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Would Union Budget 2021
accelerate the industry’s
recovery?
Survey results
January 2021
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 2
Introduction
• Objective and methodology
• Respondent profile
Executive summary
Survey findings
• Effectiveness of stimulus packages during the pandemic
• Economic outlook
‒ Ease of doing business
‒ Self-reliance/Atmanirbhar Bharat
• Economic revival and expectations from Union Budget 2021
Contents
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 3
Introduction
• Objective and methodology
• Respondent profile
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 4
Introduction
Objective
• Analyse the effectiveness of the announced policy measures since the
pandemic on industries.
• Identify the most effective measures that have aided in economic
revival, ease of doing business, and self-reliance.
• Assess the economic outlook as perceived by the industry leaders.
• Understand the industry expectations from Union Budget 2021 and
the measures that the leaders are looking forward to.
• Examine the industry's tax-related and investment proposals needed
for the economic revival.
Methodology
• Conducted online surveys with senior professionals across different
industries and categories of companies; the survey contained a set of
10-12 questions pertaining to the economic revival, ease of doing
business, and self-reliance; collated a total of 180 responses from
nine industries.
• Carried out a few expert interviews with stakeholders from key
industry associations, trade bodies, economists, and tax experts.
Respondent profile
15%
14%
11%
13%
12%
11%
11%
7%
6% BFSI
Infrastructure and power
Industrial product and manufacturing
Life sciences and healthcare
Consumer product and retail
Technology
Oil and gas
Telecommunications
Industry
40%
60%
Less than INR 3,000 crore
More than INR 3,000 crore
Turnover
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 5
Executive summary
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 6
Key themes emerging from the survey
The Atmanirbhar
Bharat initiative
and recent policy
measures have
been key in
supporting
economic
recovery; further
measures are
needed to enhance
their impact and
help industries
thrive.
• The infrastructure push: About 60 percent Indian Inc. expect a big push to infrastructure in the Budget. Infrastructure is one area
where India needs to scale up significantly. The country needs world-class infrastructure to compete with its peers globally. The focus
is likely to be on boosting health and social care and building productive assets. The government must allocate 4−6% GDP in the near
term. Infrastructure investment will translate into lower logistics costs; improved efficiency and better performance of the industry
and the private sector; employment generation; livelihood for low- and semi-skilled workers; and demand for goods and services
offered by MSMEs.
• R&D incentives: The Budget should give a thrust to make India the world’s R&D hub (in line with the Atmanirbhar Bharat scheme). To
attract industry players to invest more in innovation, contract R&D, and human resources, the government may consider the following
measures: reintroducing weighted deduction for R&D expenditure; bringing R&D players within the fold of the reduced tax regime or
extending incentives for R&D; and improving the patent box regime to offer reduced tax rates to assignees/transferees of the patent.
This will further enhance the programme’s effectiveness.
• Competitive business ecosystem initiatives: India has significantly improved its ranking on the Ease of Doing Business index over the
past six years. It now ranks 63.* Announcements associated with rationalising the tax structure and easing compliance requirements;
increasing role of technology and digitisation to ensure better compliance; easing compliance processes for trade across borders; and
focusing on labour and land laws are sought to improve the business environment and the ecosystem. Emphasis on digitisation may
improve efficiency.
• Schemes specific to manufacturing, MSMEs: About 63% of the industrial products and manufacturing industries highlighted the
Production-Linked Incentive (PLI) as the most impactful scheme. The industry feels more schemes, similar to PLI, are needed to boost
manufacturing. To provide more incentives to manufacturers who engage in high-level, value-addition and even move up the global
value chain, PLI should be associated with the creation of domestic value addition and high value-adding operations. Credit support
to and backward integration with MSMEs can aid their growth.
Source: https://www.doingbusiness.org/en/rankings
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 7
Executive summary (continued)
Survey results Financial year 2020-21 saw unprecedented disruptions to lives and livelihood across the world. India was no exception. As the nation waded
through the pandemic-induced challenges, industries had their fair share of learnings along the way. Recent data and business signals suggest
that the economic recovery may be on the way. The availability of vaccines, lowering COVID-19 infection rate, increased mobility, and prudent
and effective government policy support are key to economic and industrial revival.
Effectiveness of stimulus during the pandemic
• The government has announced special economic stimulus packages worth INR 29.87 lakh crore (US$404 billion), 15% of GDP (including RBI
measures, such as special liquidity facility for mutual funds). About 60% respondents believe that these packages will be effective in reviving
the economy.
• Along with the Atmanirbhar Bharat package, monetary policy initiatives, such as EMI relief and reduction in repo rate and reverse repo rate,
were the most appreciated initiatives by the industry.
• The schemes announced under Atmanirbhar Bharat proved beneficial for the life sciences (73%) and Consumer Packaged Goods (CPG, 63%)
industries.
Economic outlook
• The Budget Expectations Survey 2021 revealed that more than 70% industry leaders are optimistic about the economic recovery and
demand growth. They observe that the mass vaccination drive, the government’s stimulus packages and policies, push to infrastructure,
India emerging as a manufacturing hub, and digitisation efforts may provide the desired impetus to growth.
• About 50% respondents feel positive that the Budget will revive their industry and the economy.
Atmanirbhar Bharat
• About 60% respondents welcomed Atmanirbhar Bharat, a flagship programme of the government aimed at promoting self-reliance.
• Close to 90% CPG respondents and about 70% automobile respondents have found the policy initiatives under the scheme effective.
• Respondents also expressed that extending R&D incentives; increasing FDI limit in different sectors and simplifying its clearance process; and
supply chain reforms would further enhance the programme’s effectiveness.
• Fast-tracking reforms and focus on digitisation are some of the other measures that need attention.
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 8
Executive summary (continued)
Survey results Enhancing ease of doing business
• India provides a conducive environment to set up and run a business, as evident from the improvement in the ease of doing business in the
past six years.
• The Budget should focus on a simpler tax regime and regulations to improve compliance.
• About 49% respondents highlighted the role of technology and digitisation, in addition to implementing an online single-window system.
• Improving land and labour laws, and easier compliance for cross-border trade would be other enablers.
Overall expectations from Budget 2021
• The industry expects the Budget to announce growth-augmenting measures that can boost the economic recovery.
• About 60% of the survey respondents cited that incentivising infrastructure investments will provide the desired impetus to the sector.
Ensuring timely and adequate financing of the infra sectors, as outlined under the National Infrastructure Pipeline (NIP), must be a priority.
• About 50% respondents highlighted demand revival as one of the major working areas. Movement restrictions, and financial and health
anxiety amongst consumers have affected consumption. High precautionary savings may keep demand below pre-COVID-19 levels for a
while.
• Some respondents also feel that raising the tax exemption limit for individuals will boost private consumption and investment.
• The industry also expects the government to focus on creating jobs, especially for less-skilled workers, to boost income and demand.
Expectations by industry
• The life sciences, automobile, infrastructure and power, and telecommunication industries have highlighted the need to increase R&D
spend.
• Over 50% industrial products and manufacturing industry leaders feel that credit support to MSMEs would help these industries rebound
sooner.
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 9
Executive summary (continued)
Survey results Expectations from the capital investment perspective
• Close to 65% respondents cited that innovative ways to boost project financing and bring in private capital could help the infrastructure
sector.
• About 45% respondents believe that creating a new fund to finance projects and attracting sovereign funds through various incentives are
effective means to inject capital in the infrastructure sector.
