February 27 2016: Budget wish list of hightech indian industry leaders:
R Chandrashekhar, President, NASSCOM:The Government should commit towards offering a friction-less business environment and support to the IT-BPM industry, which is on the threshold of $100 billion exports this year. Being the sector that has put India on the global economic map, the Government should leverage the expertise and talent from this industry to meet national development goals and to set milestones for the Indian economy. Retrospective amendments and ambiguous provisions are a serious detriment and should be avoided. For certainty in tax regime, a clear roadmap for Rationalization of corporate tax rate to 25%, abolishing MAT or rationalizing the rate to 1/3rd the corporate tax rate and associated road map for utilizing MAT credit, rationalization of education cess and surcharge to bring down effective corporate tax rate should be made available.With respect to taxation on software products NASSCOM emphasized the long pending issue of dual levies. While the Goods and Services Tax (GST) will hopefully address the dual levy issue, there is the need for intervention even under the current regime. NASSCOM has raised these issues with the High Level Committee and hopes that the proposed interim resolution is available till such time that GST is implemented. To correct the anomaly in the meanwhile the industry body suggests that goods subject to levy of VAT whether delivered on media or other modes including electronic download
M.N Vidyashankar, President, IESA:We need to have Re-Exports zones in the country, similar to the SEZs we are promoting. The re-exports zones should have the facility of importing capital equipment, products, devices which will undergo value addition in the Re-Exports zones. Measures should be taken to solve the MoEF hurdles that prevent import of used electronic equipment. This is severely crippling the R&D activities, and is hurting everyone. Another area is, Transfer Pricing arbitrariness by assessing officers. Many battles have been fought and court and tribunal orders have gone in favor of the enterprises but the assessing officer’s whims and fancies continue. Neither the government nor the enterprises benefit- Only the Tax consultants gain from this. Reclassification of Agreement with parent body and thereby stating that the value addition is much higher from India and hence higher % of markup is the new fad I have seen. Simplification of the procedures to setup a startup, declaring annual returns during the early stages (until say three years of sustained revenue over Rs. 5crores) and liquidation (should be lot simpler than winding up private limited company).
Jaswinder Ahuja, Managing Director, Cadence Design Systems (India): This past year, the Government of India has announced several initiatives to set the country on a path of manufacturing and design excellence under the “Make in India” banner, such as the “Digital India” and “Startup India” initiatives. These programs are expected boost to the economy and we look forward to the cascading effect on the local electronics industry.With respect to the semiconductor and electronics industry, we are looking forward to specific announcements and programs that will provide impetus to electronic system design and manufacturing (ESDM) in India
Rajesh Bansal, Director Fenda Audio: The government should certainly move aggressively in areas relating to transfer pricing and safe harbor provisions.” He further adds that the current tax rate on corporate of 30 per cent, while not being exorbitant, is surely higher as compared to several other countries. An important area the government should definitely look into.
Vinu Cheriyan, CFO & Director Operations at Sennheiser Electronics India : We believe that there should not be any further increase in Indirect Tax rates till GST is implemented since increase in tax rates without GST credit facility will increase the operating cost considerably. Simplification of Special Valuation Branch (SVB) procedures especially with regard to renewal of existing orders would be welcome. As far as the microphone industry is concerned, we hope for a global alignment in Microphone Tariff heading since globally there is only one tariff heading (8518000) for all types of Microphones, where as in India there is a separate Tariff for wireless Microphones (85255050) this is creating lot of confusion and litigation.
Shashank ND, Founder & CEO of Practo: we need to see more clarity on the next steps that detail out disbursement and get startups access to the fund of funds for start-ups. This would definitely encourage the promising entrepreneur community in India. The need of the hour is to improve the Infrastructure in the country and make much faster progress in connecting everyone and bringing them online.
C M Menon, Regional Sales Director, Analog Devices India: we need logical taxation practices to be implemented. Companies manufacturing products in India, whether for internal consumption or for export should find themselves competitive with companies in other Asian countries without compromising on quality. India’s foreign trade policy must recognize that encouragement of domestic manufacturing of world-class standards is preferable than subsidization. The government must do away with arduous processes for availing duty concessions on import of components and parts.
