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Budget 2010: All about subsidies, tax sops and maintaining the status
March, 31st 2010

The budget and its impact on the economy:-

N S Manku, president of IPAMA
There is no doubt that corporate and direct taxpayers have gained. In fact concomitantly there has been a 13% drop in allocation for social security and welfare.

This budget has nothing great to offer to printing, packaging, converting machine manufacturers - except of course it has offered some relief to our manufacturing members most of whom fall in the category of MSME or SSI. Hike in the price of steel and petro-chemicals is going to enhance the finish product cost of machines across the board by 13-15%.

Anil Krishna, Henkel CAC
The budget has attempted a do a balancing act, that of sustaining momentum of domestic consumption through direct tax reliefs and moderated by partial roll-back of the fiscal stimulus. However the increase in excise duty by 2% and increase in custom duties from 5 to 10% for petroleum products will have an adverse impact on some of the industries we serve as the price of their inputs will go up.

B S Kampani, TechNova Toyo Ink
Every budget leaves me amused. Because we (industry-wallahs) have to accept the results of somebody's thought process. It's an annual event when all of us powerful, intelligent, well-read industry drivers feel powerless and helpless. We are compelled to manoeuvre and make the most of what's served by our finance minister.

Instead of simplifying one of the essential components of the wheel of growth - fuel; the government is innovating new roadblocks. The levy of excise duty on oil will lead to inflationary trend on raw materials inputs. This will affect the ink and coatings industry. The education expense on books, newspapers and packaging materials will go up. The shortage and inflationary trend on rosin shall continue globally. Hope the situation improves by May 2010.

R Sridhar, Spico Printing Inks
What the finance minister read in his budget speech is less damaging than what he did not read. Take for instance the service taxes on railway freight and port services. These are detrimental to industrial activity. There's a view that the way in which the government is approaching the GST, it may not be implemented. If it implemented, it may lose its basic purpose. There are good features to the budget, like excise procedural relaxation for MSME, changes in TDS procedure and increase in deduction on accounts of R&D expenditure, but these do not impact the printing industry.

R Y Kamat, Micro Inks
The budget is on expected lines. Excise duty increase from 8 to 10% is a rollback of relief measures announced last year. Duty increases on petroleum products will no doubt create cost pressure across the board, but the Indian industry is mature enough to deal with cost pressures. The delay and confusion around the GST and Direct Tax Code is disappointing. The industry needs a clear policy framework so that we can focus on our core business processes. All in all, the budget and the signals from the economy are good news for printing in India.

P Sajith, Welbound Worldwide
The growth of the print industry is linked to growth in education. The allocation for education does not meet the requirement. We have been running deficits over the planned allocations, as per 11th five-year plan v/s budgetary allocations.

For example 11th plan envisaged Rs 45,000 crore as the annual allocation for 2009-10 and we had only budgeted Rs 27,000 crores. Against this backdrop the 15% increase in budgetary allocation provided by the finance minister in the budget, falls short of requirement by a huge margin.

In 2010, the SSA is supposed to achieve the important goal of universal eduaction for all - and the budget should have provided the base for such an empowerment. Import duty on specified petroleum derivatives have been increased by 5%. This will impact the input costs of products like ink and adhesives.

Union Budget 2010 has mixed impact on paper

By Samir Lukka

The Union Budget 2010-2011, announced on 26 February has had a mixed impact on the paper industry in India. Standard rate of excise duty has increased from 8% to 10% across the board. It is likely to have a negative impact on the paper industry, considering the current oversupply situation.

In addition, domestic paper and newsprint manufacturers have raised prices in the range of Rs 2,500-3,000 per ton across all grades effective immediately in order to survive a dramatic rise in raw material prices.

Surcharge on customs duty for domestic companies reduced from 10% to 7.5% which might come across as relief domestic paper manufacturers.The budget has good news for packaging sector and paper recycling market. Reduction in excise duty on corrugated boxes and cartons manufactured by standalone manufacturers from 8% to 4%.

Outright exemption from 4% additional duty of customs (Special CVD) is being provided to wastepaper and paper scrap.
Newsprint industry dependent on waste paper as also corrugated box makers will benefit from these incentives. In the past three months, prices of pulp and waste paper, the two main raw materials, have doubled.

The budget has proposed plan to increase allocation for school education from Rs 26,800-cr in 2009-10 to Rs 31,036-cr in 2010-11. This will increase the demand for paper.

In addition, states will have access to Rs 3,675 - cr for elementary education under the Thirteenth Finance Commission grants for 2010-11.

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