Although the First Budget of NDA Government may not have been able to please all the sectors, but the Finance Minister has taken steps which may help to lay a strong foundation for a long term growth. In Budget’2014, the Finance Minister Arun Jaitley to encourage and promote entrepreneurship in India made some positive and encouraging announcements. He paid special attention to entrepreneurship and startups in his Budget.

The budget highlighted the new government’s rational approach towards reviving growth, particularly in manufacturing and infrastructure to raise adequate resources for our developmental needs. Narendra Modi Government covered all major industrial sectors of the economy, be it financial, infrastructure, agriculture, rural development or information technology.

• STARTUPS and SMEs

Arun Jaitley announced multiple funds as well as special corpus for entrepreneurs from scheduled castes. He has allocated Rs 10,000 crores as startup funds for new business.The government plans to provide more capital to start-ups by providing equity or quasi equity-based funds, soft loans and risk capital.

A special allocation of Rs.200 crore toward enhancing facilities for young entrepreneurs from the scheduled castes was also made. This money will be managed through various schemes of the Industrial Finance Corporation of India. Further it was announced that National accelerators & incubators for startups would be setup. The much needed legal bankruptcy framework will be developed to be more entrepreneur-friendly, making exits for SMEs easier.

• FDI IN DEFENCE MANUFACTURING AND INSURANCE SECTOR

With the aim to promote Foreign Direct Investment and to bring about an increase in the domestic manufacturing and job creation, the composite cap of foreign exchange was raised from 26% to 49% in Defence Manufacturing. Similarly, to expand sectors of Insurance sectors, the composite cap was increased to 49% with full India management and control through the FIPB Route. It is also proposed to take up the pending insurance laws(amendment) Bill for consideration of the Parliament.

• INFRASTRUCTURE

Infrastructure seemed to be the core area of focus in this Budget. The Government felt the need to strengthen the Public-Private Partnership(PPP) framework and proposed to set up an institution to provide support to mainstreaming PPP with a corpus fund of Rs 500 crores. To provide tax incentive in the infrastructure sector, the 80IA tax benefit was extended by 3 years. Further, it was announced that schemes for development of new Airports will be launched for implementation through Airport Authority of India. The Government realized the need to invest huge amount of investment in roads sector and proposed to invest in National Highway Authority of India. These measures of the Government will provide a good transport network system and will ensure faster travel across cities which are geographically distant. If implemented successfully, this will improve the supply chain in transporting goods across cities.

Arun Jaitely in its Budget stated that long term financing for infrastructure has been major constraint in encouraging larger private sectors participation in this sector. Thus, banks were provided with different attracting incentives for the same. Thus, now banks will be encouraged to extend long term loans to infrastructure sector with flexible structuring to be prepared for potential adverse contingencies. Banks will be permitted to raise long term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CCR, SLR and Priority Sector Lending(PSL). Taking the Infrastructure development to top priority, import duty on stainless steel products has been increased from 5% to 7.5%.Further duties on inputs like steel scrap and coking coke has been reduced, which can further help in improving their margins.

To improve the standard of living of the masses maximum of which belongs to neo middle class the Prime Minister laid down the desire to develop ‘one hundred Smart Cities’,as satellite towns of larger cities and by modernizing the existing mid-sized cities. A sum of Rs 7060 crore has been proposed to be allocated for implementation of the same. This would be interesting to see as to how Government works towards implementation of such a proposal and development of the ‘Smart Cities’.

• TEXTILE SECTOR

India’s rich cultural, historical, religious and natural heritage provides a huge potential for the development of tourism and job creation as an Industry. Rs 50 crores have been allocated to set up Trade Facilitation Centre and a Crafts Museum. Government aims at developing and promoting handloom products and carry forward rich tradition of handlooms. This is an encouraging step which would bring about job opportunities and allow many people to show their skills who does not get a platform to exhibit their skills. A sum of Rs 200 crores has been allocated to set up six more Textile mega clusters at Bareily, Lucknow, Surat, Kutchh, Bhagalpur, Mysore and Tamil Nadu.

• INFORMATION TECHNOLOGY

To provide the benefit of technology to villages in India it has been proposed to launch a pan India programme “Digital India”. This would ensure Broad band connectivity at village level, improved access to services through IT enabled platforms, greater transparency in Government processes and increased indigenous production of IT hardware and software for exports and improved domestic availability. Special focus was given on supporting software product startups. This would encourage the “future of India” to develop and sum of Rs 500 crore has been proposed for this purpose.

• FMCG SECTOR

Retailers and FMCG sector is expected to gain a lot from a reduction in excise duty on food processing and packaging machinery.Basic Customs Duty on fatty acids, crude palm stearin, RBD and other palm stearin and specified industrial grade crude oils has being reduced from 7.5% to Nil for manufacture of soaps and oleo chemicals.The basic customs duty on crude glycerin from 12.5 per cent to 7.5 per cent and crude glycerin used in the manufacture of soaps from 12.5 per cent to Nil.All FMCG companies are going to get benefited from this move since it will reduce the cost of raw materials and increase the disposable incomes in the hands of the individuals – giving them room to increase their discretionary consumption.

Arun Jaitely Budget has tried to bring about uniformity, to provide benefit to major industrial sectors. The basic agenda in Budget’2014 was to revive economic growth.The Union Budget aimed at sustainable development and identified some opportunities for strengthening the industrial sectors and economy of India as a whole.