Easy online sales, smart cities, pat to start-ups- Budget good news for IT

BANGALORE, INDIA: The inaugural budget of Modi regime has been keenly awaited at a time when the country's economy needs a strong fillip to set the momentum for high-growth, while staying within the purview of fiscal prudence, as per an industry watcher from CeBIT India.

The new government's budget bodes well for Indian Industry as it encourages local manufacturing, entrepreneurship and transparent governance to create an investor friendly, stable tax regime with retrospective decisions scrutinized by a high level committee, feels Mehul Lanvers Shah, Managing Director, HMFI India, organisers of the big expo.

He opines that the move to enable easy online sales for local manufacturers is a positive step towards developing the sector, and look forward to further measures that will attract investments in the IT/electronics manufacturing arena where India remains much behind China in Global exports.

In the reckoning of Ravi Mahajan, Tax Partner - Technology practice, EY, initiatives such as smart cities, start up funding, virtual classrooms etc will provide several new opportunities to the Technology sector in India.

"Improved broadband facilities would help technology companies such as e-commerce, media, distance education, telecom etc to intensify their presence in rural areas and small cities."

He also seems happy to note that thrust on supporting small start-ups in the software sector would help companies operating in this sector in becoming more competitive internationally. Also, visa on arrival initiative would require substantial investments in hardware and software platforms to provide backbone to this initiative. In summary, e-initiatives taken up by the Government promise significant opportunity for the technology sector, he explained. 

Encouragement for start-ups has throbbed as a major pulse in today's Budget ripples, it turns out.

The focus on micro and small and medium sized businesses and their enablement/empowerment with various schemes is a huge positive and is likely to have positive impact on the IT industry as well as such companies get empowered to resort to technology, seconds Arup Roy, Research Director, Gartner India. "The orientation towards growth across sectors augurs well for the domestic IT industry however things more or less remain ‘status quo' from offshore or exports perspective as there is no change in the position there." 

The budget has been a particularly good one for the start-up ecosystem with the Finance Minister announcing a start-up fund of Rs. 10,000 crore and fund allocation worth Rs. 200 crore for young entrepreneurs, in addition to a program for start-up village entrepreneurship & incubation, as Shah pointed out too.

"Whilst a provision has been made for absolving start-up bankruptcies, a fund worth Rs. 200 crore has been allocated to stimulate start-up entrepreneurship as well. Urbanization and development of urban infrastructure through smart cities has also found significant mention and over Rs. 7000 crore is being allocated for the development of 100 smart cities across the country - this is a huge opportunity for the Indian IT industry to partner with the government in this initiative. Overall, the IT industry can rejoice at a budget that banks on technology intervention for development."

Roy from Gartner India concludes, "Overall I would view this budget to have a positive push to industries across the board and augurs well for IT industry as well. This budget focuses clearly on growth, development and job creation with particular focus on infusing growth in manufacturing and infrastructure sectors."

In short, from industry perspective, the policies that would have major positive impact on the domestic IT uptake are: ‘Digital India' program; "Good Governance"; and "one hundred smart cities" program.

Other industry implications can not be shrugged off here. Roy reminds that FDI cap increase in defense and insurance sector is a huge positive and has direct bearing on IT industry. This budget has also set aside funding for adding new top-notch educational institutions such as the IITs and IIMs in various cities, which is likely to have a long term impact on generating technical and management talent.

However one area that Roy laments - where we would have expected some concrete decision taken would be retrospective taxes and the position thereof. But overall, this is a balanced growth oriented budget with focus on accelerating on the fundamentals, he maintains.