'Modi's first budget will have positive impact on IT industry': IDC

IDC welcomes the Union Budget as a positive step forward in the government’s efforts to revive the economy and promote economic growth. The emphasis on the infrastructure and manufacturing sectors is particularly welcome as these are foundational for a nation at India’s stage of economic growth.
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From a technology sector perspective, the budget has several proposals which are positive:

• The outlay of Rs 7060 crores on Smart Cities will not just push the frontier of urbanisation in India but also create a new set of markets for tech players across the industry spectrum. We estimate a minimum of Rs 2,000 crores flowing into the technology sector on the back of this initiative.

• The e-governance program to inter-link all ministries and departments is welcomed. India urgently needs to improve the efficiency of government functioning. While the details are yet to be made available, this initiative is likely to yield several hundred crores of revenue to the IT industry.

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• New employment and wealth creation opportunities will abound in the start up eco-system with the Rs 10,000 crore fund created to boost start ups and SMEs.

• Banking and Manufacturing are the two main sectors for the IT industry. The slew of measures announced to strengthen and expand both these sectors is welcome news and will encourage IT consumption, which together constitute 40 percent of the market, over the next 12-18 months. An addition of even 5 percent of IT spending growth here means a boost of Rs. 1000 Crores for industry.

• The duty reduction (from 4 percent to 0 percent) on imported PC components will give local electronics and computer manufacturing a boost; with the electronics import bill expected to exceed the oil import bill by 2025-2028, such measures are urgently needed. The net addition to the manufacturing base, job creation and cheaper PCs are all excellent outcomes of this budget proposal.

o However, the education cess on imported electronics, including PCs and Smartphones, will challenge consumption growth as it will increase street prices.

• The spread of the Internet to rural areas will greatly enhance the quality of life for the communities. In this context, we welcome the National Rural Internet and Technology Mission with the fund allocation of Rs 500 crores. Over time, this will boost both the IT and the ecommerce sectors.

There are a slew of proposals which will have a positive impact on the IT industry. It is a great start and we look forward to the government implement these proposals.

-- Jaideep Mehta, VP and General Manager, IDC South Asia