalized Banks and

financial Institutions
40,406
64,513
58,141
73,905
69,897
Spectrum Sale
The Government in FY13, FY14 and FY15 could not meet the target to be earned through Spectrum sale. The actual figures
stood markedly lower than the budgeted estimates. However, in FY16 the government surpassed its budget estimates. The
Centre earned Rs.57,384 crore in FY16 (RE) while it had budgeted for Rs.42,866 crore.
The Government has projected a total of Rs.98,995 crore to be garnered through the Spectrum sale in FY17.
Rs. Crore
Budgeted
Actual / Revised
FY13
58,217
18,902
FY14
43,162
40,847
FY15
45,471
30,624
FY16
42,866
57,384
FY17
98,995
Disinvestment
The Disinvestment target for FY17 is set at Rs.56,500 crore, of which Rs.20,500 crore is to be collected through strategic
disinvestments. However, in the past years it is seen that the Centre has been unable to meet the budgeted disinvestment
target. In FY16, the revised figures indicate that the government was only able to achieve 36% of the projected target at the
start of the year. It remains to be seen if the optimistic target is realized in FY16.
However, the government has got in place a new policy for management of Government investment in PSEs, including
disinvestment and strategic sale. The NITI Aayogwill identify the CPSEs for strategic sale. The government also plans to adopt
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a comprehensive approach for efficient management of Government investment in CPSEs by addressing issues such as capital
restructuring, dividend, bonus shares, etc.
RsCrore
FY13
FY14
FY15
FY16 (RE)
FY17 (BE)
Total Disinvestment
25,890
29,367
37,737
25,313
56,500
Disinvestment Receipts
25,890
16,027
32,620
25,313
36,000
14,000
3,000
15,000
3,000
Strategic Disinvestment
20,500
Others
1,814
5,119
Disinvestment of Government stake

in non-government Companies
Gross Borrowing Programme

The Gross Borrowing Programme for FY17 is expected to increase by 2.5% in FY17(BE) with the Government projected to
borrow Rs.6,00,000 crore. However, there is a 4.5% decline in repayments on part of the government thereby taking the net
borrowing programme to Rs.4.25 lakh crore.
Rs. Cr.
Gross Borrowing Programme
Repayments
Internal Debt Market borrowing (NET)
FY13
FY14
FY15
FY16(RE)
FY17(BE)
558,000
564,147
590,345
585,000
600,000
90,644
110,597
145,208
183,071
174,819
467,356
453,550
445,138
401,929
425,181
Expenditure
Total Budget expenditure is projected to increase by 10.7% in FY17 compared to that in FY16 (RE).
Total Plan expenditure has seen a steep rise of 15.3% for FY17(BE) in comparison to FY16(RE). Although non-plan expenditure
accounts for more than 70% of total expenditure, it is only 9.2% higher in FY17 (BE) vis--vis FY16 (RE). Consequently, the share
of non-plan expenditure declined in FY17 (BE).
FY13
FY14
FY15
FY16(RE)
FY17(BE)
Non plan Expenditure
Rs Cr
996,747
1106,120
1201,029
1308,194
1428,050
Interest payments
313,170
374,254
402,444
442,620
492,670
Subsidies
257,079
254,632
258,258
257,801
250,433
Pensions
69,479
74,896
93,611
95,731
123,368
413,625
453,327
462,644
477,197
550,010
Plan Expenditure
Revenue
Capital
Total Expenditure
Revenue
Capital
329,208
352,732
357,597
335,004
403,628
84,417
100,595
105,047
142,192
146,382
1,410,372
1,559,447
1,663,673
1,785,391
1,978,060
1,243,514
1,371,772
1,466,992
1,547,673
1,731,037
166,858
187,675
196,681
237,718
247,024
In terms of revenue and capital accounts, the share of revenue account in total expenditure continues to remain more than 87%
since last five years. The growth in total revenue expenditure has doubled for FY17(BE) at 11.9% compared with 5.5% growth in
FY16(RE). This has only led to increasing share of revenue expenditure in total expenditure. The substantial increase in revenue
expenditure can be in part be attributed to the centres expenditure towards fulfilling 7th Pay Panel recommendations and
disbursements towards defence personnels (OROP scheme).
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Capital expenditure, on the other hand has seen its growth rate decline from 20.9% in FY16(RE) to a mere 3.9% in FY17(BE). This
has led to a further decline in share of capital expenditure from 13% in FY16(RE) to 12.5% FY17(BE).
Interest Payments
Rs Cr
Interest Payments
Effective Interest Rate (%)
FY13
FY14
FY15
FY16(RE)
FY17(BE)
313,170
374,254
402,444
442,620
492,670
6.5
6.9
6.42
6.62
Interest payments account for around 25% of the total expenditure and 35% of non-plan expenditure.Growth in Interest
payments declined from 19.5% in FY14 to 7.5% in FY15 but has been increasing constantly since then. They are expected
to increase by 11.3% in FY17(BE) over 10% in FY16(RE). The Effective interest rate defined interest payments to outstanding
liabilities.
Subsidies
Rs Cr
FY13
FY14
FY15
FY16(RE)
FY17(BE)
Subsidies
257,079
254,632
258,258
257,801
250,433
Major Subsidies
247,493
244,717
249,016
241,857
231,782
Food Subsidy
85,000
92,000
117,671
139,419
134,835
Fertilizer Subsidy
65,613
67,339
71,076
72,438
70,000
Petroleum Subsidy
96,880
85,378
60,269
30,000
26,947
Interest Subsidies
7,270
8,137
7,632
13,808
15,523
Other Subsidies
2,316
1,778
1,610
2,136
3,128
The expenditure on major subsidies is projected to decline from 2% of GDP in FY15 to 1.8% of GDP in FY16(RE) and further
to 1.5% of GDP in FY17(BE) with focused subsidy reforms. Subsidy bill for FY17(BE) is expected to decline by 2.86%,attributed
in part to the lower petroleum and fertilizer subsidy bill.A substantial decline of 50.2% was seen in petroleum subsidy for
FY16(RE). Although, the subsidies are still falling, it has moderated to 10.2% for FY17(BE).Food subsidy attributes to more than
50% of governments total subsidy bill. It is estimated that subsidy towards this end is expected to fall by 3.3% in FY17(BE).
Fertilizer Subsidy is also expected decline by 3.4% in FY17(BE) with successful implementation of Nutrient Based Subsidy
regime. Interest subsidies account for 6.2% of the total subsidy bill is expected to increase by 12.4% in FY17(BE) after having
increased by 81% in FY16(RE) . The high interest subsidy may be attributed towards governments initiatives to ease loan
burden of farmers through interest subvention.
Defence Expenditure
Rs Cr
Defence Expenditure
FY13
FY14
FY15
FY16(RE)
FY17(BE)
181,776
203,499
218,694
224,636
249,099
Defence Expenditure which accounts for nearly 13% of the expenditure since FY13 is expected to increase by sharp 11% in
FY17(BE). The increased defence expenditure comes in line with abolishment of custom duties on goods imported for Defence
purposes by the Central and State governments.
Total expenditure which is expected to increase by Rs.192,669 crore in FY17(BE) over FY16(RE) is heavily directed towards
agriculture sector , social schemes, welfare of Scs/STs and minorities, women and child development, employment generation
and revival of banking system through recapitalization of public banks.
The focus of the government is pro-poor as it introduces Crop Insurance schemes for farmers , increases allocation towards
MNREGA and initiate developing Rurban clusters. The government has given emphasis to tapping the demographic dividend
12
of the country by allocating increasing sums towards education, skill development and focus on job creation. Addressing the
need for developing roads and railways which would help boost both agricultural and manufacturing segment of the country an
allocation of Rs.21.8 lakh crore has been made out of governments capital expenditure towards this end.
Debt
Rscr
Public Debt
FY12
FY13
FY14
FY15 (A)
FY16 (RE)
FY17(BE)
3,400,710
3,941,855
4,425,348
4,935,805
5,520,635
6,029,869
Internal Debt
3,230,622
3,764,566
4,240,767
4,738,291
5,311,636
5,801,776
External Debt
170,088
177,289
184,581
197,514
208,998
228,093
Other Liabilities
1,116,542
1,128,747
1,244,833
1,306,716
1,371,579
1,408,613
Total Debt
4,517,252
5,070,601
5,670,181
6,242,221
68,91,914
74,38,181
45.7
45.9
46
46.8
47.6
47.1
Debt/ GDP (%)
Public debt for FY17 is estimated to increase by 9.2% to Rs.6,029,869 crore lower than 11.8% growth in FY16 (RE). Of the
total public debt, the internal debt accounts for more than 96% at Rs. 5,801,776crore. The share of external debt has been
moderating gradually from 5% in FY12 to 3.8% in FY16(RE). In FY17, the outstanding external debt stock is estimated to grow
by 9.1% to Rs.228,093 crore. The other liabilities are estimated to increase by 2.7% to Rs.1,408,613 crore in FY17(BE). The debt
to GDP ratio has been increasing gradually over the past few years, rising to a high 47.6% in FY16(RE). It is targeted to decline
marginally to 47.1% in FY17 (BE) with an expectation of improving Gross domestic product.
Bond Markets
The budget had provided a boost to the domestic corporate bond markets. Various measures have been announced to deepen
and strength the corporate bond markets. These measures will make the bond market an attractive alternate source of funding
and investment at a time when the formal banking sector is stressed.
The RBI is to issue guidelines to encourage large borrowers to access a certain portion of their financing needs through the
bond markets. Assuming large exposures are Rs.100 crore and above, even if 10% of these are to migrate to the corporate
bond markets , the incremental funds raised in the bond markets would be Rs.4 lakh crore over a period of time.
Recognizing the peculiar requirements and quantum of funds for infrastructure, the budget has announced the development
of a new credit rating system for infrastructure projects that would enable arriving at an appropriate pricing cost that is
beneficial for both lenders and borrowers. Also, LIC of India is to set up a dedicated fund to provide credit enhancement to
infrastructure projects. These funds will help in raising the credit rating of bonds floated by infrastructure companies and
facilitate investment from long term investors. During the period Apr-Jan 2015-16, around Rs.75,000 crore of bonds were
raised by infrastructure projects, assuming that 10% of these get a credit enhancement, this market could be of the size of
Rs.7,500 crore.
Indicating the governments growing reliance on the bond markets for financing infrastructure, in FY17, Rs.31,300 crore of
funds for infrastructure projects is to be raised by government agencies such as NHAI, PFC, REC, IREDA, NABARD and Inland
Water Authority.
To attract foreign portfolio investments, the investment basket of these investors will be expanded to include unlisted debt
securities and pass through securities issued by securitisation SPVs.
For dissemination of information pertaining to the corporate bond markets, a complete information repository for
corporate bonds, covering both primary and secondary market segments will be developed jointly by RBI and SEBI.
Also, a framework for an electronic platform for repo market in corporate bonds will be developed by RBI.
13
Railway Budget 2016-17