• Industry experts and survey respondents also suggested that privatising PSU banks and granting licences to financial institutions could help
infuse capital and increase competition.
Expectations from the taxation perspective
• About 50% respondents would like to see capping of GST limit and convergence of GST rates (to three slabs) in the Budget.
• Close to 45% respondents feel that the government should rationalise corporate taxes and offer indirect taxes related benefits in the form
of a window of exemption on customs duty or GST. This would support priority-sector enterprises and other stressed sectors.
• Group taxation received mixed reviews in the survey. While 37% respondents supported the idea of moving to group taxation, other 40%
were not in favour of it.
• Amongst those who supported the idea, 70% of them preferred to move to group taxation within a year.
Expectations from Global In-house Centres (GICs)
• Nearly 50% respondents suggested that income-linked incentives for GICs are crucial for their growth.
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 10
Survey findings
• Effectiveness of stimulus packages during the pandemic
• Economic outlook
• Economic revival and expectations from
Union Budget 2021
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 11
Close to 60% respondents found recent government initiatives helpful
Do you think the government’s recent interventions/stimulus packages were helpful for your industry?
• Atmanirbhar Bharat was most helpful for the life sciences (~75%
respondents) and CPG (~65% respondents) industries.
• Monetary policy initiatives, such as EMI relief and reduction in
repo/reverse repo rates, were amongst the most impactful
measures per respondents.
• PLI was the most impactful scheme for the industrial products and
manufacturing industries (63% respondents).
“The PLI scheme is a good thing to start with. India should encourage
anchor investors and foreign collaborations for the technology to
come in. These collaborations give a boost to supply chain sectors
and help develop other allied industries.”
– Principal Economist, CII
Impactful initiatives
18%
11%
13%
15%
19%
21%
24%
37%
Other
Emergency Credit Line Guarantee
Scheme
Forward guidance by the RBI
Targeted liquidity injection (TLTROs)
PLI
Reduction in repo and reverse repo rate
EMI relief or extending moratorium
Atmanirbhar Bharat
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 12
Do you think the recent government’s interventions/stimulus were helpful for your industry?
Measures Banking, Financial
Services, and Insurance
(BFSI)
Infrastructure
and power
Industrial
product and
manufacturing
Life sciences
and healthcare
Consumer
product and
retail
Technology Automobile Oil and gas Telecommunic
ations
Yes % 67% 58% 42% 46% 76% 45% 63% 69% 55%
PLI 22% 13% 63% 18% 19% 11% 8% 11% 17%
Atmanirbhar Bharat 11% 38% 38% 73% 63% 44% 33% 22% 17%
Targeted liquidity
injection
11% 20% 13% 18% 19% 11% 8% 11% 17%
Reduction in repo
and reverse repo
rates
39% 6% 25% 9% 6% - 33% 44% 33%
EMI relief or
extending
moratorium
33% 38% 0% 9% 13% 22% 25% 44% 33%
Forward guidance by
the RBI
11% - 25% - 13% 22% 17% 33% 17%
Emergency Credit
Line Guarantee
Scheme
17% 13% - 9% 6% 22% 25% - -
Other 22% 13% - 9% - 44% 33% 22% -
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 13
Survey findings
• Effectiveness of stimulus packages during the pandemic
• Economic outlook
• Economic revival and expectations from
Union Budget 2021
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 14
About 70% of the industry leaders are positive about India’s growth in 2021−22, with CPG being most optimistic
What is your outlook on India’s growth in 2021−22?
About 70% industry leaders are optimistic about the economy’s
growth. However, a considerable number of leaders from the
infrastructure and power (~40%), telecommunications (45%), and
industrial products and manufacturing (37%) industries have a neutral
outlook. Clearly, different industries are likely to experience different
rebound paths until the pandemic is over.
“The economy is going to grow. Estimates from the members at FICCI
vary from 5−7% to 8−10%.”
– Secretary General at FICCI
Outlook by industry
Overall growth outlook
68%
25%
7%
Positive Neutral Negative
55%
77%
79%
75%
86%
67%
58%
46%
74%
45%
23%
16%
20%
14%
25%
37%
39%
15%
5%
5%
8%
5%
15%
11%
Telecommunications
Oil and gas
Automobile
Technology
Consumer product and retail
Life sciences and healthcare
Industrial product and
manufacturing
Infrastructure and power
BFSI
Positive Neutral Negative
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 15
Demand revival, government measures, and vaccine news have improved the outlook, but uncertainty prevails
What is your outlook on India’s growth in 2021−22?
Positive (68%)
• Demand is reviving and opportunities
are now visible − 21%
• The government stimulus and support
proved helpful, which aided
infrastructure development. This in turn
eased difficult situations that businesses
faced during the lockdown − 18%
• News of vaccination gives hope to the
market − 12%
• Others important factors include the
following:
‒ India becoming the key
manufacturing hub
‒ Awareness about the Make in India
programme (focus on Vocal for Local)
‒ Financial reforms, spending on
infrastructure, widening of the tax
base, focus on healthcare and
agriculture, PLI in more sectors, and
technology adoption
Negative (7%)
• Economic recovery is expected to be
slow − 36%
• Several markets are still not fully
operational and will have a longer-term
recovery period − 31%
• Others important factors include the
following:
‒ Job cuts to lead to low per-capita
income
‒ Many migrant labourers did not
return because of the economic
uncertainty
‒ Slow demand revival/low demand in
consumer goods
Neutral (25%)
• The economy will take time to recover
from the impact of COVID-19 − 50%
• Industrial output has lowered because
of the lockdown − 17%
• The Indian economy is dependent on
China for raw material and various
finished goods − 17%
• Others important factors include the
following:
‒ Indian products not cost
effective/competitive at a global
level
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 16
About 60% respondents believe that Atmanirbhar Bharat is helpful; 90% CPG and ~70% automobile respondents
strongly support this initiative
Do you feel Atmanirbhar Bharat can help your sector at an operational level?
• Extending R&D incentives and increasing the limit and clearance
for promoting FDIs feature as the most prominent expectation that
can further strengthen the Atmanirbhar Bharat scheme.
• Supply chain reforms/competitive investment incentives are the
other important areas that industry leaders would like to be
addressed under the scheme.
• Fast-tracking reforms, reducing administrative inefficiencies and
lowering compliance burden, and digitisation can help enhance
business operations and capabilities, and improve efficiencies.
Expectations from Atmanirbhar Bharat
Is Atmanirbhar Bharat effective?
58%
42%
Yes No 10%
10%
17%
19%
19%
21%
21%
24%
29%
31%
35%
36%
Others
Equity transfusion for NIIF
Improve land and labour laws
Competitive import tariffs
Backward integration with MSME sectors
Enhance export competitiveness
Reduce administrative inefficiencies and
compliance burden
Emphasis on digitisation
Fast-tracking reforms
Supply chain reforms/Reliability of supply
chains/Competitive investment incentives
Increased limit and easy clearance of FDI
inflows
R&D incentives extension/Weighted
deduction
• More focus on skill
development
(20%)
• Improving
confidence of
investors (10%)
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 17
Do you feel Atmanirbhar Bharat can help your sector at an operational level?
