The Modi-led Government will present its first full Union Budget on February 28. With the promise that the new government would put technology in the forefront, the Indian IT industry has pinned hopes on the Modi government to push reforms and policies that will bring stability to the sector and maximize growth.
Software lobby NASSCOM has shared its budget recommendations highlighting aspects that can promote a growth oriented business environment for existing players, innovation driven start-ups and SMEs in the Indian ICT sector. The IT industry body has asked the government to address regulatory and tax challenges for technology startups and SMEs, like difficulties in access to funding for low asset based firms; investor difficulties related to regulations and taxations discouraging investors; and ambiguous software product taxation and implementation issues. Read NASSCOM’s detailed Pre-Budget recommendations here.
India's semiconductor industry India Electronics & Semiconductor Association (IESA) bats for an ‘Electronics Commission’ in India. It has urged the government to set up Electronic Regulatory Commission (with industry representative) similar to the Telecom Regulatory Commission in India which will act as a One Stop Shop for implementation of policies, regulations, approvals, resolving issues, etc for the electronics companies in India; and to provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition. Read IESA’s detailed Pre-Budget recommendations here.
IT hardware body MAIT has sent a letter to the Prime Minister with top four recommendations covering inverted duty structure, tariff and duty anomalies, providing impetus to ICT hardware imports and developing a robust manufacturing eco-system. Click here to see MAIT’s wish list.
Dun & Bradstreet Technologies and Data Services said Finance Minister should look at rationalization of taxes to put more money in peoples’ hands to improve customer demand, while clearly spelling out the fiscal incentives for its ‘Make in India’ program with special thrust on Micro, Small and Medium Enterprises (MSME) that encourages manufacturing rather than importing. Government also needs to take forward the Goods and Services Tax (GST) bill by providing more clarity on states’ allocation and implementation roadmap to create a single market throughout India. For full text click here.
KPMG India: Initiatives like ‘Digital India’ can be a success, only if the Government works in sync with technology companies for effective implementation of the programme. Similarly, to promote the ‘Make in India’ campaign, appropriate fiscal incentives for adoption of IT infrastructure in manufacturing could be considered which could also create opportunities for the IT sector.E-commerce and start-ups are more recent entrants to this industry which are looking for support from the Government to contribute to the growth of India. Read KPMG India’s Pre-Budget recommendations here.
Gartner: The biggest expectations for the IT industry will be to put teeth behind the two slogans of ‘Digital India’ and ‘Make in India’. A manufacturing revival in an IT savvy India would be a tremendous multiplier for the Indian IT industry, unlike in China, where manufacturing took off without too much IT support, and China is only now (last 2-3 years) starting to focus on IT as a white-collar productivity effort. This can be a game changer for India in the inevitable India vs China comparisons and a huge boost for Indian competitiveness on the global landscape. Read full Pre-Budget quote from Gartner.
Greyhound Research: While the government has floated a bill for common goods and service tax (GST) across the country last month, contemplations appear with respect to various aspect of GST design including price and threshold exemptions. Since the rules are yet to be released in the public, the industry is also unclear whether the tax is to be levied based on the state where a company branch is located or where its headquarters are based. Read full text here.
Acer India: Stability in policy will enable vendors to take key medium to long term investment decisions and position India as a key IT hub for exports, given its strategic locational advantage addressing neighboring growing markets such as Singapore, Taiwan and Hong Kong. We hope the Government could look into simplifying the tax structure especially the entry loads/octroi in order to enable smooth movement of goods within India. Abetment in the MRP-led customs duty payment framework should be increased to 35 percent. Burdensome procedures and costs for BIS certifications which are duplication of efforts and in addition impacting timely market launches should also be done away with immediately. Read in detail…
Vivekanand Venugopal, VP & GM, Hitachi Data Systems: “Driving greater technology adoption is the government’s agenda, with good governance and economic recovery as the topmost priorities. With the government’s continued focus and investment in leveraging cloud computing for effective delivery of e-services by DeiTY (Department of Electronics and Information Technology), this is an opportunity for the government to enhance frameworks and policies for state governments to virtualize their datacenters for various e-projects.
Hitachi’s vision to create a better world through social innovation technologies is perfectly aligned with the governments initiative to create ‘Digital India’. This program will drive overall country transformation through infrastructure and essential citizen services which will be offered as a utility giving citizens access to quality healthcare, energy, transportation, safety and security allowing them to become digitally empowered. This vision is one of the most exciting initiatives the country has embarked upon and will be the key to establishing India as a technology and innovation hub.
The government’s focus on digitization, cloud and cyber security policies will help the industry in long-term. We hope the upcoming budget outlines clear business and economic measures to support the government’s commitment to invest in the right technology infrastructure to enable this transformation.
The other aspect to this will be to rationalize customs duty, taxes and simply procurement process to accelerate the adoption of cloud services for large data centers.”
Srinivasan H R, vice chairman and MD, TAKE Solutions: “The three key factors for the IT industry that I would like the budget to address are policies for the growth of the SME sector in IT, focus on R&D investments and manpower development incentives.
Policies to focus on SME growth in the IT sector is vital for both sectoral employment and new innovation which happens more in the SME sector. We need to address the funding of the SME. With challenges such as low asset base access to bank funds, investor regulations and lack of tax incentives make equity funding difficult, firms with sub 50 crore turnover need encouragement and must have special incentives. Larger IT companies should be encouraged to do seed/small funding of these SMEs with appropriate incentives. Most importantly SMEs must be encouraged to bid for Government projects – all projects below 50 crores budget should be reserved for SMEs. Today the eligibility criteria is loaded in favour of bigger firms with large balance sheets. This should go. The future of the IT sector is in the development of SMEs.
