Bangalore, July 11, 2014:
We bring you the reactions of the IT industry to the Indian budget received by us till 7.30 pm. We will update this piece as more reactons come in:
Arup Roy, Research Director, Gartner India: From industry perspective, the policies that would have major positive impact on the domestic IT uptake are: ‘Digital India’ program; “Good Governance”; and “one hundred smart cities” program. Also, FDI cap increase in defense and insurance sector is a huge positive and has direct bearing on IT industry. This budget has also set aside funding for adding new top-notch educational institutions such as the IITs and IIMs in various cities, which is likely to have a long term impact on generating technical and management talent. Lastly the focus on micro and small and medium sized businesses and their enablement/empowerment with various schemes is a huge positive and is likely to have positive impact on the IT industry as well as such companies get empowered to resort to technology.
Jaideep Mehta, VP and General Manager, IDC South Asia: 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.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. The duty reduction (from 4% to 0%) 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.
Jaijit Bhattacharya, Partner - Infrastructure and Government services, KPMG in India: The budget has four key mentions on leveraging technology for better governance. The proposals include the initiative to link all government transactions to the e-Biz initiative, thus resuscitating a very important initiative, rolling out of broadband to villages, issual of eVisa’s for tourists and business persons and taking forward the concept of eKranti for bringing in revolutionary use of IT for better governance.
R. Chandrashekhar, President, NASSCOM: The announcements on a pan India digital initiative, funding for start-ups, district level incubator network and leveraging technology for good governance are welcome steps. These measures along with the initiatives on skilling, smart cities and ease of business, reflect the thrust on role of technology in Budget 2014”.
The proposal to set-up a Rs. 10,000 crore fund for start-ups and entrepreneurs will act as a great booster for the growing start-up landscape and will help drive innovation and solutions for the global as well as the domestic markets. At the same time, a pan-India "Digital India" programme will promote digital inclusion with broadband connectivity up to the village level, thereby enabling improved access to services through IT enabled platforms.
Amar Babu, President, MAIT welcomes the long pending correction of inverted duty structure from the IT Hardware sector perspective. Also, some telecom products (non-ITA) have been made liable to 10% basic customs duty whereas all goods required for manufacture telecom products would continue to enjoy exemption from BCD. These steps will definitely help boost domestic manufacturing.
Anwar Shirpurwala, ED, MAIT: There are several positive signs in the budget that would go a long way in making India as an investment destination. Increasing FDI limit in defense and insurance sectors are some steps in that direction. We also welcome government’s commitment to address retrospective taxes. MAIT had made several other recommendations and hope that they would be addressed in the near future.
iSPIRT: The budget establishes the Government’s special focus on the Software Product Industry (SPI). The Government has embraced iSPIRT’s view that the SPI can transform India. In fact, the setting up of a Rs. 10,000 crore fund of funds to catalyse start-ups in the MSME sector fits very well with iSPIRT’s efforts to improve competitiveness among the Indian SME’s.
ashok Chandak, Chairman, India Electronics and Semiconductor Association (IESA): We welcome the budget aimed at boosting the Indian Electronics and semiconductor industry. The budget is growth supportive, anti-inflationary as well as committed to fiscal consolidation and reviving growth in manufacturing. Manufacturing incentives at 15% for extended period of 3 years for manufacturing company that invests more than 25 crore plus would create massive push to the MSME’s in electronic sector. Corrections of Inverted duty structure on few ITA-1 products such as TV’s Computers, Smart cards etc. and levy of 10% Basic Customs Duty on some of the Non–ITA 1 Telecom products aimed at making locally made products competitive, will boost manufacturing greatly.
Ramesh Loganathan, Vice President and Managing Director Progress Software & President HYSEA (formerly known as ITsAP): It is a reasonably good budget for the IT industry tackling incumbent industry operational elements with enabling serious future growth. With operational aspects addressed such as transfer pricing clarification and also the note on retrospective taxes (hoping for easier remediation of TP assessments), the industry welcomes the move. All the investment and FDI focus in the budget, will spur general growth that will definitely have an effect on domestic IT consumption; which is now about 20% of the IT industry revenues.
