India unveiled a fire-fighting budget on Monday that seeks to win back support among rural voters for Prime Minister Narendra Modi's government and sustain growth against a grim global backdrop - all without borrowing more.
The following sectors/companies will benefit or be hurt by the budget proposals:
WINNERS:
* AGRICULTURE
Jaitley said 359.84 billion rupees ($5.3 billion) would be set aside for farmers' welfare for the year starting April 2016. The government will also launch aid schemes intended to help double farmers' incomes by 2022.
Jaitley also raised the agricultural credit target for 2016/17 to a record 9 trillion rupees, amid rising rural distress after a series of droughts in the country.
Companies such as Jain Irrigation (JAIR.NS), Mahindra and Mahindra (MAHM.NS), Monstanto India (MNSN.NS) that supply agricultural equipment and seeds are likely to benefit.
* ROADS AND INFRASTRUCTURE
Jaitley plans to allocate 550 billion rupees for developing roads and highways. Capital expenditure on development of roads, highways and railways has been set at 2.18 trillion rupees for the year.
The higher infrastructure spending bodes well for companies such as IRB Infrastructure Developers (IRBI.NS), Larsen and Toubro Ltd (LART.NS) and Gammon Infrastructure Projects Ltd (GAIN.NS).
* NEW MANUFACTURING COS
New manufacturing companies incorporated on or after March 1, 2016 will be given an option to be taxed at a reduced rate of 25 percent plus surcharge and cess, provided they do not claim profit-linked or investment-linked deductions and do not use the investment allowance and accelerated depreciation.
* REAL ESTATE
Dividends from a special purpose vehicle to a Real Estate Investment Trust (REIT) and an Infrastructure Investment Trust (InvIT) will not be subjected to the Dividend Distribution Tax, the budget said, resolving a major hurdle for listing of REITs.
That would help companies, including DLF Ltd (DLF.NS), Prestige Estates Projects Ltd (PREG.NS), and Sobha Ltd (SOBH.NS), which have been waiting to list REITs.
Jaitley's plans to provide tax incentives for affordable housing are likely to benefit builders of low-cost homes, including Mahindra Lifespace Developers (MALD.NS) and Housing Development and Infrastructure Ltd (HDIL.NS).
* ASSET RECONSTRUCTION COMPANIES
The government said it would allow so-called sponsors of asset reconstruction companies (ARCs), which buy bad loans from banks, to own 100 percent of the company. Foreign investors can fully own Indian ARCs without having to seek prior approval from the government.
The moves will help ARCs including Edelweiss ARC, JM Financial ARC and ARCIL raise more capital.
LOSERS:
* CARS
The budget proposed an infrastructure cess of 1 pct on small petrol, LPG, CNG cars, of 2.5 pct on diesel cars of certain capacity, and of 4 pct on other higher engine capacity vehicles and SUVs.
The budget also called for tax to be deducted at source at the rate of 1 percent for purchases of luxury cars exceeding a price of 1 million rupees.
India's largest automobile maker Maruti Suzuki Ltd (MRTI.NS) and SUV-makers Mahindra and Mahindra Ltd (MAHM.NS) and Tata Motors (TAMO.NS) are likely to be hurt.
* RETAIL and TEXTILE
Factory gate duty on readymade garments with a retail price of 1,000 rupees or more has been raised to 2 percent without input tax credit, or 12.5 percent with input tax credit.
Apparel retailers such as Aditya Birla Nuvo (ABRL.NS), Future Retail (FURE.NS), and Shopper's Stop (SHOP.NS) along with textile manufacturers such as Arvind Ltd (ARVN.NS) are likely to be hurt.
* TOBACCO
Excise duties on various tobacco products have been raised by about 10 percent to 15 percent. Cigarettte makers such as ITC Ltd (ITC.NS) and VST Industries (VSTI.NS) are likely to be affected.
* OIL EXPLORERS
Finance Minister Arun Jaitley in his budget changed the so-called Oil Industries Development Cess on locally produced crude oil from 4,500 rupees per tonne to 20 pct of the value of the commodity. Industry had however expected a much lower tax rate, traders said. This affects companies such as Oil and Natural Gas Corp (ONGC.NS), Cairn India (CAIL.NS) and Oil India Ltd (OILI.NS).
