Good but not great: Infotech industry take on Indian government budget 2015

28th February 2015
Good but not great: Infotech industry take on Indian government budget 2015

February 28 2015: We bring you below extracts  ( in no particular order) from  the first reactions to the Indian Union Budget presented earlier today by the Finance Minister in Delhi.  These are all the opinions we received till 6 pm. We will update later tonight.
We lead with IT industry organizations and analysts; followed by individual enterprises.
Pankaj Mohindroo,  National President of Indian Cellular Association, noted the Excise Duty differential of 11% on domestically manufactured mobile phones over imported phones. The step up in the differential from 5% in the pre-budget dispensation to the current 11% is designed to create the necessary pull for investments from India and abroad into the industry and will realize the “Make in India”.
 Ashok Chandak, Chairman IESA: We commend the central government focus to introduce GST, along with empowering states with 62% transfers of country’s total receivables and partner states in the nation’s growth process.  There have been some incremental measures to address the disability of ESDM sector like Establishment of National Investment and Infrastructure Fund (NIIF) with an attempt to push infrastructure projects, enhancing fund availability in MSME sector which will boost SME manufacturing,Goods and Service Tax Implementation from next year. Proposal of rationalisation of SAD and proposal of duty benefits on products like LED TV, Mobile handset, tablets, LED lighting etc. will help on local manufacturing of these products. National Skill Development Mission will speed up skill set required for driving innovations in ESDM across 31 sectors and therefore, enhancing employability of rural people. There have been several Education sector announcements on IIM, AIMS, IIT and some science institutes and this will result in creation of high quality Human resource base for ESDM and medical sector.
Shekhar Sanyal, Director and Country Head, the Institution of Engineering and Technology, India: Government’s all-inclusive focus on MNREGA activities to providing strong infrastructure with an additional investment of 700 billion is a way towards attaining India’s next phase of growth.The government’s move to establish more AIIMS and IIMs and launch a National Skills Mission to enhance employability of rural youth is great to strengthen the pool of quality technical talent that will enable India’s journey to be a scientific power.
Sandeep Ladda, Leader - Technology, PwC: The Government has introduced certain key measures such as the place of effective management concept which could be relevant to IT/ITeS companies having outbound operations.  With introduction of GST and improvements in financial infrastructure of the postal network of India, eCommerce companies are likely to get respite.  Reduction in withholding tax rate from 25% to 10% on royalty and fees for technical services  is likely to encourage Tech startups and facilitate technology transfer to India.  With a view to provide fillip to the start ups in technology industry, the Government has set aside USD 165 million to support all aspects of start ups, which is a welcome announcement.
Partha Iyengar, Country Manager (Research) - India, Gartner: Overall, the budget is a ‘feel good’ budget. It has a pragmatic and good balance of social programs, industry (large and SME) friendly programs and tax reforms, without going overboard to be populist or ‘politics driven’.  In terms of the IT industry specifically there is a nod for the needs of the IT industry in terms of making a statement that the needs of the IT industry will be addressed in terms of ease of doing business, capital access etc. However, without reviewing the details of exactly how this is to be done, we will need to adopt a wait and watch approach to see how effective it will be.Reducing the tax on R&D and innovation investments to 10% is a very positive move, both from the point of view of facilitating technology transfer as well as incenting companies to invest more in driving innovation. Along the same lines, the nod to the ‘start-up ecosystem’ in the country is a major positive. This is the first time such language has made its way into the budget and a good reflection of the fact that job growth has to be broad based by facilitating the SME segment and even the start-up culture in the country. 
BVR Mohan Reddy, Executive Chairman Cyient Ltd. and Vice Chairman NASSCOM. Positives: For Start-up and SMEs, the Self Employment Talent Utilization (SETU), the techno-financial incubation scheme is a big positive; Atal Innovation Mission (AIM) platform to foster R&D and Innovation is another positive. Tax on royalty / fee for technical services reduced from 25% to 10% will be helpful in reducing cost of technology and give more incentive for technology deployment. Public Procurement Dispute resolution Bill is likely to streamline the government procurement process, and also address some of the pending disputes. This will give a fillip to Industry participation in domestic markets.
Negatives/Misses: Increase in Service Tax rate, by 1.5 %, is disappointing. Positives: For Start-up and SMEs, the Self Employment Talent Utilization (SETU), the techno-financial incubation scheme is a big positive; Atal Innovation Mission (AIM) platform to foster R&D and Innovation is another positive. Tax on royalty / fee for technical services reduced from 25% to 10% will be helpful in reducing cost of technology and give more incentive for technology deployment. 
