Despite any hardcore mention of the benefits to lighting industry in the Union Budget 2016, business implications are in abundance as observed by the industry stakeholders
The Union Budget for 2016-17 came with much fanfare, as expected, meeting a little lot of expectations but with a host of future growth prospects. No wonder, a number of announcements go in favour of lighting industry too, which has got a reason to smile as quite a few major investment boosters have been lined-up including the one with 100% village electrification by the end of 2017-18 fiscal. Like this, all the proposals are targeted to meet the short-term goals that the government has setup for itself. Most of such initiatives are tending to improving infrastructure, of which, lighting is an inevitable part. Besides, there are quite a few pre-emptive pronouncements bringing further relief for the stakeholders across the sectors irrespective of industries.
This has been rightly observed by V P Mahendru, CMD, Eon Electric, who feels that the Union Budget 2016-17 has kept the momentum up, required for the growth and development of the country’s LED lighting industry. “The government has been actively implementing initiatives for the LED lighting sector which aim at replacing conventional light source with LEDs under Domestic Efficient Lighting Programme (DELP) and Streetlight National Programme (SLNP) for domestic and public spaces, respectively. Another initiative, called UJALA (Unnat Jyoti by Affordable LEDs for All), is bringing major upswing in the demand for LEDs,” he says adding that owing to all these in-time push being provided by the government, declining prices of LED lights are becoming a key factor in driving the growth of LED lighting industry in India.
According to Mahendru, keeping up pace with this trend, the Union Budget 2016 had a lot to offer for the LED lighting industry. “To begin with, the Indian Railways’ decision to replace all the existing lights with LEDs in next 2 to 3 years is expected to be a major booster for the LED lighting industry. All the 400 stations being planned to be developed with private participation are likely to be announced as ‘Green Stations’ with several environment-friendly measures like generation of solar energy, recycling of waste water, conversion of waste-to-energy and use of LED lights to be incorporated in the plan,” he adds anticipating that the move will help Railways in reducing energy consumption in non-traction area by 10-15% through installation of energy-efficient LED lights.
Going forward, exemption from service tax on construction of affordable houses up to 60 square metres under any scheme of the Central or State Government including PPP Schemes has been a humble push to the growing economy. Encouraging new home buyers, the Budget also entails a deduction for additional interest of Rs. 50,000 per annum for loans up to Rs. 35 lakh sanctioned in 2016-17 for those buying homes for the first-time, and where the cost of house does not exceed Rs. 50 lakh. These are all nothing but the accelerators for the burgeoning lighting industry which has very important role to play in the growth-ridden trajectory.
Appreciating this move, Dinesh Aggarwal, Joint Managing Director, Anchor Electricals Pvt. Ltd. says,“The removal of service tax for less than 60 sqm house and an additional exemption for housing loans up to Rs.35 lacs will help in catalysis for the housing infrastructure sector that has suffered low demand for over three years. The Government’s commitment on a stable taxation regime, aggressive outlay for infrastructure growth and skill development will ensure that foreign investors retain and grow their interest in India; as a market and as a manufacturing base.”
In fact, Aggarwal seemed excitement while expressing his gratitude to the master of all arts, the country’s Finance Minister. “This Budget has strongly addressed all my expectations – be it about ease of doing business or to creating IP or to providing support to small and medium manufacturers,” he avers adding that lowering of IT rate for small-sized companies followed by tax holiday and speedy registration for Startups will ensure development of the ancillary ecosystem and would encourage innovations, new technologies, profit-oriented business models. “Thus, overall the Budget truly stands in line with government’s thoughts last year. It combines very well a very strong and critical social objective with the fact that India should continue to be seen as the favoured destination for investment by ensuring that the macro indicators remain positive, governance of financial markets remain strong and the rural sector should be the focus of our economic growth.
Similar sentiments were revealed by the realtors whose expectations were soaring high. According to Ajay Nahar, MD, Nahar Projects and Partner, Nahar Group, with 100% deduction of profits of undertakings from housing projects, the housing industry will see a rise in demand. “India needs over 100 million houses in the near future which will help increase the demand for new homes especially the lower income group. Housing for all by 2022; is a great initiative as the urban areas and Tier II cities can now be easily accessible. This will help developers to build more houses and the reduced tax benefits will add to the benefits of new home buyers,” he says adding that this will also be a good move for individuals who opt for rental homes.
Going further, Nahar adds that buying capacity of the middle income, upper middle and even the HNIs will increase due to less tax burden and the exemption on home loans for first-time home buyers. “With regards to the boost in infrastructure, Rs 2,18,000 crore has been allotted for the construction of new roads and railways. This will see more flyovers and better roads and connectivity options. Developers can now look forward to building new homes in Tier II and III cities and far suburbs, which will increase the overall sentiment in the housing sector, which is a positive sign.”
States Arun Gupta, MD, NTL Group, “The budget presented has far reaching implications. We believe that the focus on infrastructure and investment, financial sector reforms, easing the process of doing business in India and financial prudence will have radical effects on the health of the Indian economy. Tax reforms to reduce compliances are a positive step for the businesses”.
Adding to this, Mahendru shares that increase in allocation towards infrastructure development by way of capital outlay on construction of Roads & Highways and illuminating them with LED Lights would boost the demand for LED-based lighting products for which the company is gearing up its production facilities. “Along with this, we believe that the setting up of Smart Cities will also gain momentum in time to come. This will further boost the requirement of a variety of additional energy-efficient equipment for both lighting as well as mechanical services, which will mean enhanced business for lighting industry. This is not the limit as the incentives for wages paid to new workmen and funding of their EPF by the government for three years would further boost employment and convenient availability of workmen,” he assures anticipating that tax reforms in the areas of direct taxes would reduce compliance burden.
While there would be some increase in cost of services because of increase in Service Tax but the same would be set off through increased demand and consequent production. Meanwhile, the introduction of Goods and Services Tax (GST) Bill could be a game changer for across the sectors without differentiating between the industries be it real estate, infrastructure, building products, or for that matter lighting. It is expected to address the problem of multiple taxation system thereby bringing in the much awaited transparency in financial transactions.
Amidst all these announcements and anticipations, one thing is aptly clear that no project, be it infrastructure, hospitality, roadways, railways, or housing is complete without the lighting. No wonder, such allocations and plan outlays will ultimately bring ‘Achchhe Din’ for the country’s lighting industry which was seemingly waiting for these from ages.
Budget 2016: Highlights
Total outlay for infrastructure Rs 2,21,246 crores in 2016/17
Tax proposals to provide relief to small taxpayers through rebates
Promoting Affordable Housing
