As the Indian Government continues to introduce a huge number of economic programmes one after another, the expectations from the Union Budget 2016-17 remain high among the leading Technology companies. To get a perspective of budget expectations, Ankush Kumar spoke to some major industry leaders. Here is a brief snapshot:
Kunal Nandwani, Founder and CEO, uTrade Solutions
“A tax holiday for start-ups (much like that for IT companies during the 90s) for a period of 3 years would facilitate India to become the start-up capital of the world.”
Being a start-up in the Fintech space, we look forward to a more congenial and consistent taxation regime. While retrospective taxation should no longer raise its head, the Union Budget 2016 should support Prime Minister Modi’s ‘Start-up India, Stand up India’ initiative by introducing tax incentives for enterprises founded in the last 5 years. A tax holiday for start-ups (much like that for IT companies during the 90s) for a period of 3 years would facilitate India to become the start-up capital of the world. Shareholding premium from investments should not be considered as income and hence taxable. SEZ companies should be allowed to conduct domestic sales in Indian rupees rather than in foreign currency as per a recent knee jerk change. India should also look at bringing in a legislation that replicates the JOBS act of the US.
In summary, we yearn for an ecosystem devoid of red-tapism, paving the way for greater ease in doing business and creating the ground for ‘Innovation’.
S.Rajendran, CMO, Acer India
“One of the primary things the government should do is to adopt IT for citizen facing services and delivery centres in both central and state government.”
The expectations ride high for the Union Budget 2016 as this is the second full-fledged budget of the government. The government needs to demonstrate concrete actions to revive investment, increase growth and generate employment which will impact the industry. We are hoping that the Government will unveil the Union Budget 2016-17 with a pragmatic recognition of macro-economic woes and a thrust towards structural reforms.
One of the primary things the government should do is to adopt IT for citizen facing services and delivery centres in both central and state government. The government must also roll out the much delayed Goods & Services Tax (GST) as it will boost economic growth and will benefit manufacturing and exports. This is very important given that India has one of the lowest IT penetration rates at under 20%. Once rolled out, the IT sector has to be kept under the lowest percentage slab which will enable companies to take greater advantage of the benefits and invest more in manufacturing. Introduction of accelerated depreciation for government buying will lead to faster refresh cycles, which in turn will give a boost to the industry.
For SMEs, accelerated depreciation will also serve as a tool for competitiveness amongst the category as latest technology and IT systems serve as distinguishers for SME’s. The IT penetration in the country is yet to reach satisfactory levels and providing tax benefits to consumers purchasing IT products, at regular intervals, will help to increase the penetration levels. One shining example is of this practice is Malaysia where tax relief is provided on purchase of PC’s every three years. Increased IT penetration will bring in an increase in productivity among a large section of population and this in turn will contribute to the country’s economy.
Manish Sharma, Managing Director, Panasonic India
“An incentive scheme should be introduced to encourage manufacturers to produce high energy efficiency rating products.”
India has the potential to develop and manufacture electronics hardware for the global markets and gain higher global share besides meeting the country’s future requirements in the converging areas of information, communication and entertainment.
Firstly, there is a need to address the inverted duty structure. Budget 2015 extended SAD (Special Additional Duty) exemption on import of certain products for use in manufacture of IT hardware. However, Appliance and Consumer Electronics (ACE) manufacturers still face the same issue as the value addition in this sector, for several products, is quite low and results in an inverted duty structure. Also, the GST rate should be reasonable and in line with rates prevalent in other Asian countries (varying from 6% in Malaysia to 17% in China).
Presently, the value of LCD panel in applications like TV, smartphones etc imported is approximately INR 10,000 cr. By providing a conducive environment for their manufacture, import substitution can be achieved. This will also encourage setting up component manufacturing units for LCD Panel FAB and the development of the entire eco-system around LCD panels. An incentive scheme should be introduced to encourage manufacturers to produce high energy efficiency rating products. This could involve providing benefits either on input/ procurement side, or levying concessional rate of duty on manufactured products based on their EER.
The industry was excited with government’s efforts and intent for increasing manufacturing in India but the new FTP is a setback to industries exploring export opportunities. Also it will compel the EMS companies to relocate to other countries which will impact the initiative of “Make in India”.
Vinay Sinha, Head of Sales – India, Director – Commercial Business, AMD Asia Pacific-Japan (APJ) Mega Region
“We expect the focus of this year’s budget to be on digital literacy, improved connectivity and access to technology supported by radical government process re-engineering.”
Last year’s budget was rational and realistic for IT companies, and we hope that this year’s budget will continue in the same vein. In fact, programs such as Digital India, Start-Up India, Stand-Up India, Smart Cities and Skill India require the creation of technological infrastructure that will need budgetary support. We therefore expect the focus of this year’s budget to be on digital literacy, improved connectivity and access to technology supported by radical government process re-engineering. This will not only empower citizens but also enable start-ups and large organisations to experience digital transformation. If schemes like the IT based student financial aid scheme for animation and gaming along with the Innovation Promotion Platform to foster a culture of innovation, research and development are implemented this year, they will positively impact the Indian IT ecosystem.
