Infotech industry’s hopes for fillip in annual budget, belied
IndiaTechOnline Budget Special
New Delhi February 28 2013: The annual budgetary exercise of the Indian government has left the Information Technology and telecom sectors – two of the nation’s biggest revenue earners and employers -- with hardly anything to cheer about, and even possibly a sense of let down.
The Finance Minister has not cared to address any of the most pressing problems of the industry which include a serious lack of clarity about many contentious taxation issues that have eroded the enthusiasm of global players to invest here.
The telecom sector still reeling from the tsunami of scandals and the consequent roll back of many operator’s services in the country has been virtually ignored.
At a time when mobile penetration has suffered 10 consecutive months of negative growth, the budget has in what is almost a perverse response, further widened the digital divide by hiking the tax on mobile phones from 1% to 6 % on all except the very simplest handsets costing Rs 2000 ($40 or less). Just when a host of new mobile services including payments are being aggressively rolled out by private operators and for the first time touching the lives of the rural millions, the hike seems like a slap in the face of the aspirations of lay users to harness technologies like 3G, Near Field Communication and GPS to empower themselves.
Having mandated a sweeping change in TV transmissions from analogue to digital, that will impact some 200 million households, the government was widely expected to help ease the transition by making the cost of digital set top boxes more affordable than the present Rs 1000 – Rs 3000 ( $ 20 - $60) by slashing the import duty. But in a move that defies logic, the Finance Minister has doubled it from 5% to 10% -- Clearly the short term goal of scooping up as much dough as possible from a technology changed imposed on the only affordable entertainment medium of millions has eclipsed all those pious pronouncements about harnessing IT for empowerment.
For the IT sector as a whole which has made India a respected global brand in less than a decade, the budget is deafeningly silent on most issues which have progressively whittled away the competitive edge of Indian outsourced and offshore service providers.
A few crumbs are there: zero customs duty for equipments required for setting up semiconductor (electronic chips) plant in the country; Benefits or preferences enjoyed by Micro, small and medium units to continue upto three years after they grow out of this category ; an IT driven project to modernise the postal network and to make post offices a part of the core banking solution.
As our special feature today summarising the industry leaders’ take shows, they mostly clutch at these straws - - when what they hoped for was at least a modest expression of support and appreciation ( in concrete terms!) for India’s best and brightest sectors of business … well maybe next year!