Bangalore Chamber of Industry and Commerce (BCIC): Launch of a National Skills Mission to enhance employability of rural youth is a huge boost for generating employment in rural India. The Chamber specifically expressed happiness at the focus on the proposed development of Hampi and setting up of an IIT in Karnataka, making it the only State to have an IIT, IIM, IIIT and IISc
Safir Adeni President – TiE (The Indus Entrepreneurs) Hyderabad:  We have mixed reactions to the Union Budget. It is encouraging that the government has laid emphasis on job creators by promoting entrepreneurship. However, so far there were talks of Rs. 10,000 allocation for startups so we don't have a clarity whether in this budget the allocation of Rs 1000 crores under Self Employment and Talent Utilization (SETU) for the startups is in addition to the same or it is Rs. 1000 crore only now. Although the corporate taxes have gone down by 5%, the increase in service tax and surcharge will have negative impact on the startup ecosystem. Due to the change in the permanent base treatment, this could be a boost in Fund Manager startup space.
Ramesh Loganathan, Vice President and Managing Director Progress Software &  President HYSEA – Hyderabad Software Enterprises Association
While there was nothing dramatic in the budget, it broadly seems to be a growth inducing one. The budget provided a decent balance of Social reforms and growth initiatives including Make in India.   Several small items seem like they may add up to have an impetus to make in India. The corporate tax reduction to 25% from 30% is straight away making more money available to the companies for investments and growth. The technical services tax reduction and reduction of duties on raw material import both should help the manufacturing sector.

Rodney Noonoo, CFO, Xerox India: The Union Budget 2015-16 is a positive budget and step in the right direction. I appreciate the fiscal discipline and intent to reduce the fiscal deficit that stood at 4.5% of GDP in 2013-14 to 4.1% for the financial year 2014-2015 and subsequently reduce it to 3.6% in 2015-16 and to 3% in 2016-17.  Overall I see a spirit of enablement, long term growth with announcements of multiple schemes aimed at bringing a change in the economic and social ecosystem that includes job creation, skill development, bridging the social divide etc.
Ganesh Vasudevan, CEO The ambiguity on the smart city project which was announced in the previous budget continues with it getting no mention in the current budget.Allocation of INR 70,000 crores to Infrastructure sector, tax-free bonds for projects in rail road and irrigation, revitalising the PPP model for infrastructure development - are just some of the inclusions which will help growth of infrastructure and thereby the realty industry in the country.
 Pradeep Vajram, CEO, SmartPlay Technologies: The skill labour development program proposed in the Union Budget 2015, will provide an impetus to the ‘Make in India’ initiative. The fast paced technological advances demands high skilled labour and it has become a necessity to have skill training programmes for young India, which is the need of the hour. Additionally, it is extremely encouraging to see the government’s focus towards the start-up community in India. By implementing SETU (Self-Employment and Talent Utilisation), the government is promoting entrepreneurship driven by innovation in technology, which will take India to the next level of success.”
Somshubhro Pal Choudhury, Managing Director, Analog Devices India (ADI): The positive aspects that I see immediately apparent are the reduction in Corporate Tax to 25% in the next subsequent years, the #MakeInIndia initiatives with several corrections to the inverted duty structure and the national skill development mission for the tens of Millions of young Indians joining the workforce every year. What I would have liked to see more was incentivizing the companies to do more R&D and manufacturing from India.
 Sanjay Rohatgi, Vice President, India, Symantec: Continuing on the direction set last year, this is an excellent budget focusing on the outcomes and not just the outlays- aligned with the flagship programs, namely Make in India, Digital India, Skill India and Swach Bharat. Technology is going to be a critical enabler whether it is for making GST operational; direct benefit transfers and cashless transactions; e-Biz portal or enabling booking of unreserved railway ticket through mobile phones for the masses. However, to ensure wider adoption of technology, it must be safe and secure to foster end-to-end trust. Overall, a pragmatic and progressive budget, indeed.
Keshav Bansal, Director, Intex Technologies: The much awaited GST announcement for April 2016, will surely rejuvenate the industry as manufacturing sector will become more competitive and support the ‘Make in India’ initiative, it will be interesting to see how it will be rolled out in the coming months. Another complementing factor was the focus on skill development, National Skill Mission will be a great initiative to develop youth employability thus contributing to the growth of our country. With focus on growth and job creation, it is sure to drive India’s global competitiveness.  .
