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The electrical engineering equipment industry, which was hoping for the announcement of positive fiscal measures in the budget in order to emerge from the ongoing crisis, is disappointed.
“The government has earmarked funds worth Rs 1 lakh crore for refinancing 60% of the bank loans for public private partnership projects (PPP) through the Indian Infrastructure Financial Corporation Limited (IIFCL) in the next 18 months. However, how much of this funding assistance will go towards the development of small and mid-sized engineering units and the power sector is still unclear,” said an Electrical and Electronics Manufacturers Association (IEEMA) spokesperson.
However, the IEEMA has applauded the government for announcing the continuation of reforms, abolition of the Fringe Benefit Tax (FBT) and proposing the introduction of GST.
The association has welcomed the extension of the scope of weighted deduction of 150% on expenditure incurred on in-house R&D to all manufacturing units. It believes that this measure will provide an impetus to develop the much-needed R&D base in the core electrical engineering industry.
“The Union budget 2009-10 has certain positives like increased allocation of funds for infrastructure and higher education as well as the extension of the subvention scheme and interest subsidy. However, we were expecting the government to announce more fiscal benefits for the electrical engineering sector, which posted low growth in the last financial year,” said N Dujari, Proprietor, Amco Electrical & Engineering Company, a mid-sized electrical engineering company in Jaipur.
The IEEMA has also urged the government to speed up the implementation of engineering and power sector reforms and asked it introduce schemes to attract greater investments into the sector.
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