Implications of Indian budget 2010-2011 on

Industrial sector
Overall the finance minister has done a good job with the budget. Government has been
able to contain fiscal deficit at 5.1% and kept a bold target of 4.6% for 2012, which is
commendable. There is some edifications for Indian industrial sector that may result in
industrial growth as well as economic growth .As finance Minister has charged 20 % ad
valorem duty on iron ore .This is a pretty good step to be safe from cheap Chinese steel
imports. Here, earlier I was expecting the complete ban of exporting the iron ore and this
step is towards our expectations. One more step towards industrial growth is nothing but
the nil import duty on steel as steel and aluminum are of 60% value from raw material
used in forged auto component sector. It will also help in mitigating the inverted duty
structure which is caused by FTAs (Free trade agreement) resulting reduced inflation and a
continuous robust demand. As we are familiar with additional demand theory it will
contribute to growth of GDP. If we will go ahead with some more components of Indian
financial budget 2011, there is a full package for industrial growth. The excise duty which
plays a valuable role especially in automobiles sector, and has a direct impact on prices of
auto sector, sustainment of growth momentum, and subsequently affecting the volume
consumption in auto sector, has no change in budget. It will go ahead with hike in
passenger car segment and also it will give a powerful blow to CV segment.

Now towards the finance part of industrial segment

there is increase in FIIs limit in 5-years corporate bonds for infrastructure investment by
$20 billion. We can’t more than that from our FM(finance minister).The more investment in
bond market will help Indian companies to get more funds in their hands & FM is also
allowing FIIs in Indian mutual fund industry participation which will result as more
investment into capital markets of India. The participation of FIIs in capital market will also
bring manpower and brains in capital industry of our country. These will subsequently edify
the growth of economy. FM has also announced about the initiatives for infra- development
which is urgently required for sustainable infrastructure development of our country will
provide a strong foundation to propel economic activities and ensured efficient usage of
resources. It will be a boon for the auto sector specially CV segment. Increasing the relief
for the common man by raising minimum tax limit by Rs.20, 000 will have a positive
impact on 2 wheeler & lower end 4 wheeler industry. Finally going forward we can expect
the imposition of duties on iron ore export, and no change in excise duties to result in
reduction in automobile prices and thus help the final consumer.

But I was expecting some more from our FM as

reinstatement of Cenvat on LDO (Light diesel oil), reducing the MAT (minimum alternate
tax) , No exact timeline defined for GST implementation,& there is no move towards
increasing the DEPB which is 17 % in china as compared to 6% in India. We may expect
these components in upcoming budget 2012.