Sanjay Sethi, CEO & Co-Founder, Shopclues: The Government’s blueprint for ‘Start Up India, Stand Up India’ has been a true shot in the arm for new ventures in the country. While the taxation angle and the issue regarding ease of doing business in India was addressed in the PM’s speech, the entrepreneurial community as a whole expects GST to become a reality in this Budget session. Additionally, tax incentives for employees who work with start-ups may be a good step forward. Policy support for start-ups that are trying to list themselves with an IPO is another major expectation of companies that have done well and are now looking at further cementing their market standing.
V. Raja, Vice-Chairman and Managing Director, Philips India: The healthcare industry in general along with Philips feels creating tariff barriers will not help indigenous manufacturing. Instead, it would lead to a hike in prices of medical devices, which contributes significantly to heathcare costs for patients.
Sudhindra Holla, Country Manager, Axis Communication: With the enhanced focus on smart cities, this year we expect the Government to continue with the momentum on infrastructure and manufacturing, as we firmly believe that good infrastructure is incomplete without surveillance cameras and solutions. Also with government mandating CCTV cameras and solutions in verticals like transportation and retail, the budget should set aside substantial investment, for video surveillance solutions and quality cameras to make India a safer and smarter country.
Satya Prabhakar, Founder & CEO, Sulekha: The government should seek to lubricate communication, physical and electronic. Most societies that progressed fast and developed into sophisticated economic engines…all of them invested in enabling frictionless communication. The single biggest drain on national productivity is transport within cities. This must be addressed on a war-footing nationwide. It takes about 75 minutes to drive 5 km in Bangalore on many days; that’s a speed of 3-4 kmph. One can walk faster than that.
Sudhin Mathur, Director-Smartphone Business, Lenovo Mobile Business Group: The previous year witnessed pioneering schemes to attract investments in the country for increasing domestic manufacturing. The policy on duty differential has been effective in attracting significant manufacturing of smartphones. We saw good growth for mobile phones as nearly 100 million devices were locally produced according to the Indian Cellular Association. However, this number has to further go up if India is to truly become the global innovation and manufacturing hub. This would require focus on addressing factors that would make manufacturing globally competitive. Manufacturing companies in emerging and high growth sectors need to be given a shot in the arm in the form of simplified tax structure, better infrastructure and robust component ecosystem. Appropriate budgetary allocations need to be made for this. The Budget should also focus on electronic R&D including innovation and design.
Keshav Bansal, Director, Intex Technologies: Being a domestic mobile handset manufacturer, we expect the budget to further encourage & felicitate an environment for the creation of a mobile ecosystem that will give impetus to domestic manufacturing. Digital India & Skill India are the other key initiatives we look forward to working on. An imperative concern of this sector is the existing Cenvat credit scheme wherein suitable steps are required to justify input credit scheme to make home-grown facilities viable against imports. It is certainly the right time for firming up industry friendly tax regimes. We hope the Union Budget will effectively takes forward the reforms agenda.
Rajesh Agarwal, Co-founder, Micromax Informatics: Growth, Infrastructure development and Employment should be the three big pillars of the upcoming Union Budget 2016. PM Modi’s Make in India and Digital India are well thought out initiatives that can fuel the slackened growth and help India achieve the projected GDP growth rate at 8-8.5%. non-availability of duty concessions on the import of capital equipment for handset manufacturing is a serious bottleneck. Restrictions imposed by Ministry of Environment and Forest on import of second hand capital goods on grounds of E-Waste should be also be removed. On behalf of the entire handset makers of India, we would expect the government to introduce regulatory restrictions for ETA (Equipment Type Approval) and licensing requirements from DOT to import low powered wireless equipment which are very critical for success of the Digital India and Make in India vision.
