Budget 2020: Little to cheer for India Inc as infra and auto get cold shoulder
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Corporate India has been looking forward to this year’s Budget perhaps more than any other segment of this country at a time when GDP growth has slumped to its slowest pace since the global financial crisis of 2008-09.

What, then, did India Inc. have to say on the Budget presented today by finance minister Nirmala Sitharaman? Let’s find out:

Read the fine print

Kotak Mahindra Bank president for consumer banking Shanti Ekambaram said that while there was no big-bang announcement, it would be prudent to read the fine print before jumping to conclusions.

“The proposed LIC IPO and privatisation of IDBI Bank were other big announcements. In addition, raising deposit insurance cover to Rs 5 lakh from the current Rs 1 lakh is significant and will give a big comfort to depositors. Abolishing the dividend distribution tax (DDT) and steps taken to deepen bond markets were positive,” he said.

KPMG India deputy chief executive Akhil Bansal found the Budget progressive and balanced, taking forward the theme communicated in the Economic Survey. But he did find point out there were no significant policy announcements for infrastructure, real estate and automobiles.  

Taxes and the proposed regimes

Apart from the new personal tax regime, one of the things that caught investors’ and corporates’ attention was the removal of the Dividend Distribution Tax.

“The removal of the Dividend Distribution Tax, which was unique to India, and its replacement by the charge of tax on the recipient of dividends which typically qualifies for treaty benefits, would ensure the tax is restricted to the withholding tax rate under the relevant treaty,” EY India national leader for international tax and transactions services Pranav Satya said.

The exemption granted to startups for taxes on employee stock ownership programmes (ESOPs) also received positive attention, with Mantra Capital partner Srikanth Chintalapati saying it would provide the impetus for firms to retain and acquire talent. “One of the key pillars of successful startups is the right team and ESOPs are the instruments that can help build world-class teams if they are structured properly from a tax perspective,” he said.


There were some proposed changes in the Union Budget for micro, small and medium enterprises. For example, firms with a turnover of Rs 5 crore or more will now have to have their books audited, up from the current Rs 1 crore.

Also, the Centre will look to amend the Factor Regulation Act to enable non-banking financial companies to extend invoice financing to MSMEs through the Trade Receivables Discounting System (TReDS).

“Enabling NBFCs to extend invoice financing to MSMEs through TReDS should enhance opportunity to fuel the Indian economy and widen the acceptability and trust by the BFSI sector,” said Meghna Suryakumar, the founder and CEO of fintech startup Crediwatch. “

“For the MSMEs, we welcome the move to subordinate debt for entrepreneurs of MSMEs and treat it as quasi-equity,” Aye Finance and MD Sanjay Sharma said. “On the government’s directive, if the RBI extends the window of debt structuring by one year to March 2021, it will also bring further breather for India’s small-scale enterprises.”

However, there were notes of caution as well. “The government has reiterated its commitment to the disinvestment programme with the announcement of IDBI divestment and LIC IPO,” InCred founder and CEO Bhupinder Singh said. “Having made all of these positive points, I must highlight that ultimately a recovery in bank lending, which has not yet been forthcoming, is a must in order to get the economy moving at top speed again.”

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