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Budget 2013 - Capital Goods

Tuesday 19 March 2013

Budget 2013 is green for the sector and green for environment.

With increased investment allowance of 15% for manufacturing companies, decision to continue Technology Upgradation Fund Scheme in the 12th plan with an investment target of Rs 1.5 trillion and increase in the Defence CAPEX by up to 11%, the Budget this year is more likely to give thrust to industrial CAPEX and benefit capital goods sector.

Capital expenditure on defence for 2013-14 has been raised by 11% to Rs.867 bn. The increase in planned CAPEX on defence is positive and should translate into increase in orders for related companies.

The Budget has also finely balanced growth with responsibility by providing meaningful allocations to areas like renewable energy, safe drinking water and sanitation. With increased allocations to environment friendly vehicles, especially in hilly regions and providing low interest bearing funds to National Clean Energy Fund (NCEF) to IREDA (Indian Renewable Energy Development Agency), the Government aims at providing thrust to long term sustainable energy sources.

So who wins this year?

While the sector stands to win with the added capital infusion and increase in the likely business flows, we see a definite thrust on sustainability with the focus on renewable energy. This may indicate that these sectors having attention and validation, with a prospect of more friendly policies in the future enabling them to perform better and faster.

Want the stalwart of the industry analyze the budget for you? Click here.

Looking to invest in the Capital Goods sector? Click here to open an account with Kotak Securities.

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