Ravi Kiran, Co-Founder, VentureNursery: There is an urgent need to increase the total base of active angel investors from a low 1,000 now to at least 10,000, in the near term and 100,000 within 5 years. This is important not just to get their money into start-ups, but help them open up their business connections and make them active participants in the ecosystem. If Government is serious about Capital Gains benefit, make it simple, remove the conditions apply, such as ‘if they have invested such capital gains in the Fund of Funds recognized by the Government’ . Even more important than relaxation or waiver of Capital Gains tax, the FM should consider introducing Angel Tax Credit, so that angel investors can enjoy the benefit of investment made in qualifying start-ups in the year of investment, instead of waiting for anything up to 7 years to make a capital gain.
Lakshmideepa A, Director, Yeldi Softcom Pvt. Ltd.: India has one of the highest cash-to-gross-domestic product ratios. Though India is a cash intensive nation, slowly it is settling for the cashless payments mechanism especially through mobiles. A set budget should be allotted for the smartphone sector to access and deliver revamped IT infrastructure and create more opportunities for the people.At present, import duty on smartphones devices across categories (in the form of countervailing duty) stands at six per cent. An increased rate of import duty on these products might likely not help the companies in this sector. The import duties have to be reduced to help the companies in this segment sustain for a longer period of time.
Aliasgar Hajee, Managing Partner, SHM Group: Ease of doing business integrated with favorable tax reforms, which includes implementation of GST, removal of tax exemptions and keeping uniform tax rate across the board and reduction of unwanted red tape should be the areas of focus to attract FDI and more importantly support Indian companies to invest in its capabilities and grow its offerings. Infrastructure, rural development and enhanced security measures are the need of the hour and we hope thebudget 2016 prioritizes these requirements.
Samir Dhir, Executive Vice President, Chief Delivery Officer & Head - India operations,Virtusa: Virtusa hopes that there would be concrete incentives for start-ups and tax-sops to propel the sector to greater heights. One of India’s major drawbacks has been poor research and development (R&D) base and it is not too late for the government to help create the base and also to assist companies investing in R&D by way of fiscal and financial incentives
Nigel Eastwood, Group CEO- New Call Telecom: The Finance Minister should bring clarity on deductibility of one time spectrum charges paid by telecom operators. Telecom operators have paid huge amounts on acquiring spectrum. The government needs to issue a clarification that spectrum fees is an intangible asset eligible for depreciation under Section 32 of the Act... One of the serious issues that most startup entrepreneurs are talking about is clarity in taxation on new businesses and start-ups. Government should definitely bring in more clarity in this budget!
Ashraf-el-Arman, MD, Xerox India: Setting up of a strong and flawless tax regime should be a major goal for government in this year’s Budget. The government must bring in measures to revive industrial growth and facilitate a smooth transition to the new indirect tax regime. Implementation of GST as per the deadline will mostly result into a lower service tax rate and ease the way we do business and create grounds for innovation. Additionally, India has one of the lowest IT penetration rates as under 20% so we are expecting some sort of relaxation on import duties. This move will definitely help in IT penetration and increase affordability by a lot of SMEs.
K. Balakrishnan, MD & CEO, Servion Global Solutions: The government should continue to focus on them by providing the necessary incentives, legal/tax framework and infrastructure support. This can provide a boost to the investment towards innovations, thereby creating a vibrant start-up community and new manufacturing investments. The government should also increase investments in improving broadband connectivity as this could have multiplier effect on the overall economy.
Saurav Kumar, CEO & Co-founder, Cube26: To promote Make in India, we believe that the government should offer subsidies on investments and incentives for Indian device manufacturers. This will help them to build a price advantage over the increasing international competition from brands. Also, reduction of import duties with an option to allow businesses to Make in India will be a welcome move.Digital literacy and mobile internet penetration in tier 2, tier 3 cities are other areas onto which we would like to see the Union Budget’s focus. Substantial funds should be allocated to develop a robust network infrastructure and realise the government's 'Digital India' mission.