Anil Valluri, President, NetApp India & SAARC: A number of steps have been announced to improve the ease of doing business; creation of Micro Units Development Refinance Agency (MUDRA) Bank,  with a corpus of Rs. 20,000 crore, and credit guarantee corpus of Rs. 3,000 crore is a positive step to encourage young, educated, skilled workers who aspire to become first generation entrepreneurs or expand their activities. With robust growth in the Digital India initiative announced last year, it is heartening to see that the Government wants to further expand it and increase the network connectivity to more rural areas.
Naveen Surya, MD, Itzcash:  We firmly endorse and support the Government’s initiatives to empower a less-cash society through JAM (Jan Dhan Yojana-Aadhar and Mobile) route. The Payments Bank revolution, now being spearheaded by the proposed transformation of the Postal Offices will further widen the market for payment solutions, thereby enabling players such as us to play a constructive role in fostering financial inclusion in the country
Shashank ND, Founder & CEO, Practo:   As a young company at the intersection of health and technology we’re very pleased with the government’s focus on both these sectors and look forward to working with various stakeholders to improve healthcare access for a Digital India. 
Ichiro Iino, Managing Director, Hitachi India Pvt. Ltd: The current Union Budget strives to drive the growth of the Indian Economy especially in the Social Infrastructure domain. We are all geared up to work towards transforming India into a self-reliant country by actively getting involved in fields such as Water, Urban Transportation, IT, Healthcare etc. and contribute to the overall welfare of the Indian society. The current Union Budget is very positive and promises growth for everyone,
Dinesh Aggarwal, Jt. Managing Director, Anchor Electricals Pvt. Ltd: The reduction in tax on Royalty will encourage technology infusion and manufacturing of technology products in India. The phased reduction in corporate tax, reduction of customs duty in specific raw materials and inputs will support the "Make in India" initiative further. Clearly, the Government's intention is to empower the poor and the old in recognition of the rising health care costs and aging population.
Sudhakar Gande, Vice Chairman of AXISCADES group of companies andChairman of FICCI Task Force on Aerospace and Air Defense: The decrease in taxation on royalty payments will propel Make in India program to be successful. The introduction of Bankruptcy laws are welcome and will build balance between entrepreneurship and lenders. Specifically for Defence sector, Budget allocation has been increased by 12% to Rs.2.46L Crores. With focus on FDI in defence, Make in India, ensuring there is inclusive focus on skill development, Technical entrepreneurship, and Institutional mechanism to finance the MSME sector is encouraging for the Defence sector.
Alan D Souza, CEO, Vavia Technologies: The govt seems to have spoken of another 1000cr startup fund with no news about the previous 10000cr startup fund that was announced during the budget last year. Rather than announcing such funds, more focus needs to be given on how utilization of such funds have impacted job creation and then additional support that can be provided for the same. The proposal to reduce taxes for Tech startups from 25% to 10% is great news as this will really encourage tech startups in the country.  
Aloke Ghosh, CFO & CS, Blue Star Infotech: It is encouraging to see that the Union Budget 2015 had a special focus on PM‘s ambitious Digital India initiative. The JAM trinity of Jan Dhan, Aadhaar, Mobile & GST can prove to be game changing reforms taking forward the financial inclusion programme and smoother, seamless transfer of subsidies to the intended beneficiaries. The budget looks at not only creating new jobs, but also incentivising self employment and entrepreneurship. It will introduce more competition, innovation and bringing global expertise and technology giving a boost to the 'Make in India' programme. Its success is inextricably dependent on creation of skilled workforce.
LC Singh, Vice Chairman & CEO, Nihilent: We are delighted with the Union Budget 2015 which emphasises on education, pensions, job creation, infrastructure and creating an entrepreneurial culture in the IT sector.  The GST will put in place indirect tax system by next financial year while also bringing greater transparency and tax inflows. The other good news is the decision to reduce corporate tax over next four years.
Aninda Moitra, President – Applied Materials, India: We welcome the emphasis on skills development and employability, which, as Applied Materials has consistently advocated, is a must-have for a stable manufacturing ecosystem. The focus on Infrastructure development is also welcome, since it is a key area that supports high-value manufacturing.
