Union Budget 2015 good enough for IT industry?

|February 28, 2015 0
Lets see what the industry experts' perspectives are on this year's budget and if their expectations were met

BANGALORE, INDIA: With the Union Budget laying the roadmap for the IT industry and startups, lets see what the industry experts’ perspectives are on this year’s budget and if their expectations were met.

Y Guru, chairman & managing director, Celkon Mobiles said, “From the industry perspective, reduction of the corporate tax from 30% to 25% is appreciated. GST implementation is another welcome move which will end taxation uncertainties in a lot of aspects. High allocation for infrastructure projects such as roadways and railways will give further boost to manufacturing. Reducing the CVD on certain goods in another area the industry is looking forward to, however more clarity is needed in terms of its implementation. Having said that; the budget missed considering the challenges faced by the telecom industry.”

Sanjay Rohatgi, vice president, India, Symantec, said, “Continuing on the direction set last year, this is an excellent budget focusing on the outcomes and not just the outlays- aligned with the flagship programs, namely Make in India, Digital India, Skill India and Swach Bharat. Technology is going to be a critical enabler whether it is for making GST operational; direct benefit transfers and cashless transactions; e-Biz portal or enabling booking of unreserved railway ticket through mobile phones for the masses. However, to ensure wider adoption of technology, it must be safe and secure to foster end-to-end trust. Overall, a pragmatic and progressive budget, indeed.”

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Suman Reddy, managing director, Pegasystems India, said, It looks like a mixed budget from the IT Industry perspective. While there has been a significant reduction in the Corporate Tax from 30% – 25% and of tax on Royalty from 25% to 10% that will benefit the industry; on the other hand the budget did not provide any clarity on the transfer pricing issue which the industry was awaiting. Having said that, the budget has given the right direction to the economy going forward, the 150 Cr corpus on making India world class IT hub will bring in a positive sentiment. Focus on Infrastructure, Skill development and Manufacturing will enhance economic growth in the long term. Public expenditure in terms of investment in Infrastructure has also increased. It is good to see the government taking initiatives for startups, particularly the setting aside of Rs 1000 crores to set up Self Employment and Talent Utilization SETU supporting incubation and startups. The special attention on incubators and technology led startups is welcome as these will help the industry move from a services led to products led industry.  The hike in expenditure on education by setting up premier institutions in states such as J&K, AP, Punjab, Bihar Karnataka etc and strengthening the primary, secondary and higher secondary education along with the increase in specific educational scholarships for students is will further support skill development in the country.”

Ramesh Loganathan, vice president and managing director progress software, president HYSEA Hyderabad Software Enterprises Association, said, “While there was nothing dramatic in the budget, it broadly seems to be a growth inducing one. The budget provided a decent balance of Social reforms and growth initiatives including Make in India.   Several small items seem like they may add up to have an impetus to make in India. The corporate tax reduction to 25% from 30% is straight away making more money available to the companies for investments and growth. The technical services tax reduction and reduction of duties on raw material import both should help the manufacturing sector. Streamlining the foreign investment process as well as the increased visa on arrival facility will hopefully also simplify external investments. Simultaneously, few measures seem in place to promote startups. While the details are unclear, the 150cr world class IT hub will hopefully encourage development of new technology and products. The 1000cr startup corpus, given the wording seems like will help setup and grow incubators and startup seeding.  An interesting clause is ‘mechanism for self employment to help with startups – SETU’.”

Debasis Chatterji, CEO, Netxcell Limited, said, It was a good budget for the It industry with an initial sum of Rs 150 Cr announced to create a world class IT hub to take advantage of our competitiveness. Further the reduction of Corporate tax and support to tech Start-ups with a mechanism for techno-financial incubation corpus of Rs 1000 crore; has given tremendous boost to the IT sector and startup ecosystem. Implementation of GST has been the greatest economic reform so far that will aid India to become business friendly. From the telecom industry perspective, there were a lot of expectations from the industry however the budget failed to offer any concrete initiatives for the sector.”