The Railway Budget was presented keeping in mind the challenging times in the form of tepid growth of our economys core
sectors due to international slowdown and the looming impact of the 7th Pay Commission and increased productivity bonus
payouts. The Railway Minister presented his second budget with the focus on the customer, increasing efficiency, network
decongestion, improving safety and increasing revenue. The Budget is based on the theme of overcoming challenges and
reorganizing, restructuring and rejuvenating Indian Railways.
The Railway Minister has envisaged three pillars of the strategy for the coming year new revenues, new norms, and new
structures.
Highlights:
No changes in passenger fares and freight rates
Capital expenditure pegged at Rs.1.21 lakh crore
Target to electrify 2,000 km
Finalized bids for two locomotive factories
Commissioning of 2,500 kms broad gauge lines
North-South, East-West dedicated freight corridor proposed
400 stations to be re-developed through PPP
100 railway stations to be equipped with WIFI
Logistics and warehouse parks to be created on PPP mode
Holding company to be explored for monetizing assets of Railway companies
Railways will generate employment for 9 crore man days in FY18 and 14 crore in FY19
Direct procurement of diesel to help save Rs.1,500 crore in FY17
Time-table freight container train to be run on pilot basis
17,000 bio toilets and additional toilets at 475 stations will be provided
Capacity building for the future through transparency, governance, internal audit measures and partnerships
Introducing 1,780 automatic ticket vending machines, mobile apps & GoIndia smartcard for cashless purchases of UTS and
PRS tickets
Security through helplines & CCTVs
Improving of customer interface
Pension Outgo budgeted at Rs.45,500 crore
Market borrowing pegged at Rs.20,000 crore
14
Financial Performance
Rs. Crore
Freight Earnings
Passenger Earnings
FY15
FY16 (RE)
FY17 (BE)
105,791
111,853
117,933
42,190
45,376
51,012
Other Coaching
3,998
4,325
6,185
Sundry Earnings
5,093
6,230
9,590
Suspense
Gross Traffic Receipts
(361)
50
100
156,711
167,784
184,820
7.1
10.2
% growth
Miscellaneous Receipts
4,307
3,971
4,451
161,017
171,805
189,271
7,775
5,500
3,200
28,642
33,220
45,500
7,975
5,700
3,400
105,996
110,690
123,560
4.4
11.6
161,017
171,805
189,271
Dividend payable to General Revenues
9,148
8,470
9,706
Surplus balance
7,665
11,402
8,479
91.3
90.5
92.0
Total Receipts
Ordinary Working Expenses
Pension outgo
Appropriation to DRF
Total Working expenses
% growth
Total Expenditure
Operating Ratio %
Source: Indian Railways
The Railway budget is based on the assumption of high revenue buoyancy in the economy as the rates and tariffs have
not been changed.
Gross traffic receipts- The Rail Minister has targeted 10.2% growth in the gross traffic receipts to achieve Rs.117,933 crore
for FY17 which would be mostly driven by strong 12.4% growth in passenger fare earnings to Rs.51,012 crore. Given that
there has been no change in fare rates, it may be expected that the number of passenger kms would increase during the
year.It needs to be noted that the earning per passenger km is expected to increase from Rs.0.40 in FY16 (RE) to Rs.0.45 in
FY17 (BE). The freight earnings are targeted to increase by 5.4% to Rs.117,933 crore in FY15 which would be due increase
in overall volumes. The average freight rate per net tonne km is expected to increase marginally from Rs.1.67 in FY16 (RE)
to Rs.1.69 in FY17 (BE). Looking at the same commodity wise, the average freight rate per net tonne km in FY17 for coal is
expected at Rs.1.79 while for pig iron and iron ore it is expected at Rs.1.55 and Rs.1.96 respectively.
Expenses- Total expenditure is expected to increase by 10.2% in FY17 as against 6.7% in FY16 (RE). The increase in total
expenditure is mainly on account of staff costs to meet the impact of 7th pay commission.
o Working expenses are to increase at a higher rate of 11.6% relative to gross receipts, most of this increase is attributed to
provident fund, pension & other retirement benefits which is expected to grow by 37%, followed general superintendence
and services at 30% and repairs & maintenance of permanent ways and works at 25%.
Operating ratio during the FY17 is expected to increase to 92% from 90.5% in FY16 (RE)
Budget Implications
The deterioration of the operating ratio will restrict capital expenditure, resulting in lower surplus on the books.
Passenger friendly measures such as e-ticketing system, e-ticketing through mobile phones, free Wi-Fi facilities, CCTVS
to monitor stations, automatic ticket vending machines, mobile apps & GoIndia smartcard for cashless purchases of UTS
and PRS tickets have been proposed. These initiatives will largely have a positive impact on various sectors particularly
information technology (IT), telecommunication and engineering.
15
The modernization of the railways through induction of technology will also help eliminate corruption and bring in more
efficiency into the system. Also, commissioning of broad gauge lines will positively boost the demand for industries such
as steel, aluminum cables, electrical equipment, etc.
Introduction of time-table freight container train and no increase in freight rates will improve movement of freight and
also help in migrating traffic from roads to railways
The partial funding of railways by market borrowings of Rs.20,000 crore in FY17, would lead to an increase in activity in
the corporate bond market.
16
Airlines
Industry Snapshot:
Currently Air India, Jet Airways, Spice Jet, GoAir, Indigo, Air Costa, Air Asia, Vistara, Air Pegasus and Trujet together control
the domestic air travel market in India.
As per DGCA, in CY15, Indigo had a market share of 36.7% in the domestic air travel (in terms of passenger carried) followed
by Jet Airways which commanded 22.5% market share, while Air India and Spice Jet had a market share of 16.4% and 11.6%,
respectively in CY15.
The total air passenger traffic(including domestic and international passenger)for FY15 on a y-o-y basis showed a jump of
12.5% and the same for April 2015-November 2015 period showed a jump of 17.04%
Proposal and Impact

Budget proposals
Impact on the Industry
Key schemes announced

Tools and tool kits being exempted from Basic Customs duty, CVD and SAD
when imported by MROs for maintenance, repair and overhauling [MRO] of This is expected to reduce cost of
aircraft subject to certification by the Directorate General of Civil Aviation.
MRO specifically for airlines which do
Exemption from excise duty being extended to tools and tool kits when self-handling of MRO activities.
procured by MROs for maintenance, repair, and overhauling [MRO] of
aircraftsubject to a certification by the Directorate General of Civil Aviation
Impact on Companies
Company
Jet Airways
Spice Jet
Interglobe Aviation
Impact
Comments
+
+
+
This is expected reduce to cost of MRO for airlines.
17
Airports
Industry Snapshot:
The airport sector has been opened to private sector in the last decade. This has fuelled growth in passenger and cargo
handling capacity. Total passenger handling capacity of airports increased from 72 mn in FY06 to 272 mn in FY15 and the
total cargo handling capacity of airports was at 6.2 mn tonnes per annum in FY15.
As per the Twelfth Five-Year Plan (2012-2017), total investment in the airport sector is expected to be Rs.87,714 crore, which
is expected to further augment airport infrastructure across the country.
The total air passenger traffic (including domestic and international passenger) for FY15 on a y-o-y basis showed a jump of
12.5% for April 2015-November 2015 period showed a jump of 17.04%.
Proposal and Impact

Budget proposals

Proposal to develop 160 non-functional airstrips
with support of state government.
Proposal to develop 10 out of 20 defunct airstrips
The proposal to develop non-operational and defunct airstrips

is expected to have a positive impact on the sector, as this will
result in improving regional connectivity and should result in
total investment of around Rs.15,000- Rs.17,000 crore towards
airport infrastructure development over the long run.
Impact on Companies
Company
GMR Infrastructure Ltd.
GVK Power & Infrastructure Ltd.
Impact
Comments
=
=
While these players presently operate only at major airports they may
be benefited through probable participation in the development of nonfunctional airstrips.
18
Auto Ancillaries
Industry Snapshot:
The automobile component sales grew by 11 per cent on year-on-year basis in FY15 to Rs.2.34 lakh crore, largely on account
of improvement in two/three wheeler and passenger vehicle segments post subdued period across the segments over
FY12-FY14. The auto component industry contributes around 3.8% to the countrys GDP providing direct employment to 1.5
million people. The revival is likely to continue albeit at slower pace in FY16 on account of increase in demand of commercial
vehicles and a reasonable uptick in sales of passenger cars which are the key demand drivers for auto components from
automobile manufacturers. Additionally, the increase in localisation levels in the vehicles manufactured in India is likely
to reduce costs thereby auguring well for auto component manufacturers. The demand from the replacement market is
expected to remain weak for the organized sector since the replacement market is dominated by the counterfeit auto parts
from unorganised sector and cheap imports. With the likely adoption of new standards of emission norms, the substantial
investment shall be required by auto ancillaries segment to complement the Original Equipment Manufacturers (OEMs).
Duty Structure
Customs Duty (%)
Before
After
Impact
7.5
7.5
10
10
10
10
7.5
7.5
7.5
7.5
Engine & engine parts,

except the below
mentioned:
Silencer, exhaust pipes &
radiators
Drive transmission,
steering, suspension
&braking parts, except the
below mentioned:
Couplings & seals, Spark
plug, ignition coils & starter
motors
Spark plug, distributors,
ignition coils & starter
motors
Excise Duty (%)

Engine & engine parts
Drive
transmission,
steering, suspension &
braking parts
Spark plug, distributors,
ignition coils & starter
motors
Before
After
Impact
12
12
12
12
12
12
Proposal and Impact

Budget proposals
Nil custom duty and 6% excise/CVD being extended

This is likely to encourage the auto ancillaries along with OEMs to
on parts of electric vehicles and hybrid vehicles
invest in the hybrid/green technologies.
which was earlier available upto 2016
Impact on Companies
Company
Bharat Forge Ltd.
Bosch Ltd.
Sona Koyo Steering Systems Ltd.
Exide Industries Ltd.
Motherson Sumi Ltd
Impact
Comments
=
=
=
=
=
Since there were no major announcements pertaining to the industry, the

budget would have a marginal impact on component suppliers.
19
Automobiles
Industry Snapshot:
The Indian auto industry is one of the largest in the world with an annual production of 23.37 million vehicles in FY15 ie
growth of 8.68 per cent over the last year. During FY15, two-wheeler segments and passenger vehicle contributed to the
overall growth. Besides, India is also a prominent auto exporter and growth was also on account of increase in export to
certain extent. The auto industry contributes around 7.1% to countrys GDP providing employment to 29 million people
and contributes 13% to excise revenue for the Government. The overall growth in FY16 is likely to remain flat with the
exception of few segments such as commercial vehicle which is likely to witness uptick on account of expected improvement
in the overall macroeconomic conditions. Besides, the investment in order to develop vehicles with the improved emission
standards and competitive market is likely to pose challenge for the players.
Duty Structure
Customs Duty (%)
Before
After
Impact
Passenger Cars
Small Cars*
Old
105
105
New
100
100
Two Wheelers
Old
New
Excise Duty (%)
105
60 (75^)
105
60 (75^)
Commercial Vehicles
Old
40
40
New
40
40
Before
After
Impact
12.5
12.5
=
=
Mid-size Cars@
24
24
Large Cars#
27
27
=
=
SUV
30
30
Buses
12.5
12.5
Trucks
12.5
12.5
=
=
Two-wheeler
12.5
12.5
Three-wheeler
12.5
12.5
Hybrid Vehicles
=
=
=
=
=
=
=
=
=
Note:
*Indicates cars which have engine capacity less than 1,500cc in case of diesel and 1,200cc in case of petrol and length less than 4 meters.
@ Indicates cars which have engine capacity less than 1,500cc in case of diesel and 1,200cc in case of petrol and length more than 4 meters.
#indicates cars having engine capacity more than 1,500cc in case of diesel cars and 1,200cc in case of petrol and length exceeding 4 meters.
Definition of SUV as per central excise department is a vehicle with engine capacity greater than 1,500cc, length exceeding 4000mm and
ground clearance 170 mm and above
^75% Custom duty is applicable for two-wheeler having engine capacity greater than 800cc
Proposal and Impact

Budget proposals
Introduction of infrastructure cess
With the proposed levy of infrastructure cess, additional 1% luxury
a. 1% for small Petrol/LPG/CNG cars;
tax on cars costing Rs.10 lakh or more and no change in the existing
b. 2.5% for small diesel cars;
duty rates, the prices are expected to increase for four-wheeler
c. 4% for mid-size, large cars and SUVs
passenger vehicles and thereby denting a demand to certain extent.
1% luxury tax on cars costing Rs. 10 lakh or more
Nonetheless, the demand for other passenger vehicles such as two Sum of Rs.38,500 crore allocated for MGNREGA
wheeler segment is likely to show an uptick due to further increase
in income linked to substantial allocation of funds under MGNREGA.
Impact on Companies
Company
Maruti Suzuki Ltd
Ashok Leyland Ltd
Hero Motocorp Ltd
Bajaj Auto Ltd.
Mahindra & Mahindra Ltd
Impact
=
+
+
=
Comments
With proposed levy of infrastructure cess, luxury tax primarily on the four-wheeler
passenger vehicles, the budget shall have negative impact on OEMs such as Maruti
Suzuki Ltd in the short term.
For other categories of passenger vehicles barring two-wheelers segment and
commercial vehicles, the impact is neutral with no change in duties.
20
Banking & Financial Services

Industry Snapshot:
Banks
The Indian economy grew by 7.3% in FY15 as compared to 6.9% in FY14. As per advanced estimates, the GDP growth for
FY16 stood at 7.6%. As on March 20, 2015, the y-o-y growth in advances (non-food credit) and deposits were weak at 9.4%
(FY14: 14.5%) and 10.9% (FY14: 14.6%), respectively. As on February 5, 2016, the y-o-y growth in advances (non-food credit)
and deposits stood at 11.1% and 10.6% respectively. Slowdown in economy, relatively high interest rates in the banking
system, capital concerns for some banks, higher NPAs and challenge of restructured assets all contributed for low advances
growth. Corporates also resorted to mobilising funds from the commercial paper market instead of banks in FY15 which
also played a role in subdued credit growth. Asset quality pressure is continuing in FY16 leading to increased provisioning
and lower profitability for the banking sector. Under the Indradhanush scheme, the Government has announced a capital
infusion of Rs.70,000 crore for PSU banks during FY16 - FY19. Going forward, the banks especially public sector banks would
need additional equity in order to meet Basel III norms and manage the challenge of asset quality stress. Advances and
deposits are expected to grow in the range of 11-12% in FY16.
Proposal and Impact

Budget proposals
Rs.25000 crore of capital infusion was already part of the

Indradhanush scheme announced by the government in
August 2015. Given the deterioration in capital adequacy
levels of PSU banks (due to decline in asset quality and hence
Capital infusion of Rs.25,000 crore in PSU banks in 2016-17
profitability), this amount would be inadequate to meet the
capital needs of PSU banks which are in need of not just
growth capital but capital to comply with Basel III norms.
Operationalization of the Bank Board Bureau
Bank Board Bureau has already been formed and its effective
functioning will ensure better corporate governance in PSU
banks.
Consolidation in PSU banks
Consolidation of a weaker bank with a robust PSU bank will

be a positive development for the banking sector
Debt Recovery Tribunals will be strengthened
This will help in effective and speedy resolution of bad

assets and will be a positive development in facilitating the
recovery efforts of banks.
Encouraging large borrowers to meet a portion of their
financing needs from the bond market will ensure reduction
in banks exposure to large borrowers and thereby reduce
the risk of a chunky exposure facing stress.
Steps taken for deepening of the corporate bond market
Setting up of a dedicated fund under LIC of India to provide

credit enhancement to infrastructure projects will assist
in raising of funds by infrastructure companies thereby
providing a boost to the sector which contributes significantly
towards asset quality problems in the banking sector
21
Tax on securitization trust

The Budget has proposed to provide complete pass- These steps would aid in bringing in investors such as large
through regime to securitisation trusts and tax such
domestic and foreign investors in the securitization industry
income in hands of the investor. However, income
(through investments in Pass Through Certificates).
outflows from such trusts would attract provisions of Tax
Deducted at Source (TDS).
Furthermore, such actions enable easier tax administration
Pass Through Securities issued by securitisation SPVs
of securitization trusts by making TDS credit available.
to be included in investment basket of foreign portfolio
Obtaining certificates for deduction at a lower rate would
investors.
minimise litigation on tax issues.
Introduction of amendment to Section 197 relating to
certificate for deduction at a lower rate.
22

HOUSING FINANCE
Industry Snapshot:
Over the last decade, housing finance in India has emerged as one of the most secured asset class with low delinquencies.
As a result, housing finance continued to be a focus segment for both banks as well as housing finance companies and has
witnessed robust CAGR growth of roughly 19% during the last three years (2013-2015), higher than the overall bank credit
growth.

