Budget 2013: IT Inc. happy for mfg, MSMEs & semicon

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BANGALORE, INDIA: Overall, the Union Budget 2013-14 presented by Finance Minister, P. Chidambaram, on Thursday, is deemed 'balanced' by the IT industry, despite the lack of any stand-out initiatives for the sector.


After the FM's budget speech, most of the industry welcomed a couple of proposals, in particular. Among the budgetary measures that drew their appreciation were the 15 per cent tax allowance for investments over Rs. 100 crore in the manufacturing sector and skills building for the youth, attracting FDI, and new initiatives for MSMEs and the semicon industry.

"The 15 per cent investment allowance on manufacturing investment should give a fillip to domestic manufacturing," said Asim Warsi, vice-president, Samsung Mobile.

"The exemption of 15 per cent in investments of more than Rs. 100 crore to set up plant and machinery should provide a huge leg-up to the manufacturing sector. The commitment to increase the availability of low cost funds to infrastructure sector is noteworthy," welcomed Pradeep Nair, managing director, India and SAARC, Autodesk.


According to Rajat Jain, managing director, Xerox India, "The 15 per cent tax allowance is among some of the important measures announced for promoting investment in the country."

Nair was particularly pleased with the emphasis on national skill development as well as the separate amount of Rs. 200 crore to fund technology for common man. "Reassurances around the innovative direct cash transfer scheme and allocation of Rs. 80,194 crore in 2013-14 for Ministry of Rural Development, along with measures to promote skill development amongst youth bode well," added Jain.

The focus on technology infusion in agriculture and provisions regarding MSMEs will spur the growth of the economy in the right direction, felt Jagdish Mahapatra, managing director, McAfee India & SAARC, who added that the budget was a realistic one hinged on growth and development-oriented expenditure.


"The incentives to semiconductor wafer fab manufacturing facilities, along with provisioning zero customs duty for plant and machinery, is quite positive," he further stated.

From a technology perspective, said N. Chandrasekaran, chief executive officer, Tata Consultancy Services, "Allowing funding for technology incubators located within academic institutions to qualify as CSR expenditure as per new Companies Act, would give a huge boost to entrepreneurs and start-ups and increase the engagement of the corporate sector and start-ups."

"From the perspective of the IT industry, the clarifications on taxation rules regarding development centers and safe harbor rules are very welcome as are measures to drive skill development, with a special focus on tier-II and tier-III towns."



Rajesh Janey, president, EMC India & SAARC, welcomed the government's focus on fiscal stimulus, education with an emphasis on skills building for the youth, attracting FDI and incentivizing the MSME industries. "We believe a lot of the key initiatives outlined will leverage technology at the core, whether banking norms compliance or ATM expansion or transforming post offices and the textile sector or rolling out Aadhaar-enabled payments for various government schemes, among others," he expressed confidence.

They, however, had their own disappointments and reservations on certain measures announced by the Finance Minister. "The increase in the excise duty on mobile phones will not have a positive impact on the mobile industry and should lead to an increase in prices for end consumers," asserted Warsi.


"The IT & electronics manufacturing industry was looking forward to budgetary support to the government's stated policy of promoting IT & electronics manufacturing in India. It currently attracts less tax to import than to manufacture locally," said Jaijit Bhattacharya, director, South Asia, Hewlett-Packard India Sales, and co-Chair, FICCI Electronics Hardware Committee.

"Key asks to mitigate this was to remove SAD on components and remove excise duty on seven key components. This has not been done in this budget. We hope these asks are accepted during the budget discussion process."

Mahapatra was hoping for the discontinuation of MAT on SEZs and apportionment more grants to ensure secure data access, which hasn't been considered. The other disappointing aspect he pointed out is the surcharge for MNCs in India that has increased from 2 to 5 per cent, if the taxable income exceeds Rs. 10 crore.


On the budget, market research firm Gartner's country manager for research in India, Partha Iyengar, said, "The big specific positives of the budget are that he has focused both in terms of the letter and spirit of the budget on the key planks of growth for India and health of every industry, including IT, which is infrastructure, education, skills development, and incentives for the growth of domestic manufacturing. Some of the other positive areas are support for entrepreneurship, the MSME sector, both in terms of financial and overall support."

Sanjay Dhawan, technology leader, PwC India, said, "Unexpectedly, the budget did not offer fresh incentives for the technology sector. However, proposals like modernization of the postal network, which includes post offices becoming part of the core banking solution and offer real-time banking services and the plan for national roll-out of Aadhaar-based schemes, like the Direct Benefit Transfer (DBT) scheme, will hopefully result in increased domestic IT spending."

They have spoke, so what is your view on the budget?

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