India's financial markets are betting the Union Budget will further open up sectors such as banking and telecommunications to foreign investment.

Other measures expected in the 2003-04 (April-March) Budget, to be presented to Parliament by Finance Minister Jaswant Singh at 1100 IST on Friday, include lower taxes and simplifying complex procedures.

Following are some of the expectations based on a Reuters survey of analysts, traders and industry observers:

Banking

A hike in the cap on foreign investments from 20 per cent for State Bank of India, and from 24 per cent for other state-run banks.

Removal of a 49 per cent ceiling on foreign direct investments in private banks. The government has said in the past that it intends to lower its stake in state-owned banks to 33 per cent from more than 50 per cent.

Tax breaks for writing off bad loans which totalled Rs 700 billion ($14.7 billion) at end-March 2002 for the industry.

Software services

Unlikely to revoke the reduced tax holiday for software exports, which was cut to 90 per cent from 100 per cent of export profit for units in software technology parks, but the industry should be happy if status quo is maintained.

The lower exemption, announced in the last Budget, had jolted the industry not so much by the impact it had on revenue but as a clawback on a promise.

Telecoms

An increase in the FDI limit to 74 per cent from 49 per cent.

Autos

Excise duty on cars and utility vehicles may be reduced to 28 per cent from 32 per cent, but some analysts say the cash-strapped government may not lower the levy.

No changes expected in the excise duty structure on other vehicles such as motorcycles, scooters, trucks and tractors, as at 16 per cent they are in line with the tax panel recommendations.

Consumer non-durables

Levies unlikely to be touched for most categories except for an expected hike in excise duty on cigarettes.

A reduction in corporate tax will benefit fast moving consumer goods companies such as Hindustan Lever Ltd.

Cement

Expectations that investments in infrastructure and tax sops for housing, two sectors that drive demand for the industry, will be kept.

Capital markets

The government is likely to waive taxes on dividends, which are paid from post-tax earnings. Some analysts also expect the government to remove a 10 per cent tax on long-term capital gains.

Commodities

Basic import duty on crude palm oil may be cut by 10 percentage points to 55 per cent to help consumers prices and boost refining by Indian units. Prices in India, the world's largest importer of edible oils, have soared 35 to 40 per cent from a year earlier.

Agriculture Minister Ajit Singh said last week the government would examine the difference in customs duty between CPO and refined palm oil which attracts a levy of 85 per cent.