Over the last few years many new HFCs with a focus on affordable housing have started operations. The governments thrust
on providing housing to all by 2022 coupled with significant housing shortages in the low cost and affordable housing is likely
to fuel credit growth in the segment. In addition, various NHB schemes and tax incentives provided to individuals on housing
loans continue to remain positive for the sector. HFCs are expected to maintain their good profitability on the basis of strong
business growth and stable asset quality over the medium term.
Proposal and Impact

Budget proposals
For the first home buyers, the budget has proposed

deduction for additional interest of Rs.50,000 per annum This move is targeted towards boosting affordable housing in
for loans up to Rs.35 lakh sanctioned during the next
peripheral areas of metros, tier-2/3 cities and beyond.
financial year, provided the value of the house does not
exceed Rs.50 lakh.
100% deduction for profits to an undertaking from a
housing project for flats upto 30 sq. metres in four metro
cities and 60 sq. metres in other cities, approved during The move intends to incentive the builders to undertake
June 2016 to March 2019, and completed within three
affordable housing projects and is expected to provide boost
years of the approval
to the Housing For All by 2022 project which was cleared by
the Cabinet in June 2015
Exempt service tax on construction of affordable houses
up to 60 square metres under any scheme of the Central
or State Government including PPP Schemes
Deduction of interest payable on capital borrowed
for acquisition or construction of a self-occupied The construction timeline has been increased from 3 years
to 5 years.
house property shall be allowed if such acquisition or
construction is completed within five years
23

ASSET RECONSTRCUTION COMPANIES
Industry Snapshot:
Asset Reconstruction Companies (ARCs) were setup under the SARFAEST Act, 2002 to relieve banks and financial institutions
of the burden of NPAs. Major trigger for this came in November 2013 when RBI asked the banking system to clean up its
stressed portfolio. With the RBI directing banks to clean up their balance sheets by March 2017 and with stressed assets of
the Indian banking industry having risen to 11-12% of gross advances, the sale of bad loans from banks to ARCs is expected
to increase going forward.
Proposal and Impact

Budget proposals

Sponsor of an ARC to hold up to 100% stake in the ARCs.
Will enable ease of capital infusion in ARCs from promoters

100% FDI in ARCs will be permitted through automatic
/ sponsors.
route.
Permit non-institutional investors to invest in Will ease entry of global funds specializing in distressed
Securitization Receipts. Foreign Portfolio Investors (FPIs) assets seeking to invest in ARCs in India
will be allowed up to 100% of each tranche in securities
May attract HNI investors / funds having an appetite for
receipts issued by ARCs subject to sectoral caps.
securitization receipts issued by ARCs.
Complete pass through of income-tax to securitization
trusts including trusts of ARCs. The income will be Provides clarity on taxation with respect to ARCs
taxed in the hands of the investors instead of the trust.
However, the trust will be liable to deduct tax at source.
24
Cement
Industry Snapshot:
India is the second-largest cement producer in the world. Cement production increased at a CAGR of 6.7% to 270 million
tonnes over FY07FY15. Housing and real estate sector is considered to be the largest driver of cement demand in India,
which held approximately two-third total cement consumption, followed by infrastructure sector. Cement production grew
by 5.6% in FY15 as compared with 3.1 % in FY14. The growth was supported low base effect and delayed monsoon in the
first half of the year. During the second half, the demand was impacted by low government spending, slow down in real
estate activities and low rural demand. The trend continued in 9MFY16 also with a meagre growth of 2.2% in cement
production.
Going forward, focus of the Government on strengthening infrastructure including road sector, development of smart cities
and promotion of low-cost housing and expected revival in the overall economic growth is expected to result in improved
growth prospects for the cement sector. Moreover, fall in diesel prices and coal and pet coke prices will provide some respite
to the cement industry on the cost front.
Duty Structure
Customs Duty (%)
Before
After
Impact
2.5%/10%
10%
2.5%
2.5%
200
400
Raw Materials
Basic Custom Duty on
- Coal
- Lignite
Clean Energy Cess on coal (Rs./tonne)
Proposal and Impact

Budget proposals

Total outlay for infrastructure Rs.221,246 crore proposed in the budget. Allocation
of Rs.55,000 crore for Roads & Highways Sector (additional Rs.15,000 crore to be Higher outlay and focus on
infrastructure, housing and rural
raised by NHAI).
development are likely to boost the
Measures to boost construction sector, promote affordable housing (including cement demand.
exemption of service tax on construction of affordable houses upto 60 square
metres). and rural development
Excise duty exemption, presently available to concrete mix manufactured at site
for use in construction work at such site being extended to Ready Mix Concrete
manufactured at the site of construction for use in construction work at such Overall impact on input cost will be
site.
negligible.
Reduction/rationalization in Basic Custom Duty for coal, lignite, etc. Increase in
Clean Environment Cess on inputs such as coal, lignite on the cement input costs.
Impact on Companies
Company
Ultratech Cement Ltd
Ambuja Cements Ltd
J. K. Cement Ltd
J K Lakshmi Cement Ltd
Impact
Comments
+
+
+
+
Higher outlay and focus on infrastructure, housing and rural development are
likely to boost the cement demand in the long-term, which in turn will benefit the
companies in the sector.
25
Chlor Alkali
Industry Snapshot:
The Chlor-alkali industry is a sub-segment of basic chemicals industry (inorganic), accounting for about 70% of the total
basic chemicals production and 65% of the total installed capacity of chemicals in India (during FY15). Chlor-alkali industry
mainly comprises caustic soda, soda ash, chlorine, hydrogen and hydrochloric acid. Production of caustic soda and soda ash
together account for about 74% of the total Chlor-alkali industry.
Caustic soda and chlorine are produced together in the ratio of 1:0.88 (also known as Electrochemical Unit or ECU) through
electrolysis of salt. On account of their co-production, the market dynamics for caustic soda and chlorine are heavily
influenced by each other. Caustic soda finds application mainly in alumina, textiles, paper, organic, inorganic, soaps &
detergents industries, etc. Chlorine is very important for manufacturing PVC. It is also used in disinfection of drinking water
in the pharmaceutical industry and various other chemical industries. During FY08-15, the caustic soda consumption grew
at a CAGR of 3.6%. Whereas caustic soda production has increased at a CAGR of 2.3% and imports grew substantially at a
CAGR of 16.1% during the same period.
In India, soda ash is produced by synthetic process using salt as raw material. Soda ash is mainly available in two forms
light soda ash and dense soda ash. Light soda ash has a share of approximately 60% in total soda ash production. Soda ash is
extensively used in the production of glass, soap & detergents, chemicals, silicates and some other industries. During FY0815, soda ash consumption grew at a CAGR of 4.7%, whereas its production increased at a CAGR of 3% resulting in substantial
growth of imports at CAGR of 13.1% during the same period.
Rising imports mainly attributed to excessive dumping of cheap imports due to disparity between the domestic and
international prices is one of the threats for the Chlor Alkali industry.
Duty Structure
Customs Duty (%)
Before
After
Impact
Caustic Soda
7.5
7.5
Soda Ash
7.5
7.5
Chlorine
7.5
7.5
Hydrogen
7.5
7.5
Hydrochloric Acid
7.5
7.5
=
=
=
=
Membrane cell plant/

membranes & their parts
2.5
Nil
Excise Duty (%)
Before
After
Impact
Caustic Soda
Flakes
Lye
12.5
12.5
12.5
12.5
Soda Ash
12.5
12.5
Chlorine
12.5
12.5
Hydrogen
12.5
12.5
Hydrochloric Acid
12.5
12.5
=
=
=
=
Proposal and Impact

Budget proposals

Neutral for caustic soda manufacturers.

Basic customs duties (BCD) on electrolysers,
membranes and their parts required by caustic
soda/potash unit using membrane cell technology
being exempted.
Allowing free import of membrane cell technology will help the

conversion of the players towards energy-efficient and eco-friendly
membrane cell technology faster. It will also help the industry to
reduce the cost of capacity expansion. However, almost 100% of the
caustic soda industry operates on membrane cell technology. Hence
the benefit of this reduction will accrue only during replacement of
electrolyses, membranes etc which happens every 2-3 years.
26
Impact on Companies
Company
Impact
Comments
Aditya Birla Chemicals (India) Ltd (ABCIL)
=
=
=
=
No major impact
Gujarat Alkalies and Chemicals Ltd (GACL)

Gujarat Heavy Chemicals Ltd. (GHCL)
Tata Chemicals Ltd.
27
Coal
Industry Snapshot:
Indian coal Industrys domestic production/off-take stood at 599/582 MT (Coal India Limited (CIL)+Singareni Collieries
Company Limited (SCCL) + Captive) in FY15. Against this the demand for coal stood at 840 MT in FY15 resulting in deficit of
29% which was met through import. CARE Ratings expects Indian coal production to reach 652 MT/681 MT (base case) in
FY16E/FY17E. For 10MFY16, CILs production grew at 9.6% YoY to 426 MT, while growth in off-take was 9.8% YoY to 438 MT.
The demand of coal is expected to grow to 884 MT in FY17E.
Duty Structure
Customs Duty (%)
Before
After
Impact
Non-Coking Coal
2.50
2.50
Met coke
2.50
5.00
Rs.200/tonne
Rs.400/tonne
=
=
=
Clean Energy Cess now renamed as Clean Environment Cess (applicable to

thermal coal, imported thermal coal and lignite)
Proposal and Impact

Budget proposals
The increase in clean energy cess of Rs.200/tonne of coal is likely to

garner Rs.17,300-17,500 crore yearly for the exchequer. The impact
Clean Energy Cess is increased from Rs.200 to Rs.400/
on the coal and lignite industry remains neutral as cess increase
tonne of coal to finance clean environment initiatives.
is fully pass-through to end-consumers (in regulated sectors like
power).
Impact on Companies
Company
Coal India Ltd.
Impact
Comments
Since energy cess is pass-through, the company would not be impacted.
28
Construction
Industry Snapshot:
Construction industry, the second largest employment generator in the economy after agriculture, is integral to support
Indias growing need for infrastructure and industrial development. The growth of the industry is directly correlated to the
growth of gross domestic product (GDP). In the last 10 years, construction as a percentage of GDP has been around 7-8%.
The industry witnessed a slowdown in the last couple of years, mainly on account of slowdown in the economy, delay in
project awarding and execution due to environmental clearance hurdles, aggressive bidding by players, lack of funding, land
acquisition issues and policy bottlenecks.
As on March 31, 2015, the multiple of order backlog to the net sales of the major construction companies stood at around
4 times.
Duty Structure
Excise Duty (%)
Before
After
Impact
6%*
Cement
12.5%
12.5%
Steel
12.5%
12.5%
+
=
=
Raw materials
Ready Mix Concrete manufactured at site
* With input tax credit (2% without input tax credit)
Proposal and Impact

Budget proposals
The continued focus of the government on infrastructure

development through increased allocation towards roads,
Total outlay of Rs.221,246 crore planned for infrastructure
railways irrigation, ports, etc, would be beneficial for the
in 2016-17.
construction industry. Also, focus of the government on
A dedicated Long Term Irrigation Fund to be created
building affordable houses will augur well for the industry.
in NABARD with an initial corpus of Rs.20,000 crore for