Measures BFSI Infrastructure
and power
Industrial
product and
manufacturing
Life sciences
and
healthcare
Consumer
product and
retail
Technology Automobile Oil and
gas
Telecommunications
Yes % 52% 50% 42% 58% 90% 55% 68% 62% 46%
R&D incentives extension 21% 69% 25% 50% 16% 27% 38% 50% 40%
Competitive import tariffs 7% 15% 38% 21% 21% 9% 8% 38% 40%
Increased limit and easy clearance
for promoting FDI inflows
50% 31% 38% 29% 47% 36% 23% 13% 40%
Enhance export competitiveness 29% - 25% 7% 16% 27% 38% 25% 40%
Supply chain reforms/Competitive
investment incentives to develop a
strong supply chain
21% 46% 13% 50% 42% - 23% 38% 40%
Backward integration with MSME
sectors
7% 31% 38% 14% 16% 36% - 13% 40%
Reduce administrative inefficiencies
and compliance burden
21% 15% 63% 7% 11% 45% 31% - -
Emphasis on digitisation to build a
robust digital ecosystem
29% 8% 13% 36% 32% 36% 15% 13% 20%
Improve land and labour laws while
ensuring social and health protection
36% 8% - 14% 21% 9% 31% - 20%
Fast-tracking reforms 50% 23% 13% 50% 21% 27% 8% 38% 20%
Others - 15% - 7% 5% 9% 31% 13% -
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 18
Simpler tax regimes and compliance, along with digitisation efforts, are sought as the major steps to enhance
the ease of doing business
What measures do you think can enhance ease of doing business in your sector?
• India has progressively improved its position on the Ease of Doing
Business index and is now ranked 63.* Respondents suggested that
simpler tax regimes, digitisation, and better compliance of
processes will further improve the business environment.
• About 50% of them also cited the increasing role of technology and
digitisation in this aspect, in addition to implementation of an
online single-window system.
• Leaders from the industrial products and manufacturing (53%),
CPG (~50%), and automobile (53%) industries have stressed on
easier compliance processes for cross-border trade for smoother
business operations.
• About 60% automobile leaders, and over 45% industrial products
and manufacturing, and telecommunications industry leaders lay
emphasis on improving land and labour laws.
Measures that can enhance Ease of Doing Business
• More transparency
in business
activities - 20%
• Easy regulatory
guidelines - 12%
15%
15%
20%
24%
25%
35%
35%
49%
63%
Other
Effective framework and process for
insolvency
Simplifying property registration and
acquisition of land
Fast disposal of commercial disputes
Upskilling talent and reducing skill gaps
Easy compliance process for trade across
borders
Improve land and labour laws
Enhance digitisation efforts and
implementation of online single window…
Simpler tax regimes and compliances
Source: https://www.doingbusiness.org/en/rankings
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 19
What measures do you think can enhance ease of doing business in your sector?
Measures BFSI Infrastructu
re and
power
Industrial product
and
manufacturing
Life sciences
and
healthcare
Consumer
product and
retail
Technology Automobile Oil and gas Telecommunications
Simpler tax regimes and
compliances
78% 50% 68% 62% 48% 70% 37% 83% 91%
Enhance digitisation efforts
and implementation of an
online single-window system
for clearances and integrate
business procedures
56% 42% 42% 79% 48% 50% 42% 42% 18%
Simplifying property
registration and land
acquisition
4% 46% 11% 21% 19% 25 5% 42% 9%
Easy compliance process for
trade across borders
30% 39% 53% 21% 48% 15% 53% 25% 27%
Effective framework and
process for insolvency
19% 19% 21% 17% 10% 15% 5% 8% 9%
Fast disposal of commercial
disputes
26% 35% 32% 8% 34% 25% 13% 8% 36%
Improve land and labour laws 26% 23% 47% 38% 38% 20% 58% 25% 45%
Upskilling talent and
reducing skill gaps
19% 15% 21% 25% 24% 45% 26% 17% 45%
Others 14% 19% 16% 13% 10% 15% 26% 17% -
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 20
Survey findings
• Effectiveness of stimulus packages during the pandemic
• Economic outlook
• Economic revival and expectations from
Union Budget 2021
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 21
About 50% industry leaders are anticipating positive outcomes from Union Budget 2021−22; about 35% are neutral
How optimistic are you that the Budget will focus on your industry’s revival?
• About 80% of the industry respondents expressed neutral to
positive sentiments for the upcoming Budget, except for those in
the telecommunications, and oil and gas industries.
• Respondents from the automobile, industrial product and
manufacturing, and life sciences and healthcare industries were
most optimistic about the Budget and its impact on the recovery.
These are also the industries that have benefited from schemes
and announcements made earlier.
Sentiment by industry
Sentiment regarding Budget on industry revival
4% 13% 34% 42% 7%
1 - Not at all positive 2 3 4 5 - very positive 27%
5%
4%
4%
9%
23%
5%
15%
14%
8%
11%
15%
15%
18%
8%
42%
30%
38%
42%
58%
31%
30%
36%
69%
42%
40%
33%
38%
31%
42%
51%
9%
11%
10%
14%
8%
8%
4%
Telecommunications
Oil and gas
Automobile
Technology
Consumer product and retail
Life sciences and healthcare
Industrial product and manufacturing
Infrastructure and power
BFSI
1 - Not at all positive 2 3 4 5 - Very positive
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 22
Focus on infrastructure − national and local − have been cited as the most important step
What budgetary steps, according to you, can drive your sector’s growth and revival?
• About 60% industry leaders believe that incentivising infrastructure
investments will provide the much-needed impetus to the economy and
core sectors.
‒ Investment in roads, power, railways, and local infrastructure (such as
hospitals and schools) would help reduce logistics costs and,
consequently, the cost of doing business.
• Slightly more than 45% respondents expressed that reviving demand should
be one of the important considerations in the Budget.
‒ A reduction in personal taxes, offering short-term income-tax reliefs, and
creating jobs would be effective measures.
• For the life sciences, automobile, infrastructure and power, and
telecommunication industries, over 45% emphasised on increased R&D
spending.
• More than 50% industrial products and manufacturing industry leaders asked
for a higher credit support for MSMEs.
Budgetary steps for industry growth
“For recovery, it is necessary to have more spending on infra, healthcare,
expediting affordable housing and divestment of PSUs.”
– Principal Economist, CII
“The government should increase the spending in the digital economy space. Under the PM Wani Yojana, last year the government announced spending of INR
6,600 crore. This year the spending should increase by 10 times because access to digital infrastructure will ultimately increase consumption.”
- Secretary General at FICCI
24%
11%
22%
28%
32%
41%
47%
61%
Others
Privatisation of PSU banks
Tax holidays, tax exemptions, or
preferential tax
Accelerated divestment programme
Budgetary support to MSMEs
Increased spending in R&D
Demand revival
Incentivised infrastructure
investments
• More subsidies for basic
infrastructure
development- 31%
• Lower tax slabs to
stimulate spending -
14%
• Simplification of GST -
12%
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 23
What budgetary steps, according to you, can drive your sector’s growth and revival?
Measures BFSI Infrastructure
and power
Industrial
product and
manufacturing
Life sciences
and
healthcare
Consumer
product and
retail
Technology Automobile Oil and gas Telecommuni-
cations
Accelerated divestment
programme
41% 35% 26% 25% 29% 10% 32% 23% 18%
Incentivised infrastructure
investments to reduce
logistics costs
48% 69% 58% 67% 52% 50% 63% 77% 73%
Privatisation of PSU banks 30% 15% 5% 0% 14% 15% 5% - -
Increased spending
in research and innovation
15% 50% 47% 46% 24% 45% 63% 39% 46%
Demand revival 60% 27% 58% 46% 67% 65% 32% 15% 46%
Tax holidays, tax exemptions,
or preferential tax
26% 19% 21% 21% 14% 25% 16% 23% 46%
Budgetary or credit support
to the MSMEs supporting the
industry
26% 23% 53% 38% 38% 40% 32% 8% 18%
Others 22% 31% 11% 13% 24% 25% 37% 39% 18%
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 24
Devising innovative structures to attract private capital is cited as the top-most measure to finance projects
What steps should be taken to inject capital for financing various projects?
