Industry bodies hail budget 2004-05

NEW DELHI: It seems the finance minister P Chidambaram has managed to please them all with his budget, at least that what the industry bodies-Nasscom, CII, MAIT and the COAI seem to convey through their initial immediate reaction.

The man who said 'Mai hoon na' a line picked up from a popular Hindi movie to silence the opposition during his budget speech, has got the requisite industry backing to address key issues, particularly the decision to up FDI investments caps in crucial segments such as telecom. There was also an overwhelming response to his decision to completely do away with the excise duty on PCs.

Welcoming the initiative taken by the minister Confederation of Indian Industry (CII) president, Sunil Kant Munjal said that the budget would drive demand and encourage investment that will benefit the corporate sector as a whole. "This is a budget with an eye on the big picture and presents a vision for growth and development. Increase in FDI cap in insurance, civil aviation and telecommunications is a welcome move, as these sectors required huge capital investment. Also establishing an Investment Commission as an apex body to streamline investment related guidelines would boost foreign investment in the country," he added.

Congratulating the minister for paying heed to the long pending PC vendor's demand of a zero duty excise regime, MAIT executive director Vinnie Mehta said, "Reduction in Excise duty from eight percent to zero on PCs is indeed a welcome step. This will have a positive impact on the sector and help abolish the grey market and make IT products from the organized sector price competitive. We believe that this will help deepen the existing market and improve IT penetration in the country."

He, however, added that a similar measure of zero excise duty for IT peripherals would have further benefited the industry and as consumers today prefer to buy everything as a package—PCs and peripherals together-rather than a stand-alone system. "Further, 100 percent depreciation on IT products would have given additional boost to IT consumption in the corporate sector," he added.

According to MAIT, among other positives, creation of National Manufacturing Competitive Council will get the manufacturing sector the much-needed attention. "The IT manufacturing industry is the world's largest and fastest growing industry and also the largest employment generator. We hope the Government will give due consideration to the sector as well. Further, the focus given to agriculture, education, and healthcare is encouraging. Deployment of IT and IT solutions can bring in significant efficiency and effectiveness to the said programs. Impetus to upgrading the technical education (ITI) will lead to better quality manpower for the sector," the MAIT press release said.

Echoing the same sentiments Cellular Operators Association of India (COAI) chairman, Dilip Modi said that the increase in FDI limit to 74 percent was a positive sign for the industry and will allow telecom players to raise fresh capital for the growth and development of telecom infrastructure. "Moving forward, these incentives by the government will help to increase the level of economic activity in the country that will be reflected through manufacturing in the domestic sector. Reduction in input costs is another welcome move and will enable the industry to extend affordable telecom solutions to the end consumers," he said.

However, with no sops or clarifications on issues related to taxation of the BPO industry, the mood at the IT industry's apex body was somewhat somber. "These are holding back more rapid growth and larger investment and employment in this industry. Also, a number of procedural issues continue to cloud the policy outlook in this industry," said a Nasscom press release.

Nasscom president Kiran Karnik, however, welcomed the government's initiatives on the education front. "Our talented youth is the biggest asset of the knowledge sector. It is imperative that educational institutes are provided with requisite support in terms of operational flexibility, tax incentives and related infrastructure," he said adding that the association hoped that the education cess levied in the current budget would be able to provide a fillip to the growth of educational institutions. "The upgradation of 500 ITIs over the next five years will also ensure adequate supply of talent pool for the technology sector. We welcome the intent to develop public private partnerships in this area," Karnik said.

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