This issue focuses on our expectations of India’s 2012 budget. The Indian economy is finally showing signs of a mild upturn through positive performance on key economic indicators. Inflation has plummeted to a two year low, India’s December performance on the Index of Industrial Production (IIP) has increased by 5.9 percent, mostly led by manufacturing and electricity. Against this backdrop, we look at key sectors and outline some of the key issues that we hope will be included in the budget.
Media & Entertainment
This sector is projected to grow at a compound annual growth rate of 14 percent to reach INR 1,275 billion by 2015 on the back of positive industry sentiment and growing media consumption. Key issues might include:
- Carriage fees
- Uplinking Charges paid by Channel
- Sale of satellite rights on cost basis for loss making films
- Discount by DTH operators
- Rationalization of Tax Structure
Pharmaceuticals
The Indian Pharma industry is likely to lead the manufacturing sector with Research and Development ("R&D") playing an important role in the growth of Pharma business. The issues in the budget may include:
Private Equity
Industry estimates suggest that over 1,800 Indian companies have accessed growth capital from VC/PE funds over the period 2004-2011. Key issues may include:
- Tax Pass-Through for VC/PE Investments
- Administrative reforms in respect of claiming credit for taxes paid/deducted at source
- Safe Harbour provisions for offshore funds managed from India
- Income characterization – Capital gains vs. Business income
Transportation & Logistics:
In addition to two pending items - roll out of Goods and Services Tax and FDI in multi-brand retail – the following are some of the critical areas that would provide much needed impetus to the sector:
- Regulatory decision making
- Infrastructure status
- Coastal shipping and inland waterways