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Engineering
Highlights
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No significant changes in basic excise and custom duties
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Boost to power sector reforms should help improve the
demand scenario
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Certain segments of the engineering industry to benefit
from improved demand scenario for the auto sector.
| Budget
Impact |
| Excise |
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Customs |
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Policy
Tax |
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Though
there is no direct benefit for the engineering sector (save
a marginal reduction in import duty), a reform thrust in the
power sector and excise duty reductions in the automobile
sector, could improve demand. Of course, the cut in income
tax surcharge and reduction in corporate dividend tax will
definitely have a positive impact on the bottomlines. The
impact will vary from company to company depending upon their
tax and dividend payouts.
There
is no change in the duty structure for project imports.
The
proposal for 100% electricity metering by December 2001
will benefit meter manufacturers like ABB, Alstom and others.
The
emphasis on rural electrification, introduction of the new
Electricity Bill, and the move towards rationalisation of
tariffs and restructuring of SEBs have the potential for
substantially improving the demand for the power equipment
segment of the engineering sector.
Outlook
Engineering sector comprises of electrical equipment, diesel
engines, textile machinery, turbines, transmission line
towers, machine tools and textile machinery. Key demand
drivers are investment in power projects, investments in
infrastructure and auto sector growth. In absence of any
major investment in these and due to negative growth in
automobile sector, the engineering sector too is under pressure.
Most companies in this sector have performed badly, with
net profits taking a big hit. Unless public and private
investments flow in, this sector will remain an underperformer.
For the sector to pick up, it is imperative that policies
relating to infrastructure and power are properly formulated,
the Regulatory Commissions start fulfilling their role and
the power tariffs are rationalised to remove the anomalous
situation wherein the industrial sector subsidises the agricultural
sector.
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Voices
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IEEMA's
major emphasis was on power reforms for stimulationof
growth for the electrical industry, which Finance Minister
has adequately addressed. What really matters now is
the pace and success of implementation .
Rajesh
Jain, President, IEEMA
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