This year’s budget should aggressively promote R&D benefits so that the organisations are encouraged to innovate and come up with newer technologies. Investment allowances for IT adoption must also be made to promote India as a premiere destination for both hardware and software development.
Deepak Maheshwari, Director – Government Affairs, India & ASEAN Region, Symantec
“The need of the hour for the Government is to set aside about 10% of IT budgets for cyber security which would ensure long-term benefits of IT investments and engender trust across the ecosystem.”
India continues to be the bright spot in the global economy which makes it more important for us to be wary of complacency especially while setting pre-budget expectations. Role of Information & Communication Technology in this pursuit cannot be overstated as it is being leveraged across all sectors of the economy. Its beneficial impact is showing up right from the financial inclusion through JAM (Jan-Dhan Yojana, Aadhaar and Mobile) to making our habitat more livable under Smart Cities and enhancing the ease of doing business by reducing the paperwork and associated delays.
Headlines scream of data breaches and website defacements. Unless addressed properly, critical infrastructure can come to a grinding halt. However, threats are also on the rise and despite less than 30% of Indians on the Internet, India is amongst the leading source as well as the destination of cyber attacks, according to Symantec’s 2015 Internet Security Threat Report. Even individuals suffer from identity theft, impersonation, cyber bullying and frauds.
In this context, it is pertinent to mention that the Honorable Prime Minister Modi had given a clarion call to focus on cybersecurity on March 1, 2015 the day after the union budget was presented on February 28.
Government departments had begun earmarking 2-3% of their total annual budget for IT projects following the recommendations of the IT Task Force in 1998 set up by the then Prime Minister Vajpayee. The need of the hour for the Government is to set aside about 10% of IT budgets for cyber security which would ensure long-term benefits of IT investments and engender trust across the ecosystem. Costs of cyber breaches, both direct and indirect, are massive. Hence, it does make sense to invest wisely in security.
Sunil Jose, Managing Director, Teradata India
“The Government needs to explore bringing down the excise duty on hardware so that better technology becomes more accessible to a wider market.”
Support for Digital India initiatives and access to Internet connectivity in rural areas will boost the economic and domestic spending of the country as more citizens will be able to access e-commerce sites. This will provide much needed growth to the e-commerce sector.
The Government also needs to explore bringing down the excise duty on hardware so that better technology becomes more accessible to a wider market and that would be a huge boost for us to provide superior technology to a wider audience at a more competitive rate.
Prabhu Ramachandran, Director, WebNMS
“Smart cities – the fine amalgamation of technology, environment, governance and people, should be a predominant piece in the union budget pie.”
This year, hopefully the budget should focus more on ‘smart cities’. With 98 smart cities listed in 2015 across India, 2016 seems prospective for the IT sector, particularly for the IoT players. We had spoken a lot about smart cities in the last 2 years and this year should witness ‘real action’. Smart cities – the fine amalgamation of technology, environment, governance and people, should be a predominant piece in the union budget pie.
We expect announcement of a vivid, descriptive road map and implementation plan for the humongous task of transforming the cities to a smarter phase, with select few cities embracing new technologies and people friendly applications. Real-time apps like ‘smart metering, smart road & rail transport management, smart metro, smart water & waste management, smart lighting and traffic control’ etc can be initiated in those chosen cities which could serve as blueprints for implementing future projects among the rest, in the years to come.
Virender Jeet, Sr. VP – Technology, Newgen Software
“Some of the announcements we expect in the budget speech of 2016 are Lower Minimum Alternate Tax (MAT ), incentives for setting up more data centers and incentives for digitisation of SME’s.”
Given that India is being looked upon as an advanced technology hub by foreign multinationals, a lower corporate tax will make the India software market more lucrative.This will also boost R&D activities in the country in terms of software platforms. Some of the announcements which we would eagerly look forward to in the Finance Minister’s budget speech of 2016 are Lower Minimum Alternate Tax (MAT ), incentives for setting up more data centers and incentives for digitisation of SME’s.
To make this concept more attractive, our foreign trade policy must recognise that encouragement of domestic manufacturing of world-class standards is a preferable alternative to protection and subsidisation through high tariffs, trade remedy measures and financial giveaways. The policy must encourage free imports of capital goods, industrial raw materials, components, tools and devices, as well as technology-laden imports, with a view to upgrading the quality and competitiveness of our domestic manufacturing. Apart from that, the importance of the protection of intellectual property rights (IPRs) in the scheme of attracting foreign investment and establishing high quality domestic manufacturing must not be overlooked.