Secondly, focus needs to be on development of software products to compete on global scale. The services model of “time and material” is now out-dated and firms need to be encouraged to develop non- linear scalable business models that can compete globally. For this, the below aspects need to actioned.
-- Remove ambiguous software product taxation and impart clarity
-- R&D incentivization
Lastly, the technology industry is a manpower intensive one that requires constant re-skilling to stay globally relevant. Manpower development expenses need to be incentivised with deferred tax credits. So also recruitment or office establishment from/in rural and semi-rural areas need encouragement. If these incentives are aligned properly – the IT industry can generate twice the current employment in 4-5 years”.
Mrinmoy Purkayastha, VP, Alten Calsoft Labs: “The recently rolled out ‘Make in India’ and ‘Digital India’ initiatives of the government have intensified corporate India’s expectations from the upcoming Union Budget 2015-16. With a task of a growth oriented budget, we hope to see increased investment in infrastructure: roads, railways, power, water supply and sanitation – which are the main pain points of SMEs. In most cases, infrastructure development can be accelerated through Public Private Partnerships (PPPs) which is a business model that the Government should make more attractive for businesses.
This coupled with increased spending on vital sectors like primary education and healthcare, will lead to positive growth and prosperity in the long term. One of the biggest challenges for the government is to balance development between the 'leading' and 'lagging' states in India. This mismatch leads to labour migration to a few cities thereby aggravating power, water, sanitation and hygiene issues, and hampering planned infrastructure development in cities. Balancing and accelerating infrastructure in the ‘laggard/lagging’ states is essential. This would lead to enhancement of productivity of individuals, in turn impacting the economy as a whole.
With an ambitious plan like ‘Digital India’, we do hope the Union Budget 2015-16 will provide investments in India’s technology infrastructure, and a significant amount should be invested in developing a robust network infrastructure across the country to build a foundation for our ‘Digital’ economy. A policy framework for industry and SMEs in particular that encourages innovation and adoption of technology can boost the ‘Make in India’ initiative”.
Sanjay Motwani, country director, Raritan India & SEA: "Many initiatives being discussed by the new government would have a direct impact on building India as a world class Data Center Market. Some direct initiatives in State Data Centers & Smart Cities would attract large domestic & international organizations seeking a reliable, scalable & cost effective IT environment for growth. Similarily, indirect initiatives including spectrum & bandwidth related policies as well as incentives for ecommerce, banking, infrastructure, telecom & media segments would positively impact the entire IT value chain. Outlook remains positive with projected 5-10% growth in 2015. In many ways, 2015 is a make or break year with respect to the global competitivenness of the Indian IT Infrastructure Market. The right policies & actions in Budget 2015 could spearhead India to a top position in the global IT Infrastructure Market. However, given the increasing competition amongst nations to attract global IT Infrastructure spending, delayed decision making could also mean India loses its opportunity on achieve global scale."
Aninda Moitra, president, Applied Materials India : “We are positive that Budget 2015 is going to be a growth-oriented one, with enough focus and discussions around Make in India and the electronics industry. The government should now back this up by accelerating the execution of Policy so that we have concrete actions that move us forward. Semiconductor electronics industry is core to high-value added manufacturing and with full government support has the potential to attract FDI and Indian investors. The budget should support and strengthen high-value added manufacturing enablers, viz Capital Availability, R&D Intensity, Skilled Labor and Infrastructure. It should also focus on building a high value manufacturing ecosystem, which enables close collaboration between industry, academia and government. When all of these are in place, India will be well on its way to realize its vision of enabling a self-sufficient, sustainable electronics manufacturing sector.”
Ambarish Deshpande, MD-India, Blue Coat Systems: “The Government should focus on information security sector for long-term growth and development of organizations across the country. The rapid growth of cybercrime has created a dent in various companies due to their under-preparedness and this has led to a growing demand of information security professionals across these organizations. Our workforce lack information and specialized courses that can bridge this gap. I foresee this imminent need being addressed with the upcoming budget. Information security is a critical issue and an increased awareness about the same from an educational perspective is the need of the hour. I also believe that procurement of Internet Security technology should be planned at initial stages of a project rather than setting up the complete infrastructure and then thinking of securing it later. This leads to gaps in completed projects and makes it vulnerable to use.”
L.C. Singh, vice chairman and CEO, Nihilent: “IT product development has been a key focus area in our PM’s Make in India initiative. We look forward to the coming budget to promote the culture of product development & innovation. The entire R&D budget for IT companies must be exempted from tax. In order to promote the culture of product development & innovation, the entire R&D budget for IT companies must be exempted from tax. The transfer pricing must be made simpler and practical. As of now, it is extremely cumbersome. Clarity on transfer pricing related issues will greatly improve ease of doing business. While rollback provisions for APAs in the July 2014 Budget were welcomed, we are hopeful of legislative amendments to prescribe the extent and manner of the applicability of these provisions.”
Jerold Pereira CEO at Videocon Mobile Phones: “India is already one of the world’s largest mobile phone markets, and is fast becoming one of the world’s largest smartphone markets. The Make In India initiative started by the Government is a great opportunity for the country to focus more and more on building indigenous capabilities – both in the hardware and software sides of this technology-driven industry.
We are optimistic that the upcoming budget would send the right signals to key players at all levels of the “value chain”, particularly those players required to help the country build its own eco-system and infrastructure required to support local manufacturing. The collateral benefits are greater employment opportunities, higher quality standards, better pricing, and more.”
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Updated Date: Feb 24, 2015 17:54:44 IST