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Union Budget 2011-12: Impact on Infrastructure sector
In the Union Budget 2012 the government has proposed the following measures in as far they relate to the infrastructure
sector
• Overall planned allocation for Infra increased by 23% to Rs2.14 tn.
• Tax free bonds of Rs300bn to be issued by government undertakings for infra development proposed.
• IIFCL’s cumulative disbursement target increased to Rs250 bn by March 2012 from Rs200 bn by March 2011
and Rs 60 bn in FY10.
• Power equipment manufacturers exempted from paying excise duty on equipments supplied for Mega/Ultra
Mega power projects in line with exemption on paying CVD for imported equipment. Positive for domestic
power equipment manufactures like BHEL and L&T.
• FII limit to invest in corporate bonds with minimum 5 year residual maturity period in the infrastructure sector
raised by $20 bn to $25 bn (overall limit raised to $ 40 bn). The move could be counted as neutral as this
might help reduce the cost of funds for infra companies but FIIs investment in bonds of infrastructure companies
with 3 year lock is already less.
• Additional Tax benefit for retail individuals on investments of up to Rs20,000 in qualified infra bonds continued
for one more year.
• To create additional Infra-Debt Funds, this would benefit all construction companies.
• Allocation for Bharat Nirman increased by Rs100bn to Rs580bn.
• Tax holiday for SEZ’s discontinued; MAT is now applicable to SEZ developers and units in SEZ – negative for
SEZ developers like Mundra Port and utilities operating in SEZ locations like Adani Power and KSK.
• Section 80IA benefits continued till 31st March 2012. Positive for all infra & Power companies.
• Investment in Fertilizer and Cold Storage chains to get Infrastructure status. This would encourage more investment
in both the sectors, hence would be beneficial for Fertilizer companies as well as cold storage
equipment manufacturers like ISL, Netafim, Finolex Plasson, Nagarjuna Fertilizers & Chemicals, Premier
Irrigation, Adrite, NCMSL and Jain Irrigation Systems
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Union Budget 2011-12: Impact on Infrastructure sector
In the Union Budget 2012 the government has proposed the following measures in as far they relate to the infrastructure
sector
• Overall planned allocation for Infra increased by 23% to Rs2.14 tn.
• Tax free bonds of Rs300bn to be issued by government undertakings for infra development proposed.
• IIFCL’s cumulative disbursement target increased to Rs250 bn by March 2012 from Rs200 bn by March 2011
and Rs 60 bn in FY10.
• Power equipment manufacturers exempted from paying excise duty on equipments supplied for Mega/Ultra
Mega power projects in line with exemption on paying CVD for imported equipment. Positive for domestic
power equipment manufactures like BHEL and L&T.
• FII limit to invest in corporate bonds with minimum 5 year residual maturity period in the infrastructure sector
raised by $20 bn to $25 bn (overall limit raised to $ 40 bn). The move could be counted as neutral as this
might help reduce the cost of funds for infra companies but FIIs investment in bonds of infrastructure companies
with 3 year lock is already less.
• Additional Tax benefit for retail individuals on investments of up to Rs20,000 in qualified infra bonds continued
for one more year.
• To create additional Infra-Debt Funds, this would benefit all construction companies.
• Allocation for Bharat Nirman increased by Rs100bn to Rs580bn.
• Tax holiday for SEZ’s discontinued; MAT is now applicable to SEZ developers and units in SEZ – negative for
SEZ developers like Mundra Port and utilities operating in SEZ locations like Adani Power and KSK.
• Section 80IA benefits continued till 31st March 2012. Positive for all infra & Power companies.
• Investment in Fertilizer and Cold Storage chains to get Infrastructure status. This would encourage more investment
in both the sectors, hence would be beneficial for Fertilizer companies as well as cold storage
equipment manufacturers like ISL, Netafim, Finolex Plasson, Nagarjuna Fertilizers & Chemicals, Premier
Irrigation, Adrite, NCMSL and Jain Irrigation Systems
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