Overall the Finance Minister has failed to announce any major policy decisions. With the elections looming ahead, political agenda has dominated the budget. Agriculture and pharma have proved to be the major beneficiaries. For the auto component industry, a duty cut on the finished product or a cut in import duties on aluminium and steel would have been effective in giving a thrust to this sector.

The overall reduction in interest rates in the country will surely boost the entire economy.

The areas ignored include labour reforms and power reforms.

Though the FM has introduced a new fund to offset transmission losses, it remains to be seen whether it will generate tangible benefits. Privatisation of distribution will be a critical reform in the power sector. But strong political commitment and sector reforms are needed to make this industry financially more viable and an attractive investment for private participators.

Indian automotive industry does not enjoy tax and fiscal incentives like in some of the other developing markets. Tax holidays such as those available to IT companies, additional tax incentives for new undertakings, creation of special auto-component parks and other VAT benefits will serve the long-term objective of making India a global manufacturing hub.

The weighted deduction of 150 per cent of the expenses incurred on scientific research should be extended for another 10 years after 2012.

Rishi Bagla, Joint Managing Director,

Bagla Group