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India Equity Research Reports, IPO and Stock News
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LOGISTICS
BUDGET HIGHLIGHTS & IMPACT
n Central excise exemption on specified equipment used for preservation
of agriculture produce
Impact: Positive. To attract investment in cold-storage chain, capital investment
will be eligible for viability gap funding scheme of the Finance Ministry. It is
also proposed to recognize cold chains and post-harvest storage as an
infrastructure sub-sector. The FM has also extended full exemption from excise
duty on air-conditioning equipment and refrigeration panels used for cold
storage. We believe this move will be a positive for manufacturers of coldstorage
equipments like Blue Star and Voltas.
n Service tax on air travel raised by Rs 50
Impact: Neutral. The FM has proposed to raise the service tax on air travel
by Rs 50 in the case of domestic air travel and Rs 250 on international journeys
by economy class. It has also been proposed to tax travel by higher classes
on domestic sector at the standard rate of 10 per cent to bring it on par with
journeys by higher classes on international air travel. The increase in service
will be passed through to the customer.
n Tax free infrastructure bonds upto Rs 30 bn for investment in ports and
transportation infrastructure
Impact: Positive. In order to give a boost to infrastructure development in
railways, ports, housing and highways development, the FM has proposed to
allow tax free bonds of Rs 300 bn to be issued by various Government
undertakings in the year 2011-12. This includes Indian Railway Finance
Corporation Rs 100 bn, National Highway Authority of India Rs 100 bn, HUDCO
Rs 50 bn and Ports Rs 50 bn. The move is expected to improve logistics
infrastructure in the country.
n Progress on GST implementation
Impact: Positive. While no timeline has provided for shifting to GST, the FM
observed that decisions on the GST have to be taken in concert with the States
with whom the central government's discussions have made considerable
progress in the last four years. Areas of divergence have been narrowed. As
a step towards the roll-out of GST, it is proposed to introduce the Constitution
Amendment Bill in this session of Parliament. Work is also underway on drafting
of the model legislation for the Central and State GST. Among the other steps
that are being taken for the introduction of GST is the establishment of a strong
IT infrastructure.
Introduction of GST will lead to rationalization and simplification of the tax
structure at both the centre and state levels and there would be continuous
tax credit right from the producer to the final consumer level. This is overall
positive for the logistics industry as it would facilitate easier interstate movement
of goods and transfer of business from the unorganized to the organized sector,
thereby providing additional logistics opportunities.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
LOGISTICS
BUDGET HIGHLIGHTS & IMPACT
n Central excise exemption on specified equipment used for preservation
of agriculture produce
Impact: Positive. To attract investment in cold-storage chain, capital investment
will be eligible for viability gap funding scheme of the Finance Ministry. It is
also proposed to recognize cold chains and post-harvest storage as an
infrastructure sub-sector. The FM has also extended full exemption from excise
duty on air-conditioning equipment and refrigeration panels used for cold
storage. We believe this move will be a positive for manufacturers of coldstorage
equipments like Blue Star and Voltas.
n Service tax on air travel raised by Rs 50
Impact: Neutral. The FM has proposed to raise the service tax on air travel
by Rs 50 in the case of domestic air travel and Rs 250 on international journeys
by economy class. It has also been proposed to tax travel by higher classes
on domestic sector at the standard rate of 10 per cent to bring it on par with
journeys by higher classes on international air travel. The increase in service
will be passed through to the customer.
n Tax free infrastructure bonds upto Rs 30 bn for investment in ports and
transportation infrastructure
Impact: Positive. In order to give a boost to infrastructure development in
railways, ports, housing and highways development, the FM has proposed to
allow tax free bonds of Rs 300 bn to be issued by various Government
undertakings in the year 2011-12. This includes Indian Railway Finance
Corporation Rs 100 bn, National Highway Authority of India Rs 100 bn, HUDCO
Rs 50 bn and Ports Rs 50 bn. The move is expected to improve logistics
infrastructure in the country.
n Progress on GST implementation
Impact: Positive. While no timeline has provided for shifting to GST, the FM
observed that decisions on the GST have to be taken in concert with the States
with whom the central government's discussions have made considerable
progress in the last four years. Areas of divergence have been narrowed. As
a step towards the roll-out of GST, it is proposed to introduce the Constitution
Amendment Bill in this session of Parliament. Work is also underway on drafting
of the model legislation for the Central and State GST. Among the other steps
that are being taken for the introduction of GST is the establishment of a strong
IT infrastructure.
Introduction of GST will lead to rationalization and simplification of the tax
structure at both the centre and state levels and there would be continuous
tax credit right from the producer to the final consumer level. This is overall
positive for the logistics industry as it would facilitate easier interstate movement
of goods and transfer of business from the unorganized to the organized sector,
thereby providing additional logistics opportunities.
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