Measures taken for faster resolution of issues in projects
implementation of irrigation projects under Accelerated
under PPP model and window for renegotiation of terms
Irrigation Benefit Programme (AIBP).
of the agreement will encourage participation of private
The total outlay on roads and railways to be Rs.218,000
sector through this model.
crore. Nearly 10,000 km of National Highways to be
awarded in FY17 and nearly 50,000 km of State highways Availability of credit enhancement for infrastructure
projects will improve credit rating and facilitate investment
to be taken up for upgradation as National Highways.
at lower cost.
Rs.800 crore allocated for development of greenfield
ports and work on the National Waterways.
NHAI, PFC, REC, IREDA, NABARD and Inland Water
Authority to be permitted to raise additional finances of
Rs.31,300 crore through bonds in FY17 for infrastructure
spending.
Measures to revitalise PPPs:
A Public Utility (Resolution of Disputes) Bill to be
introduced for resolution of disputes in infrastructurerelated construction contracts, PPP and public utility
contracts.
Guidelines for renegotiation of PPP Concession
Agreements.
29
In-built credit enhancement to be available to

infrastructure projects for a better credit rating. LIC of
India to set up a dedicated fund to provide such credit
enhancement to infrastructure projects.
Exemption of service tax on construction of affordable
houses up to 60 square metres under any scheme of the
Central or State Government including PPP Schemes.
CVD exemption on specified machinery required for
construction of roads being withdrawn.
Impact on Companies
Company
Hindustan Construction Company Limited Ltd
NCC Ltd.
Gammon India Ltd
Sadbhav Engineering Ltd
Simplex Infrastructures Ltd
Patel Engineering Ltd
Impact
Comments
+
+
+
+
+
+
Increased allocation towards various infrastructure projects

is expected to result in increased order inflow to the
construction companies.
30
Consumer Durables
Industry Snapshot:
Consumer durables industry is highly correlated to economic scenario as the industry demand is largely depended upon
disposable income. Urban market accounts for about 67 per cent of revenue for the consumer durable industry in India.
The rising demand from rural and semi-urban markets is likely to drive the consumer durables industry. The key growth
drivers are rising income levels, easy availability of consumer credit, various policy support from the government like
relaxation in customs duties and excise duty, awareness of brands and products, change in lifestyle, new model launches
with technological improvements and ease of shopping through various online formats
Duty Structure
Customs Duty (%)
Before
After
Impact
Populated PCBs for manufacture of personal computers (laptop or desktop)
Nil
Populated PCBs for manufacture of mobile phone/tablet computer
Nil
Magnetron of capacity of 1 KW to 1.5 KW for use in manufacture of domestic microwave ovens
10
Proposal and Impact

Budget proposals

Increased in duty of PCBs for manufacture of
Likely to result in increase in cost which if passed on to consumers
computers/mobile phones
may affect demand for these products
Reduction in custom duty on magnetron of
Likely to result in decrease in cost of these products
capacity of 1KW to 1.5 KW used for manufacture of
microwave ovens
Impact on Companies
Company
Bajaj Electricals Ltd
Mirc Electronics Ltd
Impact
Comments
=
=
Reduction in custom duty would reduce the input cost which may be
passed on to the consumers
31
Education
Industry Snapshot:
Education sector in India is a mix of government-operated & privately operated educational institutions and allied education
products & services providers. India has a significant young population which calls for a robust education sector to harness
potential for human capital. The sector is highly influenced by the various government schemes and policies launched
primarily to improve the quality of education and the planned expenditure by the government through several schemes
including the Sarva Shiksha Abhiyan (SSA) and Rashtriya Madhymik Shiksha Abhiyan (RMSA) to improve the quality of
education and eventually the literacy level in the country.
Governments focus on education has continued in the Union Budget 2016-17 with a budget outlay of Rs.22,200 crore
(Rs.22,000 crore in the budget 2015-16) towards SSA, Rs.3,600 crore (PY: Rs.3,565 crore) for RMSA and other such schemes.
Duty Structure - Not Applicable

Proposal and Impact
Budget proposals

Continuing focus on School education with an
Objective is to increase gross enrollment ratio. Private sector
allocation of Rs.40,000 crore to Department of
educational institutions offering primary and secondary education
School Education and Literacy. Proceeds from
likely to benefit with higher enrolment levels.
Education cess to be allocated to key schemes such
as SSA and Mid-day Meal.
Special focus on Skill Development and
Entrepreneurship under the National Skill
Development Mission. To set-up 1500 multi-skill
training institutes and to provide entrepreneurship
education and training in 2200 colleges, 500
government ITIs through open online courses.
Focus on skill development as a priority to empower and skill

the youth would result in increased opportunities for private players
offering skill development courses partnering with National Skill
Development Corporation.
The agency would leverage funds from the market and

Higher Education Financing Agency (HEFA) to be set supplement the same with donations and CSR funds which would be
up with an initial capital base of Rs.1000 crore.
used to finance improvement in infrastructure in higher education
institutions
Impact on Companies
Company
Impact
Comments
NIIT
+
+
Tree House
The government has re-emphasized its focus on skill development

towards providing entrepreneurship education and training through
open online courses. This is expected to result in higher inflow of
orders to the private sector players especially for companies engaged in
information and communication technology segment who are partnering
with National Skill Development Corporation.
Aptech
32
Engineering & Capital Goods

Industry Snapshot:
The key indicators representing the growth in Indian engineering and capital goods (ECG) industry which includes, new
investment announcements, Gross Fixed Capital Formation (GFCF), execution of stalled project and growth rate in Indian
Electrical Equipment Industry indicated a mixed trend.
Investment announcements:
There was an increase in the average quarterly investment announcements (AQIA) for five quarters till Q2FY16 which was
however followed by a dip in Q3FY16. AQIA for five quarters ended Q2FY16 was around Rs.1.1 trillion by the Government and
Rs.1.7 trillion by private players, however, the announcements registered a dip in Q3FY16, with Government announcement
falling to Rs.0.36 trillion and private sector to Rs.0.69 trillion.
Gross Fixed Capital Formation and execution of stalled projects:

Conversion of new capex announcements into actual capex remained lean as the GFCF as a percentage of GDP witnessed
a dip from 29.7% in FY14 to 28.7% in FY15. However, during the first three quarters of FY16 it has improved from 27.8% in
Q1FY16, 28.3% in Q2FY16 to 29.4% in Q3FY16.

However, the major part of capital formation appears to be driven by execution of stalled projects. The quarterly average of
stalled projects reduced from Rs.1.7 trillion in FY14 to Rs.1.2 trillion in FY15 and further to Rs.0.65 trillion in 9MFY16, thus
indicating lean materialization of new investment announcements.
Growth in the electrical equipment industry:

The domestic electrical equipment industry, indicative of order inflow (in volume) for downstream electric equipment
manufacturers, registered a marginal growth of 0.05% y-o-y in H1FY16, after registering a 9.95% y-o-y growth in FY15.

The growth in the ECG industry would now be led by new project announcement and its materialization as the level of
stalled projects has come down significantly. A declining interest rate trajectory, favorable policy changes such as ban of
duty-free import of capital goods for power transmission and distribution projects and increased focus of the government
on infrastructure such as opening up of foreign direct investments across various sectors may act as catalysts.
Duty Structure
Customs Duty (%)
Before
After
Impact
Excise Duty (%)
Before
After
Impact
Construction equipment
7.5%
7.5%
Construction equipment
12.5%
12.5%
Textile machinery
7.5%
7.5%
Textile machinery
12.5%
12.5%
Stamping and lamination
7.5%
7.5%
Stamping and lamination
12.5%
12.5%
Copper winding wire
7.5%
7.5%
=
=
=
=
Copper winding wire
12.5%
12.5%
=
=
=
=
12.5%
12.5%
12.5%
12.5%
Power
generation
equipment such as boilers
and turbines
7.5%
10%
Power
generation
equipment such as
boilers and turbines
Motors
7.5%
10%
Motors
33
Proposal and Impact

Budget proposals
100% village electrification by May 1, 2018, with Rs.8,500 Budgetary allocation for FY 2015-16 under DDGJY was
Rs.4,500 crore, which has doubled for FY2016-17. This
crore provided for Deendayal Upadhayaya Gram Jyoti Yojna
would result in increased demand for power transmission
(DDGJY)
and distribution equipment
Mobilization of additional finances upto Rs.31,300 crore
by NHAI, PFC, REC, IREDA, NABARD and Inland Water This could help mobilize much needed long-term funds for
the associated sectors such as roads and power, which could
Authority through bonds
translate in order inflows for equipment manufacturers
Total investment in the road sector of Rs.97,000 crore
Total investment in railway infrastructure of Rs.1.21 lakh Investment in the road sector proposed for FY 2016-17
is higher than the investment proposed for the sector
crore
for FY 2015-16 of Rs.52,918 crore. Increased investment
100% FDI through FIPB route in marketing of food products
in the sector would result in more order inflow for road
manufactured in India.
construction equipment manufacturers.
Investment in railway infrastructure proposed for FY
2016-17 is higher than the investment of Rs.1 lakh crore
announced for FY 2015-16. This would translate in orders
for railway equipment manufacturers.
This is likely to boost the demand for food processing
machinery
Impact on Companies
Company
ABB India Ltd.
Impact
Action Construction Equipment Ltd.
=
=
Alstom India Ltd.
Bharat Heavy Electricals Ltd.
EimcoElecon (India) Ltd.
=
=
=
=
=
=
=
=
=
=
=
=
=
Elecon Engineering Company Ltd.

Engineers India Ltd.
Kalpataru Power Transmission Ltd.
KEC International Ltd.
Larsen & Toubro Ltd.
Shanti Gears Ltd.
Siemens Ltd.
Sterlite Technologies Ltd.
Texmaco Rail & Engineering Ltd.
Thermax Ltd.
TRF Ltd.
Voltamp Transformers Ltd.
Comments
Stable
Investment in road infrastructure could see improved demand for
construction equipment
Investment in railway infrastructure could see improve demand for railway
equipment and service provider
Governments thrust on increase of power generation and transmission
could see new order inflows for power equipment. Also, increase in
customs duty on boilers and turbines is likely to protect the interest of
domestic equipment manufacturers.
Stable
Stable
Stable
Stable
Stable
Focus on capacity building and infrastructure could see higher order flow
Stable
Stable
Thrust on rural electrification could see higher demand for cables
Growth in annual freight carrying capacity could translate into increased
order flow for rolling stock
Stable
Stable
Focus on rural electrification could see higher demand for distribution
transformers
34
Fertilizers
Industry Snapshot:
Domestic fertilizer sales volume increased by 5.37% y-o-y in FY15 to 54.37 million metric tonnes (MMT) driven by healthy
growth in demand of P&K fertilizers by 11.22%, while the urea consumption largely remained stable at 30.88 MMT. During
10MFY16, the total fertilizer sales volume increased by 6.65% y-o-y to 47.82 MMT due to increase in the sales volume of
P&K fertilizers by 9.36% (20.92 MMT) and of urea by 4.64% (26.90 MMT) due to improvement in demand scenario.
Policy moves such as gas price pooling and new urea policy 2015 augured well for the urea segment of fertilizer industry
which coupled with reduced gas price is expected to result in reduction in subsidy bill for FY16. However, the reduced
international prices of some of the P&K fertilizers resulted in increase in imports in current financial year as the raw material
prices have not softened to that extent. Overall, the fertilizer subsidy budget of Rs.72,968 crore for FY16 would continue to
fall short against the total outlay mainly due to large arrears of previous year.
The key challenges faced by fertilizer industry are inadequate subsidy budget leading to delays in subsidy payments, skewed
usage of nitrogen nutrient (urea) and high dependence on imported raw materials.
Duty Structure
Customs Duty (%)
Before
After
Impact
Urea
5%
5%
DAP
5%
5%
MOP
5%
5%
Ammonia
5%
5%
Phosphoric Acid
5%
5%
Sulphur
2.5%
2.5%
Rock Phosphate
2.5%
2.5%
=
=
=
=
=
=
=
Excise Duty (%)
Before
After
Impact
Urea
12.50%
12.50%
DAP
12.50%
12.50%
MOP
12.50%
12.50%
Ammonia
12.50%
12.50%
Phosphoric Acid
12.50%
12.50%
Sulphur
12.50%
12.50%
Rock Phosphate
12.50%
12.50%
=
=
=
=
=
=
=
DAP: Di-ammonium phosphate; MOP: Muriate of potash
Proposal and Impact