About 65% respondents agree that innovative structures (such as InvITs and
Fund of Funds) could attract private capital into the infrastructure sector
and boost the project financing.
About 45% respondents believe that bringing in incentives for attracting
long-term investors, such as sovereign wealth funds and pension funds, are
effective means to inject capital in the economy.
“The government should add more financial institutions in the country
and work towards giving more banking licences for capital injection in the
economy.”
– Secretary General at FICCI
Injecting capital in the economy
“Exports should be revived and integrated into global chains. A long-term
systematic structure should be thought of.”
– Principal Economist, CII
18%
13%
18%
31%
45%
46%
66%
Others
Partial utilisation of forex reserves
More banking licences
Global bonds to raise finance
Incentives to attract sovereign funds and
risk capital
Establishment of a new fund to finance
projects
Innovative structures to bring in private
capital into infra sector
• Allowing BFSI to inject money in the market
• Introducing banking relaxations and incentives for MSMEs and
corporates
• Easing policies to attract foreign investments
• Redefining import policies
• Motivating start-ups and introducing microfinancing schemes
• Initiating divestment in PSUs
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 25
GST capping and convergence, and corporate tax reduction are sought as important measures expected from the Budget
What tax-related changes are currently important for your industry?
• About 50% respondents expect announcements associated with GST
rationalisation − capping GST rate and reducing GST slabs (to three) − in
Budget 2021.
• They expect a reduction in the tax compliance burden for corporates,
and simpler and stable processes.
• Expectations by industry are as follows:
‒ The life sciences sector has additionally cited restriction on
availment of the Input Tax Credit (ITC) as one of its prime concerns.
‒ About 50% of the BFSI and CPG respondents have sought for
rationalisation of Tax Deducted at Source (TDS) and Tax Collected at
Source (TCS) .
Tax-related changes
“Simpler and stable taxation measures and predictability in terms of on-
ground implementation of rules and regulations/ensuring sanctity of
contracts is needed.”
– Experts at FICCI and CII
21%
30%
31%
48%
49%
51%
Others
Input Tax Credit (ITC) availing restriction
limit
Rationalisation of TDS and TCS
Further reduction in corporate taxation
Convergence of GST rates (to three slabs)
Capping of GST limit
• GST caps should be lowered - 25%
• Rationalisation of Income tax - 9%
• Export/SEZ benefits - 9%
• Post-retirement insurance/tax benefits - 9%
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 26
What tax-related changes are currently important for your industry?
Measures BFSI Infrastructure
and power
Industrial
product and
manufacturing
Life sciences
and
healthcare
Consumer
product and
retail
Technology Automobile Oil and gas Telecommu-
nications
Input Tax Credit (ITC) availing
restriction limit
26% 39% 37% 50% 14% 20% 37% 23% 18%
Convergence of GST rates 41% 69% 47% 33% 43% 60% 47% 38% 55%
Capping of GST limit 56% 73% 47% 54% 33% 50% 58% 31% 36%
Rationalisation of TDS and
TCS
48% 19% 42% 25% 48% 25% 16% 15% 36%
Further reduction in
corporation taxation
44% 42% 53% 38% 24% 55% 68% 46% 82%
Others 11% 23% 11% 29% 10% 20% 37% 46% 9%
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 27
About 45% respondents believe that rationalising corporate tax rates for priority-sector enterprises would have a
positive impact
Which tax incentives should be announced for enterprises in the priority sectors?
In addition to RBI’s revised guidelines for priority-sector lending to start-ups
and the agricultural sector, these sectors can benefit from certain tax
incentives (besides rationalisation of tax rates). According to the survey:
• About 45% respondents believe that rationalising corporate tax would
be beneficial.
• Nearly 35% cited that providing benefits in the form of ‘a window of
exemption on customs duty’ or ‘GST relaxation’ will help priority
sectors.
“Schemes such as PLI create champions that compete on scale and we
need such schemes in more sectors.”
– Secretary General at FICCI
Anticipated tax incentives for priority sectors
15%
24%
36%
44%
Others
Accelerated deduction of expenditure on
investments in the business
Benefit of indirect taxes to enterprises in
the form of exemption on customs duty
or GST
Rationalisation of corporate tax rates of
companies engaged in these sectors
• GST relaxation from 18% to
6−12%
• More benefits on CSR and R&D
activities
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 28
About 40% respondents favour group taxation, with 70% of these want it to be introduced within one year
Should India move to the concept of ‘group taxation’? What should be the ideal time frame?
• At present, India does not allow group taxation.
• The survey revealed that it is not a priority for the industry.
— 22% respondents are not sure or do not have an idea about group
taxation.
• However, 37% respondents felt that introducing group taxation is
important.
— Of these, 70% feel that it should be implemented within one year.
Moving to group taxation
37%
41%
22%
Yes No Don't know
Opportune time for movement
22%
7%
37%
34%
Now
In the next year
Two to five years
After a minimum
of 5 years
Yes
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 29
75% respondents believe that increasing tax exemptions for individuals will help revive demand
Do you think changes in personal taxation would help increase demand?
• Three-quarters of the respondents feel that demand could be revived
by increasing tax exemptions, which would increase cash in hand
amongst consumers and boost spending.
• Measures such as making EPF employee contribution voluntary and
interest relief on housing loans, could boost purchasing power and
encourage consumers to spend more and save less.
• The housing sector may see a rise in demand with such reliefs.
“Section 80 JJAA gives a deduction for additional employment at a lower
level. There is a salary cap of INR 15,000. This should be increased to INR
50,000.”
– Principal Economist, CII
Expected changes in personal taxation
14%
15%
36%
43%
43%
75%
Others
Three-year holiday for ESI contribution to
both employers and employees
Exemptions on interest on delayed tax
payments
Interest relief on housing Loans
Making the employee’s contribution to EPF
voluntary
Increasing tax exemption limit to boost
liquidity
Changes in personal taxation, effective?
70%
29%
1%
Yes No Not sure
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 30
Do you think changes in personal taxation would help increase demand?
Measures BFSI Infrastructu
re and
power
Industrial
product and
manufacturing
Life
sciences
and
healthcare
Consumer
product and
retail
Technology Automobile Oil and gas Telecommunications
Making the employee’s
contribution to EPF
voluntary
27% 43% 43% 60% 50% 40% 54% 33% 46%
Three-year holiday for ESI
contribution to both
employers and employees
9% 7% 7% 7% 50% 7% 23% 33% 0%
Increasing tax exemption
limit to boost liquidity
73% 71% 86% 93% 57% 93% 69% 58% 73%
Exemptions on interest on
delayed tax payments
14% 43% 43% 53% 21% 47% 39% 50% 27%
Interest subvention on
housing loans of 3−4% for a
period of 3−4 years
64% 57% 29% 40% 36% 27% 23% 50% 55%
Others 37% 14% 0% 13% 7% 7% 8% 17% 9%
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 31
About 50% respondents wish for income-linked incentives for GICs
What are the expected incentives for changes in taxation for GICs?
• About 48% of the respondents across most industries preferred an income-linked incentive. There are a few exceptions.
