Budget 2014: India Inc's expectations

Mumbai: Finance Minister Arun Jaitley on Thursday will present the general budget for the 2014-15 fiscal on Thursday, after the BJP won a landslide victory in May to form the first majority government of the country in three decades. India is also likely to cut gold import duty to 6 per cent to 10 per cent.

The budget is expected to unveil bold reforms in a bid to turn around an economy growing at decade-lows. But there won't be major changes to taxes, according to a Reuters survey.

NEW REFORMS EXPECTED, MAJOR INITIATIVES:

• Announcement of plans to cash in on India's soaring stock market by selling stakes in major companies to raise funds and bridge the gap between revenues and expenditure.
• Cutting giveaways on fuel and petroleum products to reduce India's $40 billion subsidy bill, which is a key reason for the country's wide fiscal deficit.

Here are measures that analysts and investors expect for key industrial sectors:

Autos:

• Rollout of a goods and service tax (GST) to help streamline and standardise the cost of selling cars
• Incentives for exports of vehicles, for free movement of vehicles between states and for getting dated cars off the road
• Support to promote and manufacture electric and hybrid vehicles

Financial Services:

• Having a roadmap to creation of a holding company for state-run banks
• Increase of ceiling on foreign direct investment (FDI) in insurance sector to 49 percent from 26 percent
• Tax exemption on long-term infrastructure bonds
• Increase in housing loan interest limit beyond 150,000 rupees for tax exemption
• Higher allocation for capital infusion in state-owned banks
• Tax incentives to encourage expansion of affordable housing

Healthcare:

• Tax incentives to spur investment in research and development
• Simpler tax norms, including rapid implementation of GST
• Increase tax exemption for setting up hospitals
• Infrastructure status along with tax benefits
• Revive clinical trials in India
• Double healthcare expenditure to 8 percent in next 5 years

Infrastructure:

• Accelerate dedicated plans for dedicated freight corridors
• Open more projects, particularly parts of the railway network, to foreign direct investment
• Set up a national fund for infrastructure projects, which could source funds from China or Japan
• Roadmap for attracting long-term debt for infrastructure projects

Metals and Mining:

• Address issues around mining regulations and adopt reforms for raw material security
• Reforms to reduce logistical bottlenecks in transport ofBSE -5.31 % metals and raw materials to and from mines
• Introduction of competitive auctions for allocation of minerals and raw materials
• Continuation of tax benefits on capital expenditure

Oil and gas:

• Reduction of subsidy bill through fuel price reforms
• Reintroduce import duty on crude oil
• Continuation of diesel price hikes and deregulation of diesel price

Power:

• Fast tracking of stalled projects, easier access to power plants and coal mines
• Deregulation of electricity prices
• Tax concessions and incentives to promote investment into renewable energy

Real estate:

• Streamlining of tax laws to enable listing of real estate investment trusts (REITs)
• Establishing a single window clearance for speedy project approvals
• Grant industry status to the sector, which would lower the risk weightage assigned to it by banks
• Increase in tax deduction benefit limit on home loan interest, which is currently capped at 150,000 rupees annually

Retail and consumer goods:

• Implementation of GST and tax reforms that will lead to an increase in personal disposable incomes
• Announcement of easing of rules on FDI in online retailing
• Increase in tax on cigarettes