($1 = 68.4250 Indian rupees)
The following sectors/companies will benefit or be hurt by the budget proposals:
WINNERS:
* AGRICULTURE
Jaitley said 359.84 billion rupees ($5.3 billion) would be set aside for farmers' welfare for the year starting April 2016. The government will also launch aid schemes intended to help double farmers' incomes by 2022.
Jaitley also raised the agricultural credit target for 2016/17 to a record 9 trillion rupees, amid rising rural distress after a series of droughts in the country.
Companies such as Jain Irrigation (JAIR.NS), Mahindra and Mahindra (MAHM.NS), Monstanto India (MNSN.NS) that supply agricultural equipment and seeds are likely to benefit.
* ROADS AND INFRASTRUCTURE
Jaitley plans to allocate 550 billion rupees for developing roads and highways. Capital expenditure on development of roads, highways and railways has been set at 2.18 trillion rupees for the year.
The higher infrastructure spending bodes well for companies such as IRB Infrastructure Developers (IRBI.NS), Larsen and Toubro Ltd (LART.NS) and Gammon Infrastructure Projects Ltd (GAIN.NS).
* NEW MANUFACTURING COS
New manufacturing companies incorporated on or after March 1, 2016 will be given an option to be taxed at a reduced rate of 25 percent plus surcharge and cess, provided they do not claim profit-linked or investment-linked deductions and do not use the investment allowance and accelerated depreciation.
* REAL ESTATE
Dividends from a special purpose vehicle to a Real Estate Investment Trust (REIT) and an Infrastructure Investment Trust (InvIT) will not be subjected to the Dividend Distribution Tax, the budget said, resolving a major hurdle for listing of REITs.
That would help companies, including DLF Ltd (DLF.NS), Prestige Estates Projects Ltd (PREG.NS), and Sobha Ltd (SOBH.NS), which have been waiting to list REITs.
Jaitley's plans to provide tax incentives for affordable housing are likely to benefit builders of low-cost homes, including Mahindra Lifespace Developers (MALD.NS) and Housing Development and Infrastructure Ltd (HDIL.NS).
* ASSET RECONSTRUCTION COMPANIES
The government said it would allow so-called sponsors of asset reconstruction companies (ARCs), which buy bad loans from banks, to own 100 percent of the company. Foreign investors can fully own Indian ARCs without having to seek prior approval from the government.
The moves will help ARCs including Edelweiss ARC, JM Financial ARC and ARCIL raise more capital.
LOSERS:
* CARS
The budget proposed an infrastructure cess of 1 pct on small petrol, LPG, CNG cars, of 2.5 pct on diesel cars of certain capacity, and of 4 pct on other higher engine capacity vehicles and SUVs.
The budget also called for tax to be deducted at source at the rate of 1 percent for purchases of luxury cars exceeding a price of 1 million rupees.
India's largest automobile maker Maruti Suzuki Ltd (MRTI.NS) and SUV-makers Mahindra and Mahindra Ltd (MAHM.NS) and Tata Motors (TAMO.NS) are likely to be hurt.
* RETAIL and TEXTILE
Factory gate duty on readymade garments with a retail price of 1,000 rupees or more has been raised to 2 percent without input tax credit, or 12.5 percent with input tax credit.
Apparel retailers such as Aditya Birla Nuvo (ABRL.NS), Future Retail (FURE.NS), and Shopper's Stop (SHOP.NS) along with textile manufacturers such as Arvind Ltd (ARVN.NS) are likely to be hurt.
* TOBACCO
Excise duties on various tobacco products have been raised by about 10 percent to 15 percent. Cigarettte makers such as ITC Ltd (ITC.NS) and VST Industries (VSTI.NS) are likely to be affected.
* OIL EXPLORERS
Finance Minister Arun Jaitley in his budget changed the so-called Oil Industries Development Cess on locally produced crude oil from 4,500 rupees per tonne to 20 pct of the value of the commodity. Industry had however expected a much lower tax rate, traders said. This affects companies such as Oil and Natural Gas Corp (ONGC.NS), Cairn India (CAIL.NS) and Oil India Ltd (OILI.NS).
($1 = 68.4250 Indian rupees)
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