• On the other hand, the BFSI (~45%), oil and gas (~40%), and technology (~30%) industries preferred expenditure-linked incentives.
Incentives sought for GICs
16%
13%
23%
48%
Don't know/no comments
Income linked with a sunset period
Expenditure linked
Income linked
Would Union Budget 2021 accelerate the industry’s recovery?
© 2021 Deloitte Touche Tohmatsu India LLP. 32
Thank you
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL
and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see
www.deloitte.com/about for a more detailed description of DTTL and its member firms.
This material is prepared by Deloitte Touche Tohmatsu India LLP (DTTILLP). This material (including any information contained in it) is intended to provide general information on a
particular subject(s) and is not an exhaustive treatment of such subject(s) or a substitute to obtaining professional services or advice. This material may contain information sourced
from publicly available information and/or other third-party sources and views shared by third parties. DTTILLP does not independently verify any such sources and is not responsible
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Deloitte Survey Results: Understanding the Effect of the Union Budget 2021 on the Economy

  • 1. Would Union Budget 2021 accelerate the industry’s recovery? Survey results January 2021
  • 2. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 2 Introduction • Objective and methodology • Respondent profile Executive summary Survey findings • Effectiveness of stimulus packages during the pandemic • Economic outlook ‒ Ease of doing business ‒ Self-reliance/Atmanirbhar Bharat • Economic revival and expectations from Union Budget 2021 Contents
  • 3. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 3 Introduction • Objective and methodology • Respondent profile
  • 4. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 4 Introduction Objective • Analyse the effectiveness of the announced policy measures since the pandemic on industries. • Identify the most effective measures that have aided in economic revival, ease of doing business, and self-reliance. • Assess the economic outlook as perceived by the industry leaders. • Understand the industry expectations from Union Budget 2021 and the measures that the leaders are looking forward to. • Examine the industry's tax-related and investment proposals needed for the economic revival. Methodology • Conducted online surveys with senior professionals across different industries and categories of companies; the survey contained a set of 10-12 questions pertaining to the economic revival, ease of doing business, and self-reliance; collated a total of 180 responses from nine industries. • Carried out a few expert interviews with stakeholders from key industry associations, trade bodies, economists, and tax experts. Respondent profile 15% 14% 11% 13% 12% 11% 11% 7% 6% BFSI Infrastructure and power Industrial product and manufacturing Life sciences and healthcare Consumer product and retail Technology Oil and gas Telecommunications Industry 40% 60% Less than INR 3,000 crore More than INR 3,000 crore Turnover
  • 5. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 5 Executive summary
  • 6. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 6 Key themes emerging from the survey The Atmanirbhar Bharat initiative and recent policy measures have been key in supporting economic recovery; further measures are needed to enhance their impact and help industries thrive. • The infrastructure push: About 60 percent Indian Inc. expect a big push to infrastructure in the Budget. Infrastructure is one area where India needs to scale up significantly. The country needs world-class infrastructure to compete with its peers globally. The focus is likely to be on boosting health and social care and building productive assets. The government must allocate 4−6% GDP in the near term. Infrastructure investment will translate into lower logistics costs; improved efficiency and better performance of the industry and the private sector; employment generation; livelihood for low- and semi-skilled workers; and demand for goods and services offered by MSMEs. • R&D incentives: The Budget should give a thrust to make India the world’s R&D hub (in line with the Atmanirbhar Bharat scheme). To attract industry players to invest more in innovation, contract R&D, and human resources, the government may consider the following measures: reintroducing weighted deduction for R&D expenditure; bringing R&D players within the fold of the reduced tax regime or extending incentives for R&D; and improving the patent box regime to offer reduced tax rates to assignees/transferees of the patent. This will further enhance the programme’s effectiveness. • Competitive business ecosystem initiatives: India has significantly improved its ranking on the Ease of Doing Business index over the past six years. It now ranks 63.* Announcements associated with rationalising the tax structure and easing compliance requirements; increasing role of technology and digitisation to ensure better compliance; easing compliance processes for trade across borders; and focusing on labour and land laws are sought to improve the business environment and the ecosystem. Emphasis on digitisation may improve efficiency. • Schemes specific to manufacturing, MSMEs: About 63% of the industrial products and manufacturing industries highlighted the Production-Linked Incentive (PLI) as the most impactful scheme. The industry feels more schemes, similar to PLI, are needed to boost manufacturing. To provide more incentives to manufacturers who engage in high-level, value-addition and even move up the global value chain, PLI should be associated with the creation of domestic value addition and high value-adding operations. Credit support to and backward integration with MSMEs can aid their growth. Source: https://www.doingbusiness.org/en/rankings
  • 7. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 7 Executive summary (continued) Survey results Financial year 2020-21 saw unprecedented disruptions to lives and livelihood across the world. India was no exception. As the nation waded through the pandemic-induced challenges, industries had their fair share of learnings along the way. Recent data and business signals suggest that the economic recovery may be on the way. The availability of vaccines, lowering COVID-19 infection rate, increased mobility, and prudent and effective government policy support are key to economic and industrial revival. Effectiveness of stimulus during the pandemic • The government has announced special economic stimulus packages worth INR 29.87 lakh crore (US$404 billion), 15% of GDP (including RBI measures, such as special liquidity facility for mutual funds). About 60% respondents believe that these packages will be effective in reviving the economy. • Along with the Atmanirbhar Bharat package, monetary policy initiatives, such as EMI relief and reduction in repo rate and reverse repo rate, were the most appreciated initiatives by the industry. • The schemes announced under Atmanirbhar Bharat proved beneficial for the life sciences (73%) and Consumer Packaged Goods (CPG, 63%) industries. Economic outlook • The Budget Expectations Survey 2021 revealed that more than 70% industry leaders are optimistic about the economic recovery and demand growth. They observe that the mass vaccination drive, the government’s stimulus packages and policies, push to infrastructure, India emerging as a manufacturing hub, and digitisation efforts may provide the desired impetus to growth. • About 50% respondents feel positive that the Budget will revive their industry and the economy. Atmanirbhar Bharat • About 60% respondents welcomed Atmanirbhar Bharat, a flagship programme of the government aimed at promoting self-reliance. • Close to 90% CPG respondents and about 70% automobile respondents have found the policy initiatives under the scheme effective. • Respondents also expressed that extending R&D incentives; increasing FDI limit in different sectors and simplifying its clearance process; and supply chain reforms would further enhance the programme’s effectiveness. • Fast-tracking reforms and focus on digitisation are some of the other measures that need attention.
  • 8. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 8 Executive summary (continued) Survey results Enhancing ease of doing business • India provides a conducive environment to set up and run a business, as evident from the improvement in the ease of doing business in the past six years. • The Budget should focus on a simpler tax regime and regulations to improve compliance. • About 49% respondents highlighted the role of technology and digitisation, in addition to implementing an online single-window system. • Improving land and labour laws, and easier compliance for cross-border trade would be other enablers. Overall expectations from Budget 2021 • The industry expects the Budget to announce growth-augmenting measures that can boost the economic recovery. • About 60% of the survey respondents cited that incentivising infrastructure investments will provide the desired impetus to the sector. Ensuring timely and adequate financing of the infra sectors, as outlined under the National Infrastructure Pipeline (NIP), must be a priority. • About 50% respondents highlighted demand revival as one of the major working areas. Movement restrictions, and financial and health anxiety amongst consumers have affected consumption. High precautionary savings may keep demand below pre-COVID-19 levels for a while. • Some respondents also feel that raising the tax exemption limit for individuals will boost private consumption and investment. • The industry also expects the government to focus on creating jobs, especially for less-skilled workers, to boost income and demand. Expectations by industry • The life sciences, automobile, infrastructure and power, and telecommunication industries have highlighted the need to increase R&D spend. • Over 50% industrial products and manufacturing industry leaders feel that credit support to MSMEs would help these industries rebound sooner.
