Overall the Union budget has been NEGATIVE for the aviation industry as the domestic air travel will cost more from the next financial year with the government raising service tax on it by Rs 50 and Rs 250 for domestic and international journeys respectively.

We expected a decline in the prices of ATF (Aviation Turbine Fuel) by bringing it under the regime of GST and making it uniform across the country. Proposal of fog prone equipment was also not considered in the proposed budget. However, there was relief to the Air India as the Finance Minister made a budgetary support of Rs 1,200 crore to the ailing national carrier as additional equity infusion. This would be the third tranche of equity for Air India, which received Rs 800 crore and Rs 1,200 crore respectively in the 2009-10 and 2010-11 budgets.

HOSPITALITY INDUSTRY-NEGATIVE

The Hospitality industry contributes more than 8.6% to our country’s GDP, despite that our Finance Minister did not came out with any positives for the sector, instead there was an added service tax which was levied on hotel accommodation , liquor and healthcare and making it costlier.

We expected that the hotel industry would be given higher depreciation allowances as the industry has to make heavy investments in renovation and up-gradation and demands for massive capital investment but there was no such grants were given to the concerned sector.

AUTOMOBILE INDUSTRY-POSITIVE

India’s automotive sector has some positive to take from the budget because Finance Minister proposed many encouraging moves for the promotion of green technology, as per our expectation. FM announced to set up a National Mission, apart from several incentives in the form of deduction in excise and custom duty, for Hybrid and Electric Vehicles to encourage manufacturing and selling of alternative fuel-based vehicles. At present EV sales are just accounted at less than 1% of the petrol two wheelers sold in the country, so this all proposed steps will help the industry to clock more numbers in this segment.

Another welcome move to benefit carmakers and auto component suppliers is the reduction of custom duty on raw steel which in turn will help to strengthening margins besides the excise duty remain intact on vehicles. Moreover, broader measures like increased focus on rural and infrastructure spending would support long term growth of the sector.