Budget proposals

Overall fertilizer subsidy budget reduced by Rs.2,968 crore y-o-y
to Rs.70,000 crore. Within overall budget, subsidy for urea as a
whole increased by Rs.500 crore to Rs.51,000 crore, while for other
fertilizers, subsidy reduced by Rs.3,468 crore to Rs.19,000 crore.
Soil health card scheme with target to cover all 14 crore farm
holdings by March 2017 and to provide soil and seed testing
facilities to 2,000 model retail outlets of fertilizer companies during
next 3 years.
Promote organic farming through Parmparagat Krishi Vikas Yojna
and Organic Value Chain Development in North East region.
Improved access to irrigation through Pradhanmantri Krishi Sinchai
Yojana with additional 28.5 lakh hectares to be covered under
irrigation. Fast tracking of 89 irrigation projects under Accelerated
Irrigation Benefits Programme (AIBP), which have been languishing,
with target to complete at least 23 of these projects before March
31, 2017. Launching of dedicated long-term irrigation fund in
NABARD with an initial corpus of Rs.20,000 crore.
Fertilizer subsidy budget over the past few years

have fallen short of the actual requirements. This
is expected to continue in FY17 also mainly due to
large subsidy arrears of the previous years.
Move towards improving the soil fertility and
productivity and balance usage of nutrients would
lead use of complex fertilizers to suit soil needs
rather than excess use of low cost urea.
Move is expected to encourage fertilizer players
to introduce organic fertilizers in their product
portfolio which would also aid in improving soil
fertility further.
The move is expected to reduce dependence
on monsoon and would entail stable demand for
fertilizers.
Fertilizer demand would get a fillip on account of
easier credit availability and may also encourage
farmers to use complex fertilizers.
35
Enhanced credit to the farm sector through agriculture credit outlay

of Rs.900,000 crore, increased by Rs.50,000 crore from previous
year and provision of Rs.15,000 crore for interest subvention for
agricultural loans.
Impact on Companies
Company
Impact
Comments
Indian Farmers Fertilizer Cooperative Ltd
=
=
=
=
Marginal reduction in subsidy allocation to fertilizer subsidy budget

would continue to result in mismatch between subsidy requirement
and allocation.
Gujarat State Fertilizers & Chemicals Ltd

Rasthriya Chemicals & Fertilizers Ltd
Chambal Fertilizers & Chemicals Ltd
Gujarat Narmada Valley Fertilizers &

Chemicals Ltd
The move towards reducing the skewed usage of nitrogen nutrient

(urea) and soil productivity would lead to increase in agriculture
yield and also to increase in demand of non-urea (P&K) fertilizers.
The move towards promoting organic farming would encourage
fertilizer companies to introduce organic fertilizers in their product
portfolio.
The easier farm credit would also encourage farmers for balanced
usage of fertilizers.
Improved access to irrigation would lead to reduced dependence on
monsoon and stabilize demand of fertilizers.
36
FMCG
Industry Snapshot:
The size of the Indian FMCG industry estimated to be at around $47 billion in 2015. Most of the FMCG companies in past 2
years witnessed a subdued volume growth on account of subdued economic growth. However, the medium to long-term
prospects for the industry remains healthy on the back of favourable demographic profile, rising disposable income with
improvement in GDP growth rate and expected growth from rural demand with rising penetration in these areas.
Duty Structure
Customs Duty (%)
Before
After
Impact
Excise Duty (%)
Before
After
Impact
Fatty acids/crude palm

stearin
and
specified
industrial grade crude oil
used for manufacturing of
soaps.
Mineral
water
and
aerated
waters
containing added sugar.
18
21
Crude glycerin for

manufacturing of soaps.
Non-filter cigarettes
(not exceeding 65 mm).
1,280
(Rs./
1,000
sticks)
1,495
(Rs./
1000
sticks)
Non-filter cigarettes
(exceeding 65 mm but
not exceeding 70 mm)
2,335
(Rs./
1,000
sticks)
2,705
(Rs./
1000
sticks)
Filter cigarettes (not

exceeding 65 mm)
1,280
(Rs./
1,000
sticks
1,495
(Rs./
1,000
Sticks
Filter cigarettes
not 70 mm)
1,740
(Rs./
1,000
sticks)
2,000
(Rs./
1000
sticks)
Filter cigarettes
not 75 mm)
2335
(Rs./
1,000
sticks)
2,705
(Rs./
1,000
sticks)
Other cigarettes
3,375
(Rs./
1,000
sticks)
3,935
(Rs./
1,000
sticks)
Excise duty on cut

tobacco
Rs.70
per
kg
Rs.70
per
kg
37
Proposal and Impact

Budget proposals

Increase in excise duties on cigarettes, tobacco.
Hike in excise duty if passed on to the end consumers could

marginally impact demand for cigarettes and other tobacco products
Increase in excise duty on mineral water and Increase in excise duty would lead to marginal decline in demand
aerated water containing added sugar
for these products.
Impact on Companies
Company
ITC Ltd, Godfrey Philips India Ltd,
VST Industries Ltd
Impact
Comments
Hike in excise duty would lead to decline in the volume growth for these
products and may negatively impact margins as the hike may not be fully
passed on to the end users.
38
Gems & Jewellery

Industry Snapshot:
India is the largest diamond processor in the world and occupies a leading position as manufacturer of gold ornaments.
A predominant portion of gold jewellery manufactured in India was meant for domestic consumption. However, cut and
polished diamonds (CPD) and diamond jewellery segment is largely export-oriented and has been a major contributor to
the countrys Foreign Exchange Earnings (FEEs). India was the second-largest consumer of gold in the world during CY15,
even after muted H1CY15, on the back of good festival and wedding-related demand in Q4CY15. Indias gems and jewellery
(G&J) exports has declined mainly due to a slowdown in demand from China. During 9MFY16, the total export of gems
and jewellery (G&J) industry reduced by approximately 14% to USD 23.29 billion, compared with USD 27.15 billion during
9MFY15. Indian diamond processors have also reduced import of rough diamonds in commensuration with global demand.
Indian consumer demand for gold remained largely undeterred by challenging macro-economic environment and domestic
conditions, especially extreme weather conditions and squeeze on rural incomes. The demand for gold jewellery in India
increased by 5% to 654.30 tonnes during CY15, while investment demand decreased by 6% to 194.60 tonnes during CY15.
There has been notable change in Indias bullion market and gold refining segment. Refining capacity in India doubled from
750 tonnes per annum (TPA) during CY14 and is currently estimated at 1,500 tonnes per annum (TPA) and gold dore bars
accounted for 25% of gross official bullion imports in Q4CY15, compared with just 3% in Q1CY14.
Duty Structure
Customs Duty (%)
Before
After
Impact
Excise Duty (%)
Before
After
Impact
Imitation jewellery
10.00
15.00
Articles of Jewellery
[excluding articles of
silver jewellery, other
than those studded with
diamonds, ruby, emerald
or sapphire]
0.00
1.00
Semi-processed, half cut or

broken diamonds
2.50
2.50
Gold Bars manufactured

from gold ore or
concentrate
9.00
9.50
Cut and polished diamonds

and coloured gemstones
2.50
2.50
Silver manufactured from

silver ore or concentrate
8.00
8.50
Gold and Silver
10.00
10.00
Gold and Silver Jewellery
15.00
15.00
=
=
Impact on Companies
Company
Asian Star Company Limited
P. N. Gadgil Jewellers Private Limited
PC Jeweller Limited
Khazana Jewellery Private Limited
Impact
Comments
=
-
The domestic imitation jewellery sector received an impetus from

the government as import of imitation jewellery will become more
expensive.
The cost of jewellery will go up due to levy of excise duty and it will
become more expensive
39
Hospitals & Healthcare

Industry Snapshot:
The Indian healthcare industry is estimated to cross Rs.5,000 billion by FY17 (refers to the period April 01 to March 31). The
Hospital and Health services segment is its largest component, comprising 70% of the industry and is expected to continue
to dominate the industry. With 69.5% of the total expenditure on health being funded through private means in CY11
(Source: WHO), it is likely to remain the single-biggest determinant of healthcare spending in the near-future.
Duty Structure
Customs Duty (%)
Before
After
Disposable
sterilized
dialyzer and micro barrier
of artificial kidney
7.5
NIL
Impact
Excise Duty (%)
Before
After
Impact
Disposable
sterilized
dialyzer
and
micro
barrier of artificial kidney
12.5
NIL
Proposal and Impact

Budget proposals

The Government to launch a new health
protection scheme which will provide health
cover upto Rs.1 lakh per family.
The governments focus on improving social sector including healthcare
For senior citizens, additional top up package is reflected from the announcements. This will also improve health
insurance penetration.
of Rs.30,000/-.
National Dialysis Services programme to More dialysis centers (renal dialysis) through PPP model and certain
be started under National Health Mission indirect tax benefits to address high costs involved in dialysis processes.
through PPP Model to be provided in
all district hospitals and certain dialysis
equipment proposed to exempt from basic
customs duty, excise/ CVD and SAD.
Impact on Companies
Company
Apollo Hospital Enterprise Ltd
Fortis Healthcare Ltd
Impact
=
=
Comments
No specific comments for private sector hospitals.
40
IT & ITeS
Industry Snapshot:
The Indian IT-BPM industry in aggregate is estimated at USD 146 billion in FY15, export segment of which is estimated at
USD 98.5 billion, according to NASSCOM. IT Services exports are expected to grow at a moderate pace of 12-14% in FY16.
The nominal growth expectation is attributable to mixed set of economic data from the western markets which account
for about 80% of the income of Indian IT exporters and currency headwinds. While U.S. economy has recorded notable
recovery, economic fluctuation in Europe has been a cause of concern. The domestic IT services market meanwhile is
approaching USD 50 billion according to NASSCOM driven by growing e-commerce, under penetrated market in SMEs and
governments spending in e-governance projects.
Proposal and Impact

Budget proposals

Benefits of Section 10AA to new SEZ units available
for units which commence activity before March
31, 2020.
For IT companies, expansion and hence growth coming from SEZ

by setting up delivery units in SEZ, which provide tax benefits on
profits, could help save tax. The effective tax rate is expected to
continue to remain lower than the statutory corporate tax rate.
100% deduction on profits for 3 out of 5 years for Most start-ups suffer losses in initial years. Hence, the move for
100% tax deduction on initial years profits may not be of any major
start-ups setup during April 2016 to March 2019.
significance. As such MAT will apply.
Impact on Companies
Company
TCS
Infosys
HCL Infosystem
Wipro
Tech Mahindra
Impact
Comments
=
=
=
=
=
Effective tax rates paid by these large IT companies have remained well below the
statutory tax rates benefiting from tax incentives on operations at SEZ locations.
With the tax benefits being extended for new units commencing activity in SEZ till
March 2020, IT companies stands to benefit from lower tax outflow.
41
Media and Entertainment

Industry Snapshot:
The Indian media and entertainment industry estimated to be at Rs.1,026 bn witnessed an overall growth of 11.76% in
CY2014 (period from January to December 2014). Of the total market size, the share of television and print media continued
to garner highest share of 46.3% and 25.67% respectively, during CY2014. Other segments such as gaming and digital
advertising animation & visual effects (VFX), albeit at nascent stage of growth, continued to exhibit strong growth rates.
Given the stimulus provided by the rollout of phase one & two of cable digital access system (DAS) and continued phase
three rollout, the television segment is poised to exhibit strong growth. Besides, with continued growth of gaming and
digital advertising media, strength in the film sector and the emergence of E-commerce as a significant new category, the
industry is slated to grow at a healthy rate in the near term.
Duty Structure
Customs Duty (%)
Basic customs duty on parts
and components, subparts
for manufacture of Set-top
boxes for gaining access to
internet and Set top boxes
for TV, digital video recorder
(DVR) and network video
recorder (NVR)
Before
10%
After
Nil
Impact
Excise Duty (%)

Central Excise Duty on
Set-top boxes for gaining
access to internet and Set
top boxes for TV, digital
video recorder (DVR) and
network video recorder
(NVR)
Central
Excise
Duty on parts and
components, subparts
for manufacture of Settop boxes for gaining
access to internet, set
top boxes for TV, digital
video recorder (DVR) and
network video recorder
(NVR)
Before
After
Impact
12.5%
[with
12.5%
CENVAT
credit]
12.5%
Nil
Proposal and Impact

Budget proposals

The exemption of customs duty on parts and components would
Exemption of Customs Duty for parts and
reduce the cost for domestic manufacturers and encourage the
components, subparts for manufacture of set top
assembling of set top boxes by players who essentially import them.
boxes
Exemption of central excise duty on parts and The exemption of central excise duty on parts and components
components, subparts for manufacture of Set-top
of set top boxes will augur well for Media and Entertainment
boxes for gaining access to internet and set top
companies, who are into manufacturing of set top boxes.
boxes for TV
Impact on Companies
Company
Videocon d2h
Impact
Comments
Videocon d2h would benefit from the exemption of customs and central excise
duty on parts and components of set top boxes, as it would reduce its input costs.
42
Mining and Minerals