  • 9. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 9 Executive summary (continued) Survey results Expectations from the capital investment perspective • Close to 65% respondents cited that innovative ways to boost project financing and bring in private capital could help the infrastructure sector. • About 45% respondents believe that creating a new fund to finance projects and attracting sovereign funds through various incentives are effective means to inject capital in the infrastructure sector. • Industry experts and survey respondents also suggested that privatising PSU banks and granting licences to financial institutions could help infuse capital and increase competition. Expectations from the taxation perspective • About 50% respondents would like to see capping of GST limit and convergence of GST rates (to three slabs) in the Budget. • Close to 45% respondents feel that the government should rationalise corporate taxes and offer indirect taxes related benefits in the form of a window of exemption on customs duty or GST. This would support priority-sector enterprises and other stressed sectors. • Group taxation received mixed reviews in the survey. While 37% respondents supported the idea of moving to group taxation, other 40% were not in favour of it. • Amongst those who supported the idea, 70% of them preferred to move to group taxation within a year. Expectations from Global In-house Centres (GICs) • Nearly 50% respondents suggested that income-linked incentives for GICs are crucial for their growth.
  • 10. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 10 Survey findings • Effectiveness of stimulus packages during the pandemic • Economic outlook • Economic revival and expectations from Union Budget 2021
  • 11. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 11 Close to 60% respondents found recent government initiatives helpful Do you think the government’s recent interventions/stimulus packages were helpful for your industry? • Atmanirbhar Bharat was most helpful for the life sciences (~75% respondents) and CPG (~65% respondents) industries. • Monetary policy initiatives, such as EMI relief and reduction in repo/reverse repo rates, were amongst the most impactful measures per respondents. • PLI was the most impactful scheme for the industrial products and manufacturing industries (63% respondents). “The PLI scheme is a good thing to start with. India should encourage anchor investors and foreign collaborations for the technology to come in. These collaborations give a boost to supply chain sectors and help develop other allied industries.” – Principal Economist, CII Impactful initiatives 18% 11% 13% 15% 19% 21% 24% 37% Other Emergency Credit Line Guarantee Scheme Forward guidance by the RBI Targeted liquidity injection (TLTROs) PLI Reduction in repo and reverse repo rate EMI relief or extending moratorium Atmanirbhar Bharat
  • 12. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 12 Do you think the recent government’s interventions/stimulus were helpful for your industry? Measures Banking, Financial Services, and Insurance (BFSI) Infrastructure and power Industrial product and manufacturing Life sciences and healthcare Consumer product and retail Technology Automobile Oil and gas Telecommunic ations Yes % 67% 58% 42% 46% 76% 45% 63% 69% 55% PLI 22% 13% 63% 18% 19% 11% 8% 11% 17% Atmanirbhar Bharat 11% 38% 38% 73% 63% 44% 33% 22% 17% Targeted liquidity injection 11% 20% 13% 18% 19% 11% 8% 11% 17% Reduction in repo and reverse repo rates 39% 6% 25% 9% 6% - 33% 44% 33% EMI relief or extending moratorium 33% 38% 0% 9% 13% 22% 25% 44% 33% Forward guidance by the RBI 11% - 25% - 13% 22% 17% 33% 17% Emergency Credit Line Guarantee Scheme 17% 13% - 9% 6% 22% 25% - - Other 22% 13% - 9% - 44% 33% 22% -
  • 13. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 13 Survey findings • Effectiveness of stimulus packages during the pandemic • Economic outlook • Economic revival and expectations from Union Budget 2021
  • 14. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 14 About 70% of the industry leaders are positive about India’s growth in 2021−22, with CPG being most optimistic What is your outlook on India’s growth in 2021−22? About 70% industry leaders are optimistic about the economy’s growth. However, a considerable number of leaders from the infrastructure and power (~40%), telecommunications (45%), and industrial products and manufacturing (37%) industries have a neutral outlook. Clearly, different industries are likely to experience different rebound paths until the pandemic is over. “The economy is going to grow. Estimates from the members at FICCI vary from 5−7% to 8−10%.” – Secretary General at FICCI Outlook by industry Overall growth outlook 68% 25% 7% Positive Neutral Negative 55% 77% 79% 75% 86% 67% 58% 46% 74% 45% 23% 16% 20% 14% 25% 37% 39% 15% 5% 5% 8% 5% 15% 11% Telecommunications Oil and gas Automobile Technology Consumer product and retail Life sciences and healthcare Industrial product and manufacturing Infrastructure and power BFSI Positive Neutral Negative
  • 15. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 15 Demand revival, government measures, and vaccine news have improved the outlook, but uncertainty prevails What is your outlook on India’s growth in 2021−22? Positive (68%) • Demand is reviving and opportunities are now visible − 21% • The government stimulus and support proved helpful, which aided infrastructure development. This in turn eased difficult situations that businesses faced during the lockdown − 18% • News of vaccination gives hope to the market − 12% • Others important factors include the following: ‒ India becoming the key manufacturing hub ‒ Awareness about the Make in India programme (focus on Vocal for Local) ‒ Financial reforms, spending on infrastructure, widening of the tax base, focus on healthcare and agriculture, PLI in more sectors, and technology adoption Negative (7%) • Economic recovery is expected to be slow − 36% • Several markets are still not fully operational and will have a longer-term recovery period − 31% • Others important factors include the following: ‒ Job cuts to lead to low per-capita income ‒ Many migrant labourers did not return because of the economic uncertainty ‒ Slow demand revival/low demand in consumer goods Neutral (25%) • The economy will take time to recover from the impact of COVID-19 − 50% • Industrial output has lowered because of the lockdown − 17% • The Indian economy is dependent on China for raw material and various finished goods − 17% • Others important factors include the following: ‒ Indian products not cost effective/competitive at a global level
  • 16. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 16 About 60% respondents believe that Atmanirbhar Bharat is helpful; 90% CPG and ~70% automobile respondents strongly support this initiative Do you feel Atmanirbhar Bharat can help your sector at an operational level? • Extending R&D incentives and increasing the limit and clearance for promoting FDIs feature as the most prominent expectation that can further strengthen the Atmanirbhar Bharat scheme. • Supply chain reforms/competitive investment incentives are the other important areas that industry leaders would like to be addressed under the scheme. • Fast-tracking reforms, reducing administrative inefficiencies and lowering compliance burden, and digitisation can help enhance business operations and capabilities, and improve efficiencies. Expectations from Atmanirbhar Bharat Is Atmanirbhar Bharat effective? 58% 42% Yes No 10% 10% 17% 19% 19% 21% 21% 24% 29% 31% 35% 36% Others Equity transfusion for NIIF Improve land and labour laws Competitive import tariffs Backward integration with MSME sectors Enhance export competitiveness Reduce administrative inefficiencies and compliance burden Emphasis on digitisation Fast-tracking reforms Supply chain reforms/Reliability of supply chains/Competitive investment incentives Increased limit and easy clearance of FDI inflows R&D incentives extension/Weighted deduction • More focus on skill development (20%) • Improving confidence of investors (10%)
