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29 November 2023

NRI pros feel neglected by India budget

The GCC states accounted for nearly a third of total remittances into India and Indians formed 40 per cent of the total GCC population. (EB FILE)

By VM Sathish

The Indian budget announced on Friday by Finance Minister Pranab Mukherjee has evoked mixed reactions from the Indian business community in the UAE.

While the economic survey presented the day before the budget cautioned that the impact of the global economic slowdown in the UAE would have on India's bilateral trade and remittances from the region, the budget did not contain any specific measures for non-resident Indians (NRIs).

The survey said the UAE accounted for 10 per cent of India's total trade of $490 billion (Dh1.79 trillion) in 2008-09. Imports from the region reached $23.79bn while exports were at $24.47bn. The GCC states accounted for nearly a third of total remittances into India and Indians formed 40 per cent of the total GCC population.

The inflationary budget sparked an immediate increase in the prices of diesel and petrol in India and is already putting pressure on food prices. The resultant high cost of living could force Indian expatriates in the UAE to remit more money home to support their families.

Customs and excise duties on crude oil, petrol and diesel have been increased. The basic excise duty on most items went up from eight to 10 per cent, which will have a compounding impact on prices. The cost of cement, steel and plastics are expected to go up, leading to higher prices of white goods and cars.

Plans to boost infrastructure spending and road building and establish a Mumbai-Delhi industrial corridor are being keenly watched by NRI and UAE investors. NRIs building or planning to build new houses will be adversely affected as prices of cement, steel and other raw materials will rise as a result of the industry-friendly budget. The proposal to increase excise duty to 10 per cent and reintroduce duty on petroleum products caused an uproar in the Indian parliament, and the timing of the petrol price hike during a period of high food inflation has been widely criticised. The introduction of more indirect taxes will leave ordinary people with less purchasing power, but income tax changes will increase the purchasing power of the middle class.

Yusuffali MA, Managing Director of Emke Group and Director of Abu Dhabi Chamber of Commerce and Industry, said the budget did not support NRIs.

"What surprises me most is the ignorance of NRIs about the Union Budget. There is absolutely no mention of NRIs anywhere, which is surprising since the role of NRIs has been highly praised by both the Indian president and prime minister recently. I hope the government does some soul-searching and comes out with welfare schemes for NRIs soon."

Sajith Kumar PK, CEO of JRJ International, said the Indian rupee was likely to appreciate, adversely affecting NRIs earning in UAE dirhams. India's stock markets shot up sharply after the budget was announced and cement and auto stocks, in particular, rose due to the industry-friendly measures.

Kamal Vachani, Executive Director of Al Maya Group, said income tax changes would put more money in the hands of Indian consumers. Vachani, Regional Director of Electronics and Software Exports Council of India, welcomed the concession concerning interest payments granted to exporters under the FCPC scheme. He said the budget had also simplified taxation and there would be more demand for consumer goods.

KV Shamsudeen, Director of Indian brokerage firm, Barjeel Jeojith, said: "The Indian finance minister has totally neglected NRIs – we are now non-required Indians. If we do not react immediately and the proposed direct tax code is passed it will hit NRIs. The minister has decided to collect more direct taxes and corporate tax even after extending the highest threshold limit of 30 per cent tax."

He said the budget had increased allocations of credit for agriculture, health insurance, education and rural infrastructure. "It will generate more job opportunities and boost farmers' incomes. The minister has realised that for overall development of the country rural India must have quality of life."

Raju Menon , Chairman and Group Managing Partner, Morison Menon, said: "There was a mention about investigating foreign wealth of residents who have evaded taxes. The finance minister should offer an opportunity to declare undisclosed wealth by providing a lower rate of tax, say of 20 per cent flat, without any penalty and a condition that 50 per cent of of this is invested in infrastructure projects.

Abbas Ali Mirza, Member, Indian Business and Professional Council said it was a "responsible budget with not many negative surprises which delighted Indian stock markets. Given the global economic downturn any boost to investor confidence is a move in the right direction".


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