Industry Snapshot:
The mining and metallurgical sector remains vital for the development and economic growth of the developing countries
and India remains geologically endowed with a number of mineral resources. Currently, In-metallic dia produces around 87
minerals, which includes fuel minerals, metallic minerals, non-minerals, atomic minerals and minor minerals. In India, the
mining sector is dominated by coal comprising around 80% of the mined reserve, while the balance 20% comprises various
other minerals which includes copper, iron, lead, bauxite, zinc, gold, uranium, etc.
Although the country is more or less self-reliant with respect to a number of minerals, a significant gap exists with regards
to a large number of critical minerals and metals such as coal, uranium, copper ore, etc, for which the country is partly or
largely dependent on imports. Various inefficiencies in the sector including policy lacuna, political interference, stringent
government regulations, environmental issues, lack of infrastructure and financing mechanism have hampered the growth
of the sector. Accordingly, the share of Indian mining and quarrying sector has been low around 2% of Indian GDP vis-vis other mining nations having been around 5-6% of its GDP. It is estimated that every 1% increment in the growth rate
of mining and quarrying results in 1.2-1.4% increment in the growth rate of industrial production and correspondingly, an
approximate increment of 0.3% in the growth rate of Indias GDP.
In January 2015, the Government of India issued MMDR ordinance which supersedes the MMDR Act, 1957. The act
mandated the setting up of District Mineral Foundations (DMFs) and launched programs meant to provide for the welfare
of areas and people affected by mining-related operations, thus bringing reforms in the sector and thrust on fast-tracking
projects.
Duty Structure
Customs Duty (%)
Before
After
Impact
+
+
+
+
Iron Ore lumps (below 58% Fe content) [2601 11 21 and 2601 11 22]
30%
Nil
Iron Ore lumps (below 58% Fe content) [2601 11 41 and 2601 11 42]
10%
Nil
Bauxite (natural)
20%
15%
Chrome ores and concentrates
30%
Nil
Proposal and Impact

Budget proposals

NeutralThe increase in the clean energy cess is passed on to the
The schedule rate of clean energy cess, levied on
end-user industry. Hence, the impact of increase stands neutral on
coal, lignite and peat, is being increased from Rs.200
the industry.
per tonne to Rs.400 per tonne which will come into
effect immediately. The clean energy cess is also
Positive This move will help the exporters to stay competitive as
renamed as clean environment cess.
globally the iron-ore prices have fallen by close to 40% and in case of
Propose to scrap export duty on low grade iron ore.
lower grades (below 58% Fe content) to a decade low.
Impact on Companies
Company
NDMC Ltd
Vedanta Ltd
OMDC Ltd
MOIL Ltd
Impact
=
=
=
=
Comments
The increase in the clean energy cess for the domestic miners is passed on to the
end-user industry. Hence, the overall impact of increase stands neutral.
43
Non-ferrous Metals
Industry Snapshot:
The base metal industry is bearing the brunt of the downward revision in global macroeconomic outlook. Muted
industrial activity along with sluggish demand outlook from the developing economies, persisting concerns of the slowing
Chinese economy and cheap imports are exerting pressure on the overall demand and subsequently the prices of these
metals. However, the changing socio-economic conditions and expected recovery of demand from the developed markets
are likely to stabilize the demand for these metals in the medium term.
CARE expects prices of all base-metals to remain volatile on the back of the ongoing macroeconomic development in the
Euro zone and other major developing countries. Chinese economic outlook and the strengthening of the US dollar vis--vis
the other major currencies in the world is also likely to have its effect on the global base metal prices.
Duty Structure
Customs Duty (%)
Before
After
Impact
Bauxite
20
15
Aluminium Scrap
Alumina
7.5
7.5
7.5
2.5
2.5
Copper scrap
Refined copper
2.5
2.5
7.5
2.5
2.5
Steam Coal
2.5
2.5
Petroleum Coke
2.5
2.5
Calcined Petroleum Coke
2.5
2.5
Other Aluminium Products
7.5
10
+
=
=
=
+
=
=
=
=
+
=
=
=
=
=
+
Caustic Soda
Aluminium Ingots
Copper Concentrates
Zinc Concentrates
Refined Zinc
Lead Concentrates
Refined Lead
Excise Duty (%)
Before
After
Impact
Alumina
12
12
Caustic Soda
12
12
Aluminium Ingots
12
12
Copper Concentrates
12
12
Refined Copper
12
12
Zinc Concentrates
12
12
Refined Zinc
12
12
Lead Concentrates
12
12
Refined Lead
12
12
Non-coking Coal
12
12
Petroleum Coke
12
12
Calcined Petroleum Coke
12
12
=
=
=
=
=
=
=
=
=
=
=
=
Proposal and Impact

Budget proposals

Negative- This is likely to further increase the cost of production
Increase in Clean Energy cess levied on coal, lignite
of the Non-ferrous metals producer.
and peat from Rs.200 per tonne to Rs.400 per tonne
Positive- This is likely to make the imports dearer and help the
Increase in custom duty of non-ferrous metals
domestic players
44
Impact on Companies
Company
Impact
Comments
Hindalco Industries Ltd
=
=
National
Aluminium
Company Limited (NALCO)
Since, power cost accounts for a significant share of the overall cost of production
for non-ferrous metals, increase in the cost of coal used by captive power plants
on account of increase in freight rate and Clean Environment Cess is likely to
increase the cost of production of these players.
Hindustan Zinc Ltd
However, these companies will get some leeway in increasing prices of their
products with the hike in customs duty of imported metals.
45
Oil and Gas

Industry Snapshot:
Oil and gas industry globally is divided into three major sectors viz (1) Upstream (involves exploring and production of crude
oil) (2) Midstream (stores oil, gas and refined products as well as transports them to refineries) and (3) Downstream (includes
all refineries and petrochemical plants which converts the crude oil into various petroleum products). India depends on
imports for more than 80 per cent of its domestic crude oil needs.
Duty Structure
Basic Cenvat Duty (%)
Product
Special Additional Duty
Additional Excise Duty
Before
After
Impact
Before
After
Impact
Before
After
Impact
Rs.4500 / MT
cess+ Rs.50/ MT
20% ad
valorem
NIL
NIL
Motor Spirit
Rs.9.48 to
Rs.10.66 /ltr
Rs.6.00/ltr
Rs.6.00/
ltr.
High Speed Diesel
Rs.11.33 to
Rs.13.69/ Ltr
NIL
Rs.6.00/
ltr.
Crude Petroleum
LPG
8%
Liquefied Natural Gas
NIL
Kerosene
14%
NIL
NIL
NIL
NIL
NIL
NIL
Proposal and Impact

Budget proposals
OIDB Cess reduced from Rs.4,500 per tonne to 20% Much awaited demand from industry players in light of low crude
ad valorem
prices
The exemptions from customs duties on specified This shall make cost of exploration cheaper for upstream
goods imported for petroleum exploration
companies, especially at times when crude prices are at all-time low
Incentivise gas production from deep-water/ultra In favor of upstream companies, as such sites bear higher cost of
deep-water areas
exploration and lower probability of reserves than off-shore fields
Shall affect performance of exploration companies as current
Withdrawal of deduction u/s 80-IB of Income-tax Act
output prices are historically low and cost of exploration remains
for production of mineral oil and natural gas
high
Impact on Companies
Company
GAIL
Gujarat State Petroleum Corporation Limited
Indian Oil Corporation Ltd
Indraprastha Gas Limited
Oil India Ltd
Oil and Natural Gas Corporation Ltd
Impact
+
+
+
+
+
+
Comments
Reduction in OIDB Cess, exemption in customs duties for
import of capital goods and incentivise gas production shall
help the struggling oil & gas sector to rationalize cost of
production and encourage public and private investments in
new projects.
However, withdrawal of deduction u/s 80-IB shall hit profits
of exploration companies.
46
Paper
Industry Snapshot:
The Indian Paper Industry has three segments: Packaging paper and boards, Printing and Writing, and Newsprint. The
growth in the Indian paper industry is largely dependent on the rate of growth of the economy as well as growing literacy
rate and the government thrust on education-for-all. The Indian Paper Industry is highly fragmented and competitive in
nature. Large paper manufacturers have established their dominance in high-value segments like copier, coated packaging &
board, while smaller units cater to low value segments such as creamwove, kraft paper etc. Raw-material, energy and stores
and spares (including chemicals) forms about 75-80% of the total operating costs for the paper industry.
Duty Structure
Customs Duty (%)
Before
After
Impact
Finished products
Excise Duty (%)
Before
After
6%12.5%
6%12.5%
Impact
Finished products
Paper & Paperboard

- Basic
- CVD
10%
12%
10%
12%
Paper & Paperboard
Newsprint
- Basic
- CVD
10%
0%
10%
0%
Newsprint
Nil
Nil
Wood pulp
6%
6%
Raw materials
Wood in chips/particles
- Basic
5%
0%
Wood pulp
- Basic
- CVD
5%
6%
5%
6%
Wastepaper
- Basic
- CVD
10%
12%
10%
12%
=
=
=
Proposal and Impact

Budget proposals

Basic customs duty on wood in chips or particles for
manufacture of paper, paperboard and news print
has been reduced from 5% to Nil.
The industry has suffered in the last 2-3 years on account of scarce
wood availability and its increasing prices. The scarcity of wood had
resulted in large imports of wood logs and wood chips. Relief in the
custom duty of wood chips/particles would have a positive impact
on the profitability of the wood based paper and paperboard
producing companies.
47
Impact on Companies
Company
Impact
Comments
International Paper APPM Ltd
+
+
+
=
Tamil Nadu Newsprint

Papers Limited (TNPL)
The impact of the budget proposal of nil custom duty on imports of

wood chips/particles would give some relief to the wood-based paper
manufacturers. Companies like West Coast Paper Mills, JK Paper etc would
get benefitted as these companies had started importing wood chips/
logs in the last 2-3 years to supplement raw material availability. However,
International Paper APPM Ltd relies on wood procured from domestic
market and farm forestry programmes. Also, TNPL uses both bagasse and
hardwood as raw material and a major part of the hardwood is procured
from Tamil Nadu Forest Plantation Corporation Limited as well as contract
farming/ farm forestry. Therefore, impact of custom duty change on the
latter companies is expected to be neutral. Further, the paper sector has a
large number of agro based and waste paper based paper manufacturers.
The budget proposals pertaining to import duty on wood chips would not
have any impact on these industry players.
West Coast Paper Mills Ltd

J K Paper Ltd
Ballarpur Industries
and
Besides, the industry has been witnessing cheaper imports in some segments
of paper and paper products under the Free Trade Agreements. However, no
changes in the duty structure on imports of finished products have been
announced in this budget, thereby impact would be neutral.
On the whole, while some wood-based paper producing companies would
be benefitted, the impact on the other segments of the industry based on
waste paper and agro produce would remain neutral.
48
Petrochemicals
Industry Snapshot:
Petrochemicals are downstream hydrocarbons derived from crude oil and natural gas. The petrochemical industry is
primarily divided into basic products including olefins, ethane, propane, aromatic compounds (such as benzene, toluene),
intermediate petrochemicals, end products, polymers, synthetic fibres and synthetic rubber. The industry is the main stay of
industrial and agricultural development of the country and provides building blocks for several downstream industries, such
as textiles, papers, paints, soaps, detergents, pharmaceuticals, etc.
Duty Structure
Product
Hydrocarbons
Orthoxylene
Electrolysers/membranes
Basic Cenvat Duty (%)
Special Additional Duty
Before
After
Impact
Before
After
5%
2.5%
4%
2%
2.5%
NIL
+
+
Additional Excise Duty
Impact
Before
After
Impact
+
-
Proposal and Impact

Budget proposals
Reduction in excise/special duty rates
To bring down production costs
Impact on Companies
Company
Bhansali Engineering Polymers Limited
Finolex Industries Limited
Indian Petrochemicals Corporation Limited
Oricon Enterprises Limited
Impact
Comments
+
+
+
+
Reduction in duty rates shall bring down costs and enable

industry players to improve profitability
49
Marginaly
Pharmaceuticals
Industry Snapshot:
The Indian Pharmaceutical Industry (IPI) is ranked third globally in terms of volume, and thirteenth in terms of value. The
lower market share in terms of value can be attributed to the predominance of generic medicines which command lower
prices. As per estimates, the industry size is expected to grow at a CAGR of 14% from INR 1,406 billion in 2013 to INR 2,872
billion by 2018 given the huge export potential coupled with steady growth in the domestic formulation market. Growth in
the domestic pharma market is expected to be driven by increase in the penetration of health insurance, improving access
to healthcare facilities, rising prevalence of chronic diseases and rising per capita income. The export growth is expected to
be led by increasing generic penetration in the regulated markets on the back of patent expiries and growing demand from
semi-regulated pharma markets. In the long term, growth in the exports market will be sustained by emerging markets such
as Russia, Brazil, South Africa, etc, along with the enhanced focus on the niche and complex product segments.
Duty Structure
Excise Duty (%)
Before
After
Impact
Finished products
API
Formulation
12.5
12.5
=
=
Proposal and Impact