  • 17. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 17 Do you feel Atmanirbhar Bharat can help your sector at an operational level? Measures BFSI Infrastructure and power Industrial product and manufacturing Life sciences and healthcare Consumer product and retail Technology Automobile Oil and gas Telecommunications Yes % 52% 50% 42% 58% 90% 55% 68% 62% 46% R&D incentives extension 21% 69% 25% 50% 16% 27% 38% 50% 40% Competitive import tariffs 7% 15% 38% 21% 21% 9% 8% 38% 40% Increased limit and easy clearance for promoting FDI inflows 50% 31% 38% 29% 47% 36% 23% 13% 40% Enhance export competitiveness 29% - 25% 7% 16% 27% 38% 25% 40% Supply chain reforms/Competitive investment incentives to develop a strong supply chain 21% 46% 13% 50% 42% - 23% 38% 40% Backward integration with MSME sectors 7% 31% 38% 14% 16% 36% - 13% 40% Reduce administrative inefficiencies and compliance burden 21% 15% 63% 7% 11% 45% 31% - - Emphasis on digitisation to build a robust digital ecosystem 29% 8% 13% 36% 32% 36% 15% 13% 20% Improve land and labour laws while ensuring social and health protection 36% 8% - 14% 21% 9% 31% - 20% Fast-tracking reforms 50% 23% 13% 50% 21% 27% 8% 38% 20% Others - 15% - 7% 5% 9% 31% 13% -
  • 18. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 18 Simpler tax regimes and compliance, along with digitisation efforts, are sought as the major steps to enhance the ease of doing business What measures do you think can enhance ease of doing business in your sector? • India has progressively improved its position on the Ease of Doing Business index and is now ranked 63.* Respondents suggested that simpler tax regimes, digitisation, and better compliance of processes will further improve the business environment. • About 50% of them also cited the increasing role of technology and digitisation in this aspect, in addition to implementation of an online single-window system. • Leaders from the industrial products and manufacturing (53%), CPG (~50%), and automobile (53%) industries have stressed on easier compliance processes for cross-border trade for smoother business operations. • About 60% automobile leaders, and over 45% industrial products and manufacturing, and telecommunications industry leaders lay emphasis on improving land and labour laws. Measures that can enhance Ease of Doing Business • More transparency in business activities - 20% • Easy regulatory guidelines - 12% 15% 15% 20% 24% 25% 35% 35% 49% 63% Other Effective framework and process for insolvency Simplifying property registration and acquisition of land Fast disposal of commercial disputes Upskilling talent and reducing skill gaps Easy compliance process for trade across borders Improve land and labour laws Enhance digitisation efforts and implementation of online single window… Simpler tax regimes and compliances Source: https://www.doingbusiness.org/en/rankings
  • 19. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 19 What measures do you think can enhance ease of doing business in your sector? Measures BFSI Infrastructu re and power Industrial product and manufacturing Life sciences and healthcare Consumer product and retail Technology Automobile Oil and gas Telecommunications Simpler tax regimes and compliances 78% 50% 68% 62% 48% 70% 37% 83% 91% Enhance digitisation efforts and implementation of an online single-window system for clearances and integrate business procedures 56% 42% 42% 79% 48% 50% 42% 42% 18% Simplifying property registration and land acquisition 4% 46% 11% 21% 19% 25 5% 42% 9% Easy compliance process for trade across borders 30% 39% 53% 21% 48% 15% 53% 25% 27% Effective framework and process for insolvency 19% 19% 21% 17% 10% 15% 5% 8% 9% Fast disposal of commercial disputes 26% 35% 32% 8% 34% 25% 13% 8% 36% Improve land and labour laws 26% 23% 47% 38% 38% 20% 58% 25% 45% Upskilling talent and reducing skill gaps 19% 15% 21% 25% 24% 45% 26% 17% 45% Others 14% 19% 16% 13% 10% 15% 26% 17% -
  • 20. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 20 Survey findings • Effectiveness of stimulus packages during the pandemic • Economic outlook • Economic revival and expectations from Union Budget 2021
  • 21. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 21 About 50% industry leaders are anticipating positive outcomes from Union Budget 2021−22; about 35% are neutral How optimistic are you that the Budget will focus on your industry’s revival? • About 80% of the industry respondents expressed neutral to positive sentiments for the upcoming Budget, except for those in the telecommunications, and oil and gas industries. • Respondents from the automobile, industrial product and manufacturing, and life sciences and healthcare industries were most optimistic about the Budget and its impact on the recovery. These are also the industries that have benefited from schemes and announcements made earlier. Sentiment by industry Sentiment regarding Budget on industry revival 4% 13% 34% 42% 7% 1 - Not at all positive 2 3 4 5 - very positive 27% 5% 4% 4% 9% 23% 5% 15% 14% 8% 11% 15% 15% 18% 8% 42% 30% 38% 42% 58% 31% 30% 36% 69% 42% 40% 33% 38% 31% 42% 51% 9% 11% 10% 14% 8% 8% 4% Telecommunications Oil and gas Automobile Technology Consumer product and retail Life sciences and healthcare Industrial product and manufacturing Infrastructure and power BFSI 1 - Not at all positive 2 3 4 5 - Very positive
  • 22. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 22 Focus on infrastructure − national and local − have been cited as the most important step What budgetary steps, according to you, can drive your sector’s growth and revival? • About 60% industry leaders believe that incentivising infrastructure investments will provide the much-needed impetus to the economy and core sectors. ‒ Investment in roads, power, railways, and local infrastructure (such as hospitals and schools) would help reduce logistics costs and, consequently, the cost of doing business. • Slightly more than 45% respondents expressed that reviving demand should be one of the important considerations in the Budget. ‒ A reduction in personal taxes, offering short-term income-tax reliefs, and creating jobs would be effective measures. • For the life sciences, automobile, infrastructure and power, and telecommunication industries, over 45% emphasised on increased R&D spending. • More than 50% industrial products and manufacturing industry leaders asked for a higher credit support for MSMEs. Budgetary steps for industry growth “For recovery, it is necessary to have more spending on infra, healthcare, expediting affordable housing and divestment of PSUs.” – Principal Economist, CII “The government should increase the spending in the digital economy space. Under the PM Wani Yojana, last year the government announced spending of INR 6,600 crore. This year the spending should increase by 10 times because access to digital infrastructure will ultimately increase consumption.” - Secretary General at FICCI 24% 11% 22% 28% 32% 41% 47% 61% Others Privatisation of PSU banks Tax holidays, tax exemptions, or preferential tax Accelerated divestment programme Budgetary support to MSMEs Increased spending in R&D Demand revival Incentivised infrastructure investments • More subsidies for basic infrastructure development- 31% • Lower tax slabs to stimulate spending - 14% • Simplification of GST - 12%
  • 23. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 23 What budgetary steps, according to you, can drive your sector’s growth and revival? Measures BFSI Infrastructure and power Industrial product and manufacturing Life sciences and healthcare Consumer product and retail Technology Automobile Oil and gas Telecommuni- cations Accelerated divestment programme 41% 35% 26% 25% 29% 10% 32% 23% 18% Incentivised infrastructure investments to reduce logistics costs 48% 69% 58% 67% 52% 50% 63% 77% 73% Privatisation of PSU banks 30% 15% 5% 0% 14% 15% 5% - - Increased spending in research and innovation 15% 50% 47% 46% 24% 45% 63% 39% 46% Demand revival 60% 27% 58% 46% 67% 65% 32% 15% 46% Tax holidays, tax exemptions, or preferential tax 26% 19% 21% 21% 14% 25% 16% 23% 46% Budgetary or credit support to the MSMEs supporting the industry 26% 23% 53% 38% 38% 40% 32% 8% 18% Others 22% 31% 11% 13% 24% 25% 37% 39% 18%