Rahul K Patwardhan, CEO NIIT Ltd: We hope that the government will introduce measures to ensure a level playing field for the highly regulated Indian online education and training companies against the much larger funded global players who are entering the Indian market aggressively, in an unregulated manner as far as Indian taxation regime is concerned.Further, we hope that the Finance Minister will announce specific measures in the Union Budgetto help make education and skilling more affordable to the masses. Skill India and Digital India are two key and highly ambitious initiatives of Government of India, and in the forthcoming budget we expect specific Indirect tax rebates for the companies and its partners who are working towards making these initiatives a success. Government has set an ambitious target of skilling 500 million people by 2022. In a country where less than 4% of the population are formally skilled, FM needs to substantially increase fund allocation to the sector to draw youth to the skilling programmes.
Anurag Jain, Chairman of AccessHealthcare: We hope that the Government will come up with some positive announcements and tax sops to cut through the growth barriers. Any thrust on growth, infrastructure, job creation and skill development is likely to have a positive impact for the IT / BPO sector. We also look forward to the Finance Minister announcing some monetary encouragement for companies to focus more on research & development in order to develop products and services that are at par with international standards.
Ashish Bhatia, Founder & CEO of labsadvisor.com: In the Start-up India initiative by the Modi government, start-ups are getting corporate tax exemption for the first three years. However, for most start-ups SERVICE TAX is a bigger concern as it is charged on the revenue or turnover rather than the profit. Companies also have to bear the burden of paying service tax on services that they buy from outside e.g. advertising, web development etc. Service tax raises the cost of doing business significantly. Doing away with the service tax during the first 2-3 years will help vastly and let many more start-ups survive... Start-ups make mistakes in hiring or have to let go of people due to investment delays. When a company lets go of its employee, generally some redundancy payment is made. This payment should be tax exempt in the hands of the employees.
Gaurav Dureja, Director & Co-Founder – Ambrane India: We anticipate favorable government policies that could help the growth of consumer electronic industry in India. The policies which pertain to the lower import duties on raw material, is the staple requirement for electronic manufacturing. Furthermore, the export policies that could be beneficial for foreign trade on the behalf of Indian electronic manufacturer which shall also contribute to the Industry growth.Towards that several government initiatives namely Make in India, Stand Up India, Smart Cities etc requires stronger budgetary support. We expect the budget to build an eco-system which encourages and felicitates an environment for easy doing business in India, which aims at building immense opportunities for manufacturing.
Srinivasan H.R., Vice Chairman & Managing Director, TAKE Solutions Ltd: Tax credits for R&D efforts and deferred benefits for global expansion investments would have a positive impact on our organization. With respect to GST: This has been substantially delayed. It is vital that we move to a consumption-based tax base. I expect the political deadlock on GST to be resolved during this budget session.
P. Venkatesh, Director – Product Division, Maveric Systems: there is a need to introduce clarification for Place of Effective Management (POEM) that was introduced in the 2015 Budget. The clarifications should cover:Alignment to international and bilateral treaties by ceding the prevalence of provisions in those if found favorable to the tax payer- this would cover availability of tax credit, exemptions for certain incomes from tax, applicability of lower rate of tax and carry forward and set off losses of the previous years.
Ashok Chandak, Sr. Director Global Sales and Marketing, NXP semiconductors. Considering the large number of motor vehicle accidents in country, it is necessary to give major filip to the active safety. The regulations mandate on ABS , TPMS , Intelligent Transportation systems , Advanced driver assistance systems and Emission norms, would help to deploy technology and make the drives safer and more comfortable. Indian and global technology and auto companies are investing heavily to make ADAS and ITS a reality. While automakers are struggling with ways to protect their new and existing connected cars, there are technologies that can protect the privacy and security from the very start. The funding support for intelligent transport systems infrastructure and tax benefits for the ADAS , Digital Radio and Active Safety equipped vehicles would be very helpful in this direction.
Rajesh Doshi, Director, Zebronics India: We hope the govt would bring down the customs duty on components used for manufacturing of IT & Electronics industry, as this is must to compete with the Chinese manufacturing giants and for the 'Make in India' vision to catch the speed that we all are now expecting