Industry News

Insights on Union Budget 2018

Rajesh Nath
Managing Director

There are three core sectors focused in this year’s budget, says Rajesh Nath, Managing Director, VDMA. Read on to know more…


The Union Budget has managed the appropriate mix of social and economic reform. It can be termed well balanced. This year’s budget has primarily focused on 3 sectors – agriculture and the rural economy, Infrastructure and health care besides benefits for senior citizens.

The slew of measures announced in the Budget for strengthening agriculture, including fixing the minimum support price (MSP) for kharif crops at 1.5 times the cost of production, if implemented well, could possibly push up the farm incomes in the long run — in line with doubling farmers income by 2022.

The government has also proposed to double the budget allocation to the food processing ministry to Rs. 1,400 crore for 2018-19 fiscal and set up institutions to finance agro-processing projects. Under the scheme, the funds are given as grant-in-aid for setting up of mega food parks, development of infrastructure for agro-processing clusters, integrated cold chain and value addition infrastructure, creation of backward and forward linkages among others.

The various measures announced in the Budget for infrastructure are quite positive for the sector. The focus on water supply in the AMRUT programme as well as higher spending on the Watershed Development Component of the Pradhan Mantri Krishi Sinchayee Yojana will help infrastructure players. Road developers are also set to benefit from the strong execution in projects and allocation to the Bharatmala programme. Work executed by the Border Roads Development Board and the allocation to the North East Road Sector Development Scheme will aid EPC players. The capex of Indian railways has been pegged at an increase of nearly 14 % from the previous year, thus the companies supplying equipment and technology to railways are set to gain.

The customs duty on certain components like engines, transmission, brakes and other parts has been increased to 15 % from 7.5 %, and on lithium ion batteries, used in electric and hybrid vehicles, has been raised from 10 % to 20 %, to promote Make in India. Further, the government’s move this year to cut corporate tax for companies whose turnover is Rs. 250 crore or less will help the small and mid size companies.

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