N. Chandrasekaran’s, CEO & MD, Tata Consultancy Services: For the IT sector, the budget has provided clarity on some long-pending issues in transfer pricing and offered a collaborative framework to minimise future disputes. Above all, the government has strongly signalled that we will see lot more reforms across sectors shortly. This is a positive start to a long term process
BD Park, President & CEO, Samsung India: The increase in investment limits in FDI ( foreign direct investment ) announced in the 2014 budget will favorably impact the economy. Significant encouragement has been provided to domestic manufacturing that will likely enhance both local production and employment, especially in the sectors of retail and e-commerce. Measures on tax reforms like advance rulings, tax settlement mechanisms and APA ( advance pricing agreements ) etc. will contribute to improving investors' confidence and removing uncertainty regarding taxation.
SANJAY SETHI, CEO & CO-FOUNDER, SHOPCLUES.COM It’s a satisfactory Bu dget for the industry. ShopClues is truly a marketplace for the masses and we heartily welcome the focus laid by the Budget on empowering the new middle class in India - whether it is with a higher tax exemptions for salaried individuals and on home loans, greater benefits in provident fund provisions, pension schemes, etc. The announcement on building of airports and better connectivity for tier 2/3 cities is very encouraging
Sanjay Kapoor, Chairman, Micromax: The Finance Minister has made pragmatic choices around available resources and has articulated a road map towards reducing the fiscal deficit and fueling economic growth. While all of us hope he achieves the ambitious target of containing the fiscal deficit, executing it seems very challenging. His focus on giving fillip to the infrastructure seems exhaustive and he has rightfully protected the common man’s interest in his first budget.
Arun Jain, Chairman & Managing Director, Polaris Financial Technology: In politics, it takes a great deal of maturity and courage to respect the body of work of a predecessor. In that sense, the NDA Government’s Union Budget is reminiscent of Nelson Mandela’s ‘Rainbow Nation’ philosophy, which adopted continuity in the face of volatile relations. This is a landmark practice for a government.The tone of the budget was, in my opinion, smart to wise. While carrying on some of the major initiatives of the previous regime, this iteration of the budget was able to enhance prospects for key aspects of Indian industry. The budget signaled to a wide array of segments, with a particular and necessary focus on major infrastructure, as well as relatively low-investment industries. The 15% tax exemption to industries from the Rs. 25 cr range onwards will surely create a conducive environment for startups.
Shekhar Sanyal, Director & Country Head, the Institution of Engineering and Technology. The new government’s Union budget for the year 2014-15 is a welcome move with a more strategic focus, concentrating on mid-long term implications towards sustainable growth. The commitment to achieve 7-8% economic growth in the next 3-4 years anchoring on the core sectors is much needed to revive the sluggish economy. We, at The IET, are very positive about the fiscal prudence reflected in this budget. It is a validation of the Government’s promise to leverage technology for India’s next phase of growth.
Abhijit Bhandari, Founder, ONEMi.in : For the first time e-commerce as a sector has been mentioned in the Finance Ministers speech. Hopefully it leads to more liberalization of the sector.
BVR Mohan Reddy, Executive Chairman Cyient Ltd. on Union Budget 2014: Union Finance Minister presented a Good Budget. While there were no anticipated big reforms, the push he gave to infrastructure and housing is very welcoming. The encouragement to startups,entrepreneurship, innovation and incubation is a great initiative and is a high priority area for it will be the engine for employment generation".
Aninda Moitra, President & Managing Director, Applied Materials India: This is a progressive budget with a clear business focus. The priority that the government gives to the renewable energy sector is commendable. This should give solar manufacturers an opportunity to aspire to leadership by providing differentiated, technologically advanced and competitive offerings. Both the government and the industries should also commit to focusing more on R&D in this area – and build a sustainable solar and ESDM ecosystem in India.
R. Narayan, Founder & CEO, Power2SME: The Union Budget is extremely encouraging for the start-ups and the SMEs. The proposal of establishing a Rs.10,000 crore venture capital fund for start-up firms will act as a catalyst to attract private capital by way of providing equity, quasi equity, soft loans and other risk capital for start-up companies. It will create a favourable ecosystem for the start-ups to flourish. The revision of the MSME definition for high capital ceiling, will enable the SMEs to get greater credit from the market, in turn helping them to grow and expand.