 To make India the manufacturing hub of the world, we now need to accelerate the execution of announced policies, make rapid progress along the conveyed directions, and ensure focus on large-scale RD in specific high-value-add manufacturing areas like ESDM and Clean Energy to make the emerging manufacturing ecosystem sustainable. 
 N Chandrasekaran, CEO & MD, TCS: The focus on education through greater investment in institutions of higher learning as well as in skill development and the financial support for students will  help India capture its demographic dividend. Another important signal is the ongoing commitment to Digital India which will result in important opportunities for the IT sector. Extending the digital financial infrastructure through its support for greater use of payment systems like Rupay as well as the creation of a widespread broadband infrastructure will spur India's aspiration to become a "Smart Nation.
Amazon India: We are very encouraged by the commitment to implement GST by April 2016 and focus on development of infrastructure.  We believe both are key to ease of doing business by enabling and streamlining the movement of goods and services.  We believe this will enable us to effectively transform the lives of our customers, both, consumers and sellers. Customers can enjoy quick, easy, convenient access to a wide selection of products from across the country; and sellers, especially small and medium businesses, can grow profitably by serving customers across the country.  
R. Narayan, Founder and CEO, Power2SME: Various other measures like GST, Public Procurement Policy, Investment in infrastructure, introduction of  internationally competitive Direct Taxes, sharp slash on few indirect taxes, and simplification of tax regime and few more measure announced will certainly result in ease of doing business. With government’s focus on making the youth of India job creators and not job seekers, skill development of youth and special focus on self-employment will have very positive impact on our socio-economic scenario and if implemented in right manner this will have a long term impact.
Suresh Venkatachari, chairman of 8K Miles Software Services: The industry has been looking forward to  incentives in the exports and manufacturing of IT products. The only silver lining is the announcement of Self-Employment and Talent Utilization (SETU) programme. If we wanted to take our IT revolution to the next level, it is inevitable that we give whole-hearted support to the youngsters and the start-ups in the technology sector. The Government has realized it and moving in that direction.
 Shrinivas Rao, CEO-Asia Pacific, Vestian
Budget 2015-16 has taken many positive initiatives to boost the Indian economy by empowering the individual state economies and creating ample scope for employment generation. Proposing to overhaul capital gains taxes to make way for the listing of Real Estate Investment Trusts(REITs) is a vital step forward for the setting up REITs in the country. Meanwhile, the increase in infrastructure investments by INR 700 billion in 2015-16 will open up vast opportunities for Real Estate Sector and positively impact its growth. A prudent and progressive budget
Ambareesh Murty, Founder and CEO of Pepperfry:I think the thing all of us are looking for is a further move on GST. I think that will help us, as an industry, sell across all the states in India. It will bring transparency to the overall system of tax collection and help us set up processes and systems to serve customers with great value products. So, GST is something that we are definitely looking forward to.
Y Guru, Chairman & Managing Director, Celkon Mobiles: From the industry perspective, reduction of the corporate tax from 30% to 25% is appreciated. GST implementation is another welcome move which will end taxation uncertainties in a lot of aspects. High allocation for infrastructure projects such as roadways and railways will give further boost to manufacturing. Reducing the CVD on certain goods in another area the industry is looking forward to, however more clarity is needed in terms of its implementation. Having said that; the budget missed considering the challenges faced by the telecom industry.”
Suman Reddy, Managing Director , Pega Systems India: It looks like a mixed budget from the IT Industry perspective. While there has been a significant reduction in the Corporate Tax from 30% - 25% and of tax on Royalty from 25% to 10% that will benefit the industry; on the other hand the budget did not provide any clarity on the transfer pricing issue which the industry was awaiting. 
Debasis Chatterji, CEO, Netxcell: It was a good budget for the It industry with an initial sum of Rs 150 Cr announced to create a world class IT hub to take advantage of our competitiveness. Further the reduction of Corporate tax and support to tech Start-ups with a mechanism for techno-financial incubation corpus of Rs 1000 crore; has given tremendous boost to the IT sector and startup ecosystem.
Neeraj Jewalkar, Founder and CEO ,  The Budget in totality looks positive with enhanced focus on fast-tracking growth in Healthcare, IT, Infrastructure and Education sectors. The government has linked many initiatives to support and provide a boost to Make in India. Therefore giving additional attention to startups, the government has introduced  a corpus of Rs. 1,000 Cr to support technology led startups and incubation centers. This will further enhance the startup ecosystem in India.  INDIATECHONLINE compilation