Budget proposals
Weighted deductions for R&D proposed to be revised This will serve as a big impediment for the companies involved
to 150% from April 1, 2017 and 100% from April 1, in the new drug development, which generally involves huge R&D
2020.
expense. Indian pharma companies R&D expense as a percentage
of sales is already one-fifth as compared with the pharma majors
in the regulated destinations, reduction of R&D deductions will
discourage companies to invest further and slow down the research
activities.
Tax rebate of 10% on earnings from global patent These initiatives marginally off-set the set back of reduced
filings.
deduction of R&D. However, this is likely to benefit few pharma
Tax rate of 10% (as against 35%) on income from majors who have ability to compete on global level.
worldwide exploitation of patents developed and
registered in India.
Impact on Companies
Company
Cipla Ltd
Sun Pharmaceutical Industries Ltd
Dr. Reddys Laboratories Ltd
Impact
Comments
With reduction in tax deductions, it is likely to have marginally

negative impact on the pharma companies.
50
Pipes
Industry Snapshot:
The Indian pipe industry is one of the top manufacturing hubs globally with presence across all categories of pipes, viz,
steel, cement and plastic. Due to economic slowdown in domestic as well as global markets during last few years, demand
for pipes has remained moderate. However, CARE expects that the demand for pipes in India would remain healthy in the
long term, on the back of increasing demand arising from oil and gas, infrastructure, irrigation, water supply and sanitation
projects.
Duty Structure
Customs Duty (%)
Before
After
Impact
Steel pipes
15
15
Plastic pipes
10
10
Cement pipes
10
10
Polyvinyl Chloride (PVC)
10
10
High-Density Polyethylene
(HDPE)
10
10
=
=
=
=
=
Excise Duty (%)
Before
After
Impact
Steel pipes
12.5
12.5
Plastic pipes
12.5
12.5
Cement pipes
12.5
12.5
Polyvinyl Chloride (PVC)
12.5
12.5
High-Density
Polyethylene (HDPE)
12.5
12.5
=
=
=
=
=
Proposal and Impact

Budget proposals

Swachh Bharat Mission is Indias biggest drive to improve
sanitation and cleanliness, especially in rural India.
Rs.9,000 crore has been provided for the same.
Only 46% of area under cultivation in India is irrigated.

With Government of India (GoI) focusing on agricultural
productivity, increasing the area of cultivated land under
irrigation is of vital importance and these initiatives will
improve the long term demand for plastic pipes.
Finance minister has allocated Rs.5,717 crore via Pradhan

Mantri Krishi Sinchayee Yojana (PMKSY) scheme to Furthermore, with impetus given for affordable housing and
support micro-irrigation and watershed development sanitation, the demand for cement and plastic pipes should
in the country with a view to increase agricultural witness an increase in the long term.
productivity. 28.5 lakh hectares will be brought under
irrigation during the year FY16.
Rs.25,000 crore allocated to Rural Infrastructure
Development Fund.
Implementation of 89 irrigation projects under Accelerated
Irrigation Benefits Programme (AIBP) to be fast tracked.
These projects require around Rs.86,500 crore in next 5
years. Furthermore, a dedicated long-term Irrigation Fund
will be created in NABARD with initial corpus of about
Rs.20,000 crore.
51
Impact on Companies
Company
Indian Hume Pipe Co. Ltd.
Jain Irrigation Systems Ltd.
Finolex Industries Ltd.
Impact
Comments
The company primarily operates in cement pipes. Proposal in the budget to provide
sanitation facility to every household by the year 2022 is expected toincrease the
demand for cement pipes.
Jain Irrigation Systems is engaged in manufacturing of micro irrigation systems,

PVC pipes, HDPE pipes and other agricultural inputs. The finance ministers
proposals to boost investments in irrigation via various schemes like PMKSY, will
create demand for its plastic pipes and other irrigation systems.
Finolex Industries is involved in production of PVC resin and PVC Pipes. The
proposal to ensure housing for all and irrigation segment is likely to boost demand
for PVC pipes.
52
Ports
Industry Snapshot:
India has 7,517-km long coastline with 13 major ports and 187 non major ports, which handle around 90% of Indias total
international trade in terms of volume and 70% in terms of value. The total volume of traffic handled by all the major Indian
ports during FY15 (refers to the period April 1 to March 31) was about 581 million tonnes as compared with about 555
million tonnes handled in FY14, a Y-o-Y growth of about 5%.
The key challenges faced by the sector are full utilization of capacities at the major ports, draft constraints and operating
inefficiencies. On the other hand, development of new minor ports have been affected by inadequate connectivity with the
hinterland, the absence of multi-modal connectivity to and from ports and the differential royalties and revenue sharing
among ports.
As a result of allowance of the 100% FDI in the port sector, the port privatization has gained momentum. While in the past,
most of the private initiatives in ports was restricted to development of container terminals, the past couple of years have
witnessed significant investment in the minor ports, dominated by bulk capacities added in Gujarat and the eastern coast,
predominantly through PPP projects.
The Planning Commission has estimated the total traffic growth at about 14% during the 12th Five Year Plan (2012 to
2017). However, given the plethora of issues surrounding the projects in the power, steel and coal sectors coupled with
the slowdown in overall economic growth, CARE expects the total annual traffic at all ports to grow at a CAGR (Cumulative
Annual Growth Rate) of 6.2% and reach a level of 1,182 million tonnes by FY17.
Proposal and Impact

Budget proposals

Implementation of Customs Single Window project
starting from the beginning of the next financial
year.
Allocation of a corpus of Rs.800 crore to develop
new greenfield ports and inland waterways.
Both the proposals are likely to have a marginal positive impact

on the ports sectors. While the implementation of Single window
project is likely to fast track the project implementation process, the
additional corpus of Rs.800 crore is likely to provide support to the
greenfield projects/development of inland waterways.
Impact on Companies
Company
Gujarat Pipavav Port Ltd
Adani Ports & Special
Economic Zone Ltd
Impact
Comments
=
=
The implementation of customs single window project is likely to marginally

benefit the existing players.
53
Power
Industry Snapshot:
The all-India installed capacity on December 31, 2015 was 284.3 Giga-Watts (GW). In FY14, the base power deficit was 4.2%,
which declined to 3.6% in FY15, while peak deficit increased from 4.5% in FY14 to 4.7% in FY15. During 9MFY16, base deficit
has declined to 2.2% and peak power deficit to 3.2%.
The sector is still plagued by weak health of power distribution companies, fuel-related issues and transmission constraints.
Encouraging policy framework in the renewable energy (RE) sector has resulted in rising share of RE capacity from 5.9% (7.7
GW) in FY2007 to 13.2% (37.4 GW) as on December 31, 2015. In 9MFY16, RE capacity addition was 3 GW compared to 2.1
GW in 9MFY15. The government has set a target of augmenting the renewable power capacity to 175 GW (including solar
capacity of 100 GW) by 2022
Duty Structure
Customs Duty (%)
Clean Energy Cess on Coal (Rs./tonne)
Before
Rs.200
After
Rs.400
Impact
+ (For renewable power sector)
Proposal and Impact

Budget proposals

The Government plans to achieve 100% village
electrification by May 01, 2018 and Rs.8,500 crore has
been provided for Deendayal Upadhayaya Gram Jyoti
Yojna and Integrated Power Development Schemes.
Apart from renewable sector capacity addition targets
which have been set-down earlier, the Government
These initiatives will have marginal positive impact on the
is drawing up a comprehensive plan to augment the
sector.
investment in nuclear power generation and has proposed
budgetary allocation up to Rs.3,000 crore per annum. This
will help in boosting nuclear power capacity.
Plant & machinery acquired and installed for transmission
activity would also be eligible for additional depreciation
(at the rate of 20%) under section 32(1)(iia) of the Incometax act.
The funds accumulated would help in augmenting
capacity addition in the renewable energy sector as per the
governments laid out plans. While the increased cost will be
Clean Energy Cess (renamed as Clean Environment Cess) on pass-through for the thermal power generation companies
coal, lignite and peat increased from Rs.200 per tonne to
having fuel cost pass-through clauses, the input cost would
Rs.400 per tonne.
increase for the companies having fixed price PPAs.
With the increased cost of thermal power, difference in cost
of generation with renewable sources of energy will decrease.
No deduction shall be available under sector 80IA with
effect from 1.4.2017.
The accelerated depreciation provided under IT Act will be
limited to maximum 40% from 1.4.2017 as against present
rate of 80% (applicable for renewable power projects)
which was valid till March 31, 2017.
While the same will result in higher tax outgo as compared

to the present regime, the same corroborates with
governments clear road map of phasing out of various tax
exemptions/benefits.
54
Impact on Companies
Company
Various Power IPPs (such

as Tata Power Ltd., NTPC
Ltd etc.)
Impact
Comments
While the increased cost of power due to increase in cess on coal will be passthrough for the thermal power generation companies having fuel cost pass-through
clauses, the input cost would increase for the companies having fixed price PPAs.
With the increased cost of thermal power difference in cost of generation with
renewables will reduce.
Tax benefit under 80IA will not be available for the sector and also accelerated
depreciation benefit will be reduced for the renewable power projects with effect
from 1.4.2017.
55
Real Estate
Industry Snapshot:
The Indian real estate industry is the second-largest employment-generating sector after agriculture, contributing about
5-6% to Indias GDP. Not only does it generate a high level of direct employment, but it also stimulates the demand in over
250 ancillary industries such as cement, steel, paint, brick, building materials, consumer durables etc. The sector has been
witnessing demand slowdown due to high inflation, higher borrowing cost and weak economic sentiments affecting buyers
confidence.
Duty Structure
Customs Duty (%)
Steel
Before
After
Impact
Cement
Excise Duty (%)
Before
After
Impact
12
12
- Retail
12*+
Rs.120/t
12*+
Rs.120/t
- Bulk
12#
12
- Clinker
12
12
2% without
input tax credit]
/ 6% [with
input tax credit]
[without input
tax credit] / 6%
[with input tax
credit]
Nil
Steel
Cement
OPC/PPC/PSC@
- Basic
- CVD
- Special CVD
Nil
12
4
Nil
12
4
Clinker
- Basic
- CVD
- Special CVD
10
12
4
10
12
4
=
=
Ready Mix
Concrete
*An abatement of 30% on Retail Sale price and is on ad valorem, # on ad valorem, @ OPC- Ordinary Portland cement, PPC- Portland pozzolana
cement and PSC- Portland slag cement.
Proposal and Impact

Budget proposals

100% deduction for profits to an undertaking in housing project for flats
upto 30 sq. metres in four metro cities and 60 sq. metres in other cities,
approved during June 2016 to March 2019 and completed in three years
Deduction for additional interest of Rs.50,000 per annum for loans up
to Rs.35 lakh sanctioned in 2016-17 for first time home buyers, where
house cost does not exceed Rs.50 lakh
Exemption from service tax on construction of affordable houses up to
60 square metres under any scheme of the Central or State Government
including PPP Schemes
Distribution made out of income of SPV to the REITs having specified
shareholding will not be subjected to Dividend Distribution Tax (DDT)
Extend excise duty exemption, presently available to Concrete Mix
manufactured at site for use in construction work to Ready Mix Concrete
(RMC)
The measures undertaken to promote

affordable housing will positively impact the
developers engaged in affordable housing
development. Extension of excise duty
exemption to RMC will reduce the overall
cost of construction. Also, removal of DDT in
case of REITs (which has been a demand from
the industry) will help the companies with
completed commercial properties to raise
capital.
56
Impact on Companies
Company
DLF Ltd
Indiabulls Real Estate Ltd
Prestige Estates Projects Ltd
Sobha Developers Ltd
Kolte Patil Developers Ltd
Godrej Properties Ltd
Impact
+
+
+
=
=
=
Comments
Overall, companies with commercial property and affordable housing

development focus will have a positive impact.
57
Roads and Highways

Industry Snapshot:
Indian Road network spans about 4.87 million km- 2nd largest in the world after USA with 6.58 million km. The government
has taken various steps to revive the sector including premium rescheduling for stressed projects, bidding of tenders only
after 80% land has been acquired for the project, fast track clearances of the projects, 100% exit for developers after two
years of project completion both for pre-2009 and post-2009 projects and National Highway Authority of India (NHAI)
funding for projects that are stuck in advance stages of completion. In addition, NHAI has also made few changes in the
model concession agreement and has introduced hybrid annuity projects for Public Private Partnership (PPP) basis to
enhance the attractiveness of the sector. The above measures along with increasing focus on Engineering Procurement and
Construction (EPC) projects have led to the pace of construction of highways increasing to 18 km per day and government
has set a target on 30 km per day by end of March 2016. The pace of execution of road projects has also improved as
reflected by commencement of execution of around 80% of the stalled projects.
Duty Structure
Excise Duty (%)
Before
After
Cement
12.50
12.50
Steel
12.50
12.50
Impact
=
=
Proposal and Impact

Budget proposals
Key announcements
Increase in allocation from Rs.40,000 crore during last budget
to Rs.55,000 crore for 2016-17. NHAI can also raise additional
Rs.15,000 crore through bond issue for construction of roads.
Total investment in the road sector including Pradhanmantri
Gram Sadak Yojna (PMGSY) is envisaged at Rs.97,000 crore.