 Neeraj Jewalkar, founder and CEO, smartur.com, said, “The Budget in totality looks positive with enhanced focus on fast-tracking growth in Healthcare, IT, Infrastructure and Education sectors. The government has linked many initiatives to support and provide a boost to Make in India. Therefore giving additional attention to startups, the government has introduced  a corpus of Rs. 1,000 Cr to support technology led startups and incubation centers. This will further enhance the startup ecosystem in India. Another significant move is the government’s emphasis on making the country more business and investment friendly. Easing of regulations and focus on increased public sector investments in infrastructure will boost the business environment in the coming year.  IT Industry has received a good uplift in terms of reduction in the corporate taxation from 30% to 25% and also reduction of taxes on royalty being reduced from 25% to 10%. Moreover a 150 Cr corpus has been announced to make India a World Class IT hub; which should attract further investments in the sector. Strengthening of the education system through up gradation of primary, secondary and higher secondary education, enhanced funds allocation to the sector and introducing premier institutes in states like J&K, Punjab, AP, Karnataka etc will enable skill development across the country. The budget thus included a good pipeline of reforms which will be implemented in detail and bear fruits in the coming years.”

Pradeep Vajram, CEO, SmartPlay Technologies, said, “The skill labour development program proposed in the Union Budget 2015, presented by Honorable Finance Minister, Arun Jaitley, will provide an impetus to the ‘Make in India’ initiative. The fast paced technological advances demands high skilled labour and it has become a necessity to have skill training programmes for young India, which is the need of the hour. Additionally, it is extremely encouraging to see the government’s focus towards the start-up community in India. By implementing SETU (Self-Employment and Talent Utilisation), the government is promoting entrepreneurship driven by innovation in technology, which will take India to the next level of success.” 

Somshubhro Pal Choudhury, managing director, Analog Devices India (ADI): “The 2015 budget is well balanced and sustainable with a prudent mix of fiscal discipline and much needed investment across key sectors like infrastructure along with a well thought out safety net for the poor under a financial inclusive agenda.

The positive aspects that I see immediately apparent are the reduction in Corporate Tax to 25% in the next subsequent years, the #MakeInIndia initiatives with several corrections to the inverted duty structure and the national skill development mission for the tens of Millions of young Indians joining the workforce every year. Innovative schemes of monetizing Gold, preventing leakages and corruption with direct transfer and Digital India initiatives, the ultra-mega power projects for the commitment  of 24/7 power, support of the startup ecosystem, the scheme for the alternative energy development and the direction towards GST are the steps in the right direction.

What I would have liked to see more was incentivizing the companies to do more R&D and manufacturing from India.”

Safir Adeni President – TiE (The Indus Entrepreneurs) Hyderabad, said: We have mixed reactions to the Union Budget. It is encouraging that the government has laid emphasis on job creators by promoting entrepreneurship. However, so far there were talks of Rs. 10,000 allocation for startups so we don’t have a clarity whether in this budget the allocation of Rs 1000 crores under Self Employment and Talent Utilization (SETU) for the startups is in addition to the same or it is Rs. 1000 crore only now. Although the corporate taxes have gone down by 5%, the increase in service tax and surcharge will have negative impact on the startup ecosystem. Due to the change in the permanent base treatment, this could be a boost in Fund Manager startup space.”

 BVR Mohan Reddy, executive chairman Cyient Ltd. and vice chairman NASSCOM, said: Negatives/Misses: Increase in Service Tax rate, by 1.5 %, is disappointing. Further, with mounting backlog in service tax refunds, the Industry will be impacted. Angel tax continues – Fair market valuation applicable to angel investments and capital receipts taxed in start-ups. This problem is unaddressed in spite of the focus on entrepreneurship and start-ups. Duality in service tax and sales tax applicability to product companies not addressed.”

The budget by the Finance Minister, Mr. Arun Jaitley  is a bold and an assertive one. We are pleased to know that local businesses and budding entrepreneurs stand to make a mark globally through various schemes that will help them prosper. A number of steps have been announced to improve the ease of doing business; creation of Micro Units Development Refinance Agency (MUDRA) Bank,  with a corpus of Rs. 20,000 crore, and credit guarantee corpus of Rs. 3,000 crore is a positive step to encourage young, educated, skilled workers who aspire to become first generation entrepreneurs or expand their activities. With robust growth in the Digital India initiative announced last year, it is heartening to see that the Government wants to further expand it and increase the network connectivity to more rural areas. A progressive and investment focused budget overall from which we hope to see tremendous growth for the Indian economy,” said Anil Valluri, president, NetApp India & SAARC.

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