  • 24. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 24 Devising innovative structures to attract private capital is cited as the top-most measure to finance projects What steps should be taken to inject capital for financing various projects? About 65% respondents agree that innovative structures (such as InvITs and Fund of Funds) could attract private capital into the infrastructure sector and boost the project financing. About 45% respondents believe that bringing in incentives for attracting long-term investors, such as sovereign wealth funds and pension funds, are effective means to inject capital in the economy. “The government should add more financial institutions in the country and work towards giving more banking licences for capital injection in the economy.” – Secretary General at FICCI Injecting capital in the economy “Exports should be revived and integrated into global chains. A long-term systematic structure should be thought of.” – Principal Economist, CII 18% 13% 18% 31% 45% 46% 66% Others Partial utilisation of forex reserves More banking licences Global bonds to raise finance Incentives to attract sovereign funds and risk capital Establishment of a new fund to finance projects Innovative structures to bring in private capital into infra sector • Allowing BFSI to inject money in the market • Introducing banking relaxations and incentives for MSMEs and corporates • Easing policies to attract foreign investments • Redefining import policies • Motivating start-ups and introducing microfinancing schemes • Initiating divestment in PSUs
  • 25. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 25 GST capping and convergence, and corporate tax reduction are sought as important measures expected from the Budget What tax-related changes are currently important for your industry? • About 50% respondents expect announcements associated with GST rationalisation − capping GST rate and reducing GST slabs (to three) − in Budget 2021. • They expect a reduction in the tax compliance burden for corporates, and simpler and stable processes. • Expectations by industry are as follows: ‒ The life sciences sector has additionally cited restriction on availment of the Input Tax Credit (ITC) as one of its prime concerns. ‒ About 50% of the BFSI and CPG respondents have sought for rationalisation of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) . Tax-related changes “Simpler and stable taxation measures and predictability in terms of on- ground implementation of rules and regulations/ensuring sanctity of contracts is needed.” – Experts at FICCI and CII 21% 30% 31% 48% 49% 51% Others Input Tax Credit (ITC) availing restriction limit Rationalisation of TDS and TCS Further reduction in corporate taxation Convergence of GST rates (to three slabs) Capping of GST limit • GST caps should be lowered - 25% • Rationalisation of Income tax - 9% • Export/SEZ benefits - 9% • Post-retirement insurance/tax benefits - 9%
  • 26. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 26 What tax-related changes are currently important for your industry? Measures BFSI Infrastructure and power Industrial product and manufacturing Life sciences and healthcare Consumer product and retail Technology Automobile Oil and gas Telecommu- nications Input Tax Credit (ITC) availing restriction limit 26% 39% 37% 50% 14% 20% 37% 23% 18% Convergence of GST rates 41% 69% 47% 33% 43% 60% 47% 38% 55% Capping of GST limit 56% 73% 47% 54% 33% 50% 58% 31% 36% Rationalisation of TDS and TCS 48% 19% 42% 25% 48% 25% 16% 15% 36% Further reduction in corporation taxation 44% 42% 53% 38% 24% 55% 68% 46% 82% Others 11% 23% 11% 29% 10% 20% 37% 46% 9%
  • 27. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 27 About 45% respondents believe that rationalising corporate tax rates for priority-sector enterprises would have a positive impact Which tax incentives should be announced for enterprises in the priority sectors? In addition to RBI’s revised guidelines for priority-sector lending to start-ups and the agricultural sector, these sectors can benefit from certain tax incentives (besides rationalisation of tax rates). According to the survey: • About 45% respondents believe that rationalising corporate tax would be beneficial. • Nearly 35% cited that providing benefits in the form of ‘a window of exemption on customs duty’ or ‘GST relaxation’ will help priority sectors. “Schemes such as PLI create champions that compete on scale and we need such schemes in more sectors.” – Secretary General at FICCI Anticipated tax incentives for priority sectors 15% 24% 36% 44% Others Accelerated deduction of expenditure on investments in the business Benefit of indirect taxes to enterprises in the form of exemption on customs duty or GST Rationalisation of corporate tax rates of companies engaged in these sectors • GST relaxation from 18% to 6−12% • More benefits on CSR and R&D activities
  • 28. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 28 About 40% respondents favour group taxation, with 70% of these want it to be introduced within one year Should India move to the concept of ‘group taxation’? What should be the ideal time frame? • At present, India does not allow group taxation. • The survey revealed that it is not a priority for the industry. — 22% respondents are not sure or do not have an idea about group taxation. • However, 37% respondents felt that introducing group taxation is important. — Of these, 70% feel that it should be implemented within one year. Moving to group taxation 37% 41% 22% Yes No Don't know Opportune time for movement 22% 7% 37% 34% Now In the next year Two to five years After a minimum of 5 years Yes
  • 29. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 29 75% respondents believe that increasing tax exemptions for individuals will help revive demand Do you think changes in personal taxation would help increase demand? • Three-quarters of the respondents feel that demand could be revived by increasing tax exemptions, which would increase cash in hand amongst consumers and boost spending. • Measures such as making EPF employee contribution voluntary and interest relief on housing loans, could boost purchasing power and encourage consumers to spend more and save less. • The housing sector may see a rise in demand with such reliefs. “Section 80 JJAA gives a deduction for additional employment at a lower level. There is a salary cap of INR 15,000. This should be increased to INR 50,000.” – Principal Economist, CII Expected changes in personal taxation 14% 15% 36% 43% 43% 75% Others Three-year holiday for ESI contribution to both employers and employees Exemptions on interest on delayed tax payments Interest relief on housing Loans Making the employee’s contribution to EPF voluntary Increasing tax exemption limit to boost liquidity Changes in personal taxation, effective? 70% 29% 1% Yes No Not sure
  • 30. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 30 Do you think changes in personal taxation would help increase demand? Measures BFSI Infrastructu re and power Industrial product and manufacturing Life sciences and healthcare Consumer product and retail Technology Automobile Oil and gas Telecommunications Making the employee’s contribution to EPF voluntary 27% 43% 43% 60% 50% 40% 54% 33% 46% Three-year holiday for ESI contribution to both employers and employees 9% 7% 7% 7% 50% 7% 23% 33% 0% Increasing tax exemption limit to boost liquidity 73% 71% 86% 93% 57% 93% 69% 58% 73% Exemptions on interest on delayed tax payments 14% 43% 43% 53% 21% 47% 39% 50% 27% Interest subvention on housing loans of 3−4% for a period of 3−4 years 64% 57% 29% 40% 36% 27% 23% 50% 55% Others 37% 14% 0% 13% 7% 7% 8% 17% 9%
  • 31. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 31 About 50% respondents wish for income-linked incentives for GICs What are the expected incentives for changes in taxation for GICs? • About 48% of the respondents across most industries preferred an income-linked incentive. There are a few exceptions. • On the other hand, the BFSI (~45%), oil and gas (~40%), and technology (~30%) industries preferred expenditure-linked incentives. Incentives sought for GICs 16% 13% 23% 48% Don't know/no comments Income linked with a sunset period Expenditure linked Income linked
  • 32. Would Union Budget 2021 accelerate the industry’s recovery? © 2021 Deloitte Touche Tohmatsu India LLP. 32 Thank you
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