Continued thrust on development of the roads was
reflected from the budget proposal with additional
fiscal space proposed to be made available for funding
infrastructure investment. The pace of award of the
project is also expected to increase in the medium term.
Effective resolution of disputes and proposed guidelines
for negotiation of concession agreements are expected to
The Government plans to approve around 10,000 km of
boost the execution of ongoing projects.
National Highways in 2016-17. In addition around 50,000
km of State Highways shall be taken up for up gradation to
Enforcement of new credit rating system and expanding
National Highways.
investment basket of foreign portfolio investor to
Public Utility Bills for dispute resolution shall be introduced instruments issued by securitization of SPVs are expected
in 2016-17. Guidelines for negotiations of Public Private to improve the availability of low cost funds for the
Partnership (PPP) concession agreements are also expected developers and propel the development of bond market.
to be issued in the coming year.
New credit rating system with various credit enhancement
features is going to be introduced. Life Insurance Corporation
of India will set up dedicated fund to provide credit
enhancement to infrastructure projects. Investment basket
of foreign portfolio investor will be expanded to include
unlisted debt securities and pass through securities issued by
securitization of special purpose vehicles (SPVs).
58
Impact on Companies
Company
IRB Infrastructure Developers Ltd
Reliance Infrastructure Ltd.
Sadbhav Infrastructure Project Ltd
ILF&S Transportation Networks Ltd
GMR Infrastructure Ltd
Gammon Infrastructure Projects Ltd
Impact
Comments
+
+
+
+
+
+
The proposed increase in budgetary allocation and various measures

taken by the Government to increase the pace of execution as well
as developing bond market for infrastructure sector shall augur well
for the infrastructure players having substantial exposure in roads
sector projects.
59
Marginaly
SEZ
Industry Snapshot:
In order to boost foreign investments, promote exports and to ensure global competitiveness for domestic companies,
the Government of India had announced a policy on SEZ in April 2000 and SEZ Act 2005 came into effect in February 2006.
Investment in SEZs declined during the last few years due to economic slowdown, land aggregation issues, withdrawal of
sops [introduction of Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT)] and uncertainty with respect to
policies. As on December 21, 2015, there are 412 formally approved SEZ of which 204 are operational in India (compared to
491 formally approved SEZs of which 196 operational as on January 21, 2015).
Duty Structure
MAT (%)
Before
After
Impact
SEZ Units
18.50%
18.50%
Developers
18.50%
18.50%
=
=
DDT(%)
Before
After
Impact
SEZ Units
20.00%
20.00%
Developers
20.00%
20.00%
=
=
Proposal and Impact

Budget proposals
The Finance Ministry has imposed a sunset clause for

availing the benefits under Section 10AA of the Income Tax
Act, 1961. As per the amendment no deduction shall be
available to units commencing operation on or after April 01,
Benefit of section 10AA to new SEZ units will be available 2020.
to those units which commence activity before March 31, As per the changes, the existing operational SEZ will not
2020.
have any impact due to the phasing out of the incentive.
However, companies failing to start operations before the
March 31, 2020 would not derive any tax benefits in setting
up these units.
60
Steel
Industry Snapshot:
India has become the third largest crude steel producer in 2015, with finished steel production of 91.46 MTPA.
In the past decade (FY03-FY15), steel consumption in the domestic market has risen by CAGR of 8%. Consumption has been
growing on the back of thriving and favourable demand from diverse sectors ranging from infrastructure, automobiles,
construction, transportation, etc. However, over the past 1-2 years, steel industry had been reeling under the impact of
slowdown in demand from the major end user industries, viz, real estate & construction on one hand and unabated imports
on the other hand. Global overcapacity led to a fall in steel prices during 2014-15, while cheap import and lack of demand
drivers within the country kept the domestic steel prices low.
Government big ticket announcement on sectors like construction, infrastructure and automobiles is expected to improve
the long-term outlook for steel. The Government of India is aiming to scale up steel production in the country to 300
MT by 2025 from 100 MT in 2014-15. This will be driven by the governments on-going initiatives to clear infrastructural
bottlenecks, introducing structural reforms in the mining sector and the expectation of a benign inflationary environment.
Nevertheless, CARE expects steel prices to remain subdued in FY16 due to global weak steel pricing trend, increasing cheap
imports and prevailing overcapacity within domestic producers. While marginal improvement in steel pricing is expected
due to the implementation of Minimum Import Price (MIP).
Proposal and Impact

Budget proposals

Increased outlay aggregating 2.21 lakh crore towards Positive for steel companies which are currently reeling
infrastructure including railways and road.
under subdued end-user industry demand.
Clean environment cess on coal increased from Rs.200 per Negative impact on domestic steel players which utilise coal
tonne to Rs.400 per tonne to finance clean environmental for their captive power generation.
initiatives.
Impact on Companies
Company
Impact
Steel Authority of India Ltd

Tata Steel Ltd
Jindal Steel & Power Ltd.
JSW Ltd
Usha Martin Ltd
Comments
Increased outlay is likely to give much needed impetus to steel demand. Also,
government thrust on Housing for all shall provide support to demand for long
products.
Rise in the clean environment cess on coal would have negative impact on steel
players which are utilising coal for their captive power generation.
61
Telecom Services
Industry Snapshot:
India continued to have the second-largest wireless subscriber base globally with 1,009.46 million wireless subscribers as
on November 30, 2015. The total telecom subscriber base also comprise of an additional 25.72 million wireline subscribers.
The overall wireless tele-density was 79.78 as on same date with an urban wireless tele-density of 146.89 and rural wireless
tele-density of 49.51. The number of broadband subscribers was 131.49 million as on November 30, 2015 including 115.11
million wireless broadband subscribers. The sector has exhibited exponential growth over the past few years supported by
increasing network coverage, enabling regulations-initiatives and evolution of technology which has acted as catalyst for
this growth.
Duty Structure
Customs Duty (%)
Preform of Silica
(for use in
manufacturing of
telecommunication
grade optical fiber
cables)
Specified
telecommunication
equipment
(Soft switches and Voice
Over Internet Protocol
(VoIP) equipment
Charger, battery and
wired headsets/speakers
for manufacture of
mobile phone
Before
Nil
Nil
After
10%
10%
Impact
Excise Duty (%)
Charger, battery
and wired
headsets/
speakers for
supply to
mobile phone
manufacturers
Nil
12.5%
Custom Duty on Modem
7.5%
Nil
PCBs for mobile phones

and tablet
Nil
2%
+
-
Adapter, battery
and wired
headsets/
speakers of
mobile phone
Excise duty on
Routers and
broadband
Modems
Before
After
Impact
Nil
2%[with-out
Input Tax
Credit]
or 12.5%
[with Input
Tax Credit]
12.5%
Nil
12.5%/ Nil
4% (Without
Input Tax
Credit)
Or 12.5%
(with Input
Tax Credit)
62
Proposal and Impact

Budget proposals

The clarification that right to use spectrum and its
Service Tax to be levied on sale of spectrum trading
subsequent sale is service (hence liable for levy of service
Spectrum fees can be amortized over the period for which
tax) and not a sale of intangible good has paved the way
right to use is obtained
for levy of service tax on spectrum trading, and also
New Digital Literacy Mission Scheme for rural India
allowing the government to charge service tax at the time
of spectrum auction, making the acquisition of spectrum
more costlier for the telecom service providers. However,
on the other hand the levy of service tax will enable the
telecom service providers to claim a credit for the service
tax paid on buying of spectrum and would help in reducing
output service tax liability.
Amendment in the provisions of the Income-tax Act in
regards to the fees paid for obtaining right to use the
spectrum is to be amortized over the period for which
the right to use the spectrum has been granted. This will
eventually ease out the tax outgo for the telecom service
providers.
This new scheme is planned to cover additional 6 crore
households within the next 3 years. This will lead to new
opportunities for telecom equipment and infrastructure
players
Impact on Companies
Company
Bharti Airtel
Reliance Communications
Idea Cellular
Impact
Comments
=
=
=
No major Impact
63
Textiles
Industry Snapshot:
Indian Textiles industry plays a major role in the Indian economy which contributes 4 per cent to GDP, 14 per cent to
industrial production and 13 per cent of total exports. The industry is one of the largest sources of employment generation
providing employment to about 45 million people. The size of Indias Textile market in 2014 was USD 99 billion which is
expected to increase to USD 226 billion by 2023. In 2014, Textiles contributed 60% to the export market while the balance
was contributed by Apparels.
Readymade Garments account for 41% of the total textiles and apparels exports, followed by cotton textiles (31%), manmade textiles (16%) and balance by handicrafts, silk, etc. Indias textiles products, including handlooms and handicrafts, are
exported to more than a hundred countries. U.S.A. and the E.U., account for about two-thirds of Indias textiles exports.
Textile exports grew at a cagr of 9.97% over the period FY06 to FY15. Furthermore it grew by 5.3% to USD 41.4 billion in
FY15. Textile exports during H1FY16 (April 2015 to September 2015) touched USD 19.10 billion
Duty Structure
Customs Duty (%)
Before
After
Impact
Finished products
Excise Duty (%)
Before
After
Impact
Cotton Fabric
Man-Made Fabric
12
12
Branded RMG
12
12
=
=
=
Raw Cotton
Cotton Yarn
12.5
12.5
PTA
12
12
MEG
12
12
Polyester Chips
12
12
Polyester Staple Fibre
12.5
12.5
Viscose Staple Fibre
12.5
12.5
12
12
12.5
12.5
Finished products
Cotton Fabric
10
10
Man-Made Fabric
10
10
Branded RMG
10
10
=
=
=
Raw materials
Raw materials
Raw Cotton
Cotton Yarn
PTA
10
10
MEG
10
10
Polyester Chips
10
10
Polyester Staple Fibre
Viscose Staple Fibre
DMT
10
10
Man-Made Yarn
=
=
=
=
=
=
=
=
=
DMT
Man-Made Yarn
=
=
=
=
=
=
=
=
=
64
Proposal and Impact

Budget proposals

Increase in Tariff value of Readymade Garments and
made-ups
Increase in excise duty on branded Readymade Garments
and made up of textiles of retail sale price of Rs.1000 or
more
Reduction in duty on specified fabrics for manufacturing
of textile garments for export
Likely to impact negatively for players operating in

Readymade Garment and Made-up segments
Likely to impact positively for Readymade Garment
exporters
Impact on Companies
Company
Mandhana Industries Ltd
Raymond Ltd
Sutlej Textiles & Industries Ltd
Impact
Comments
Negative
Negative
No impact
65

Analysis of Union Budget 2016-17

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Analysis of Union Budget 2016-17

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1

Industry Allocation Sectors

Media and Entertainment............................... 42

Mining and Minerals....................................... 43

Non-ferrous Metals.................................... 44-45

Oil and Gas...................................................... 46

Banking & Financial Services...................... 21-24

Chlor Alkali................................................. 26-27

Real Estate.................................................. 56-57

Engineering & Capital Goods...................... 33-34

Roads and highways................................... 58-59

FMCG ......................................................... 37-38

Gems & Jewellery............................................ 39

Telecom Services........................................ 62-63

Hospitals and Healthcare................................ 40

(A) Macroeconomic and Fiscal Performance

Table 1: Snapshot of Macro-economic Indicators (%)

(B) Policy Initiatives

(C) Challenges and Proposed Strategy

(D) Medium Term Fiscal Framework:

(E)Outlook and Prospects

Union Budget 2016-17

(3) Social Sector including Healthcare:

Tax revenue(net to center)

Non tax revenue

Disinvestment of Equity in PSE's

Internal Debt (Market Borrowings)

Gross Tax Revenue/ GDP

Gross Tax Revenue

Gross Domestic Product

Gross Tax Revenue (% of GDP)

Major Non-Tax Revenue

Dividends and Profits

Dividends from PSEs and other Investments

Dividends/Surplus from RBI, Nationalized Banks and

Disinvestment of Government stake

Gross Borrowing Programme

Non plan Expenditure

Debt/ GDP (%)

Railway Budget 2016-17

Dividend payable to General Revenues

Proposal and Impact

Impact on the Industry

Key schemes announced

This is expected reduce to cost of MRO for airlines.

Proposal and Impact

Impact on the Industry

Key schemes announced

The proposal to develop non-operational and defunct airstrips

Engine & engine parts,

Excise Duty (%)

Proposal and Impact

Impact on the Industry

Nil custom duty and 6% excise/CVD being extended

Since there were no major announcements pertaining to the industry, the

Excise Duty (%)

Proposal and Impact

Banking & Financial Services

Proposal and Impact

Impact on the Industry

Rs.25000 crore of capital infusion was already part of the

Consolidation in PSU banks

Consolidation of a weaker bank with a robust PSU bank will

Debt Recovery Tribunals will be strengthened