Finance minister P. Chidambaram’s proposal of a cut in excise duty for small cars left the top three Indian car manufacturers smiling, while other MNCs were left complaining of a wider cross-section of cars to be brought under the duty benefit regime.

Reacting to the duty cut from 24 per cent to 16 per cent, Maruti Udyog Ltd and Hyundai Motors India slashed prices for cars while Tata Motors said prices will be cut from March 1 and the finer details were being worked out.

As the industry had been pitching for a moderate excise duty regime, top industry players as expected were bullish on the growth of the car sector in India and immediately the markets took a liking to the FM’s announcement. Shares in Tata Motors rose nearly 4 per cent to an all-time high of Rs 816 whereas Maruti was up 6 per cent to a record Rs 834.20.

Hyundai Motors India president B.V.R. Subbu told this newspaper from Chennai, "The Budget will augur well for the auto sector. The sector has arrived but needs to do more on quality fronts."

According to Mr Subbu, any company which exports 100,000 cars has attained global cost competency levels and Hyundai alongwith some of its competition have surpassed that figure. On the prospects of India emerging a hub for small car manufacturing, Mr Subbu added, "The necessary conditions exist right now for India turning out as a small car hub but some impediments still exist such as the highhandedness of ports and roads to name a few."

The Union Budget’s focus on tourism with financial commitment to developing 50 villages with handicraft competence close to tourist circuits, has been welcomed by the tourism sector in Goa."The lifestyle in village and rural India has tremendous marketability among western tourists, 80 per cent of whom take cultural tours," says Hotelier Ralph de Souza, welcoming the Budget proposal.

Goa must make a pitch to see that some of the 50 village projects are developed here, says Goa chamber of commerce and industry president Nitin Kuncolienkar.The state also hopes to attract some of the Centre’s Budget proposals for the 15 integrated area tourist destination developments proposed.

After a mid-nineties investment boom plateaued with the end of Central tax exemptions, the state is hoping to bounce back by 2007. Losing out to states like Himachal Pradesh since 2000, Goa experienced capital flight, with HP wooing many investors with its special package that ends by 2007.

"We will get back our opportunity in 2007 because of the sunset clause. By then we should be prepared to woo back investors, attracting them not by tax cuts but because of superior infrastructure," said Mr Kuncolienkar.Representatives of Goa’s export oriented iron ore mining industry though were not enthused by the increased service tax on export items.

While the finance minister’s speech admitted the mining sector had not done well, there did not seem to be much proposed to rectify this, said a representative of the Goa Mineral Ore Exporting Association.Infrastructure, logistics and increased costs due to environmental legislations are a main drag on the industry, they said.

"In this respect, Budget 2006 with its emphasis on infrastructure — on power, road transport, maritime development, etc. will have a positive affect on the mining industry since exports of minerals require strong infrastructure" GMOEA executive S. Sridhar told this newspaper.

The widening of the service tax net appears to have shocked, awed and confused the corporate sector in the country. Among the additional services now included are ATM operations.

While the proposals pertaining to the banking vertical have been appreciated by bankers, there are clearly some details whose implications would need to be carefully studied in the coming days, said industry experts. IndusInd Bank executive vice-president Suresh Pai said, "The proposal to introduce tax on ATM transactions might discourage the habit of ATM usage and may compel depositors to go the banks to draw small amounts of cash. When more details are available, the exact implications will be known."

A State Bank of India official said that they would look at the provisions in the Budget in detail and study the possible implications before commenting on the issue of tax on ATM services.

Mr Narasimha Nayak, chief financial officer, Calsoft said, "There is a blow in the hike of service tax rates to 12 per cent and addition of many services including air travel of certain categories. The fine print is still awaited on the service tax proposals.