The Budget arrives, and so does the wish-list

Digital India, duties, taxation and overall boost remain areas of concern and expectation

Pratima Harigunani
New Update

INDIA: The big day is just around the corner and from industry experts, watchers to players, everyone has some expectations and anticipation about it.


Partha Iyengar - VP & Gartner Fellow, Country Manager Research (India), Gartner tries to rein all that about the upcoming Union Budget 2016 though, reminding that as always, there are tremendous expectations of the budget and all the ‘magic’ it is supposed to unleash. "As always, we are likely to be disappointed at the lack of really big bang announcements and reforms. Part of that is the maturing process of the nation’s economy, where it is not necessary that ALL big bang reforms are announced at the time of the budget. India arguably remains one of the few countries in the world where the passing of the annual budget is such a mega event. In most countries it is a non-event that very few of the citizens even pay attention to!

As to some real wish-list here that revolves around the flagship ‘Digital India’ program launched by the government (as a slogan), he opines that there are some things that does the budget need to do. " Accelerate the ‘ease of doing business’ activity that has been going on for some time now.Create an investment regime and climate that incentivises successful start-ups to remain Indian enterprises as opposed to migrating to Singapore, US, Australia et al! Improve the IP protection climate. No country can become a technology super-power without very strong IP protection laws AND enforcement in place. We have a long way to go here. And, continue to focus on education reform. We are still in the situation where, anecdotally, only 25-30 per cent of our graduates are readily employable. This HAS to change and is not a sustainable path to getting a demographic dividend."

That's a sentiment that echoes. Shibu Paul, Regional Sales Director – India, ME and SEA, Array Networks feels that the various initiatives taken by the present government like Smart Cities, Digital India, Make in India, E-governance etc. have opened up new revenue opportunities and created a positive impact on our industry. "We are now expecting some more specific announcements from the government to incentivise both manufacturers and end consumers to actively engage them in these initiatives. There is an urgent need to develop infrastructure that can support the implementation of such projects on a large scale, particularly in rural areas. The programs announced for rural development have to be backed by tangible benefits.


He points out that the IT industry, in particular, has been facing challenges due to increase in tax burden and duties. "The pace of government projects has also remained painfully slow and at times we have to face unexpected cancellations and postponement which affects our business adversely. The timely implementation of government projects requires strict monitoring at a ministerial level. Apart from this, some immediate steps are needed to check Rupee-Dollar fluctuations as that can cause delay in purchase decisions, thereby affecting investor confidence.”

Digital India seems to be a recurring theme. "Greater support for Digital India initiatives and enhancing access to internet connectivity in rural India should be a priority to boost economic growth and income-generating activities which in turn will boost domestic spending. The government should also consider reducing excise duty on hardware so that better technology becomes more accessible to a wider market. This would be a huge enabler to the IT industry including us and help provide superior technology to a wider audience at more competitive rates.” feels Sunil Jose, Managing Director, Teradata India.

There are other angles to address here. “While India has embraced the new-age digital payments in a fairly decent pace particularly in the urban areas, the future potential of the services will depend a lot on the user-experience and assurance from a non-fraudulent perspective. The alarming rate of breaches and the increased vulnerability brought about by few players eager to score on the convenience front while over sighting the authentication process, calls for immediate attention. Authentication built over marketing proposition rather than security concerns is a cause for concern and the Union Budget should formulate a stringent process for players to adopt a long term approach rather a short-sighted strategy on attracting consumers.” Anurav Rane - Founder & CEO of reckons.


Srinivasan H R, Vice-Chairman & Managing Director, TAKE Solutions opines that the focus of this budget needs to be on employment generation and capital formation; two things that are necessary to kick-start t economy. "Job creation can only happen in the private and agricultural sectors. It is the function of adequate capital formation to fund growth and global expansion."

As to the IT industry implications, he reasons that the last two decades has seen very large job creation in the IT sector in India. "This industry has to now transfer emphasis from scale/arbitrage to IP led value play. For this, we need long term investments which can create the next wave of job creation and global presence. I expect this budget to deliver suitable incentives for IT product companies, especially those operating in the high-end domains of Life Sciences, Engineering Services and other niche capabilities."

From the side of Kumar Karpe, C.E.O., TechProcess Payment Services Ltd, the hope is around the Union Budget carrying forward the impetus offered to the adoption of smartphones by making it more affordable. "Today our debit cards are primarily used as ATM withdrawal cards just to give some figures in perspective. Withdrawals through ATM cards exceed Rs. 2,15,000 crores every month as against Rs. 15,000 crores at POS which constitutes to only 6% of the debit card usage. This is much required as it will trigger the digital banking ecosystem in general and peer-to-peer payments in particular. The new-age mobile payments will thus be able to penetrate even to the remotest of areas in the country enabling financial inclusion.”


The IT sector is facing a critical period and needs to step up by moving towards platforms and products. "It is therefore necessary to provide incentives for such development, and also for re-training and skill-building; this should include subsidies, tax credits as well as easy financing. Restoring tax benefits to SEZs – the primary users continue to be the IT sector. It is time that MAT exemption is granted to units in SEZs; also that the dividend distributed tax is exempted for such units. IT products are eligible for research and development tax credit under Sec 35(2AB). IT services are incurring expenditure when compared to products, in making platforms and process improvements. A similar benefit should be endowed for such expenditure too for the IT services sector".P. Venkatesh, Director – Product Division, Maveric Systems adds.

Suneet Singh Tuli, President & CEO, DataWind brings out the GST angle before the Budget run-up. “The Union Budget 2016 expects to aim at growth of the economy and to raise the country’s profile as an investment destination. Correcting the inverted duty structure was an important step to boost handset manufacturing here. We are hoping that it extends to laptops and computing devices as well in the upcoming Budget. In 2015, we saw ‘double digit growth’ for both handset and tablet manufacturing due to the favorable duty structure. We are hopeful that the government will make serious attempts to push for GST bill to simplify the current indirect tax structure by doing away with the multiplicity of taxes. We are hopeful of a common GST compliance which will be done by all kinds of businesses, whether manufacturers, service providers, traders etc. We hope that the GST rate is reasonable and in the range of 3-5 per cent.”

Overall, make a strong statement as regards 'stable' policies where continuity of direction is 'assured'. "A key step was taken with the taxation issue – this needs to be extended and the business community across the board needs to have comfort that there won’t be massive (sometimes draconian) reversal of direction of key policies." Partha sums up.

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