Will this budget brings “Acche Din” for the Industry?
The New Government’s ‘Digital India’ initiatives has created a positive spark in the tech industry. vendor companies, service providers and channel partners expect a slew of reforms in the forthcoming Budget 2015 that would emerge as a boon for the IT industry at large.India Inc is having high expectations from the first yearly Budget of Narendra Modi government. Finance Minister Arun Jaitley is expected to give sops to the individual tax payers, unveil initiatives to boost investments by corporates and promote manufacturing as part of the Make In India campaign that aims to make India a global manufacturing hub and create jobs.
The manufacturing sector, especially micro, small and medium enterprises (MSMEs), has a great deal of expectations from the budget. The sector is hoping to get a boost from Prime Minister Narendra Modi’s ‘Make in India’ campaign that aims to promote investment and create jobs. Reforms on issues related to taxation, GAAR and FDI will clearly help the sector to get more long-term investment.
Mr. Debasis Chatterji , CEO, Netxcell Limited
“The Economy should start growing again @8% and the interest rates should be reduced to achieve this growth. This budget should take measures to reduce complex and heavy taxation in terms of both personal and corporate income tax. The economy will benefit with more incentives for the service industry especially tourism. There will be multifold impact of manufacturing in India. Firstly, we will save valuable foreign exchange. Secondly, we will be independent of the erratic supply schedule from the foreign countries.
Thirdly and most importantly, our security concerns will be addressed as the entire process will be run in-house. Hence we will have better control on the quality and security aspects. Hence the ‘Make in India’ initiative is a welcome move. Moreover further incentives for startups and small scale businesses will help in enhancing employment in the country.
The telecom industry needs to be revived with a Realistic 3G spectrum auction. Finalization of a concrete telecom policy will provide clarity and enable ease of doing business for the industry. Tax benefits and incentives for VAS companies to energize the VAS ecosystem are much needed. The government should now look at boosting the telecom sector with the ‘Make in India’ initiative. Selection of key areas and forming exclusive technology parks for the telecom industry will be a welcome and most necessary initiative. Telecom needs the ecosystem to develop to be able to make in India, hence if government provides incentives to ancillary industries it will boost the sector. Moreover there should be adequate tax rebates to make it more viable for companies to do business in India.”
Mr. Suman Reddy ,Managing Director, Pegasystems India
“The new government has shown some promise so far in highlighting few crucial elements for improving the current economic scenario, enhancing the investor sentiment thereby leading to country’s overall development. As its going to be the first full-fledged budget by the new government, the industry is certainly keen to see some tangible initiatives from the Finance Minister. I believe this budget will set the tone from economic growth path perspective and needs to have strong policy decisions to control inflation and reduce the fiscal deficit. Reduction of oil prices has happened at a good time which will help reduce the deficit. The government should look at giving further boost to entrepreneurship and provide additional support to scale the startups. ITIR was a welcome move, the industry would look forward to more such initiatives. While Make in India is a great initiative announced by the government, the details are yet to be seen and I hope this budget will layout some realistic measures.
Telangana state needs a fresh start for certain sectors such as manufacturing and real estate. Any support from the center for these industries with further action from the state government will surely help enhance growth in the state as well.
From the IT/ ITES industry perspective clarity on transfer pricing aspects is much awaited in this budget. Additionally the budget should have more support initiatives and mechanisms to boost the startup ecosystem.
Initiatives to nurture more engineering talent and boost the skilled manpower in the country with adequate infrastructure assistance should always be in the mix.”
On the ‘Make in India’ initiative
The Make in India is a good initiative by the Prime Minister. Several companies in the IT sector have been making in India since a long time including Pega. The industry is in support of the initiative and is shifting from services led to a product led ecosystem which is commendable. Like I mentioned above, ample support from the government’s end will be key to nurture this trend. Support for the startup ecosystem with incentives, co-working spaces, trainings and mentoring etc will bring in the desired results on this front.”
Balancing industry expectations with economy limitations is a tough task yet it is a wonderful opportunity for government to showcase its vision for the economy and industry. IT manufacturing industries are expecting lower duties on raw materials and growth oriented regime.However, to boost this industry, Government needs to focus on import duty and export duty charges. A competitive exchange rate of the Rupee and sharper policy focus on sector specific issues will help increase the country’s exports.
According to Ms. Neelam Sharma (Channel Sales Head ProDot), “We want that new government should make clear business strategies to support “Digital India” and “Make in India” Campaigns. A clear roadmap to support “Make in India’ will make the country an attractive destination for long term foreign capital. This will help boost the manufacturing sector which is proving to be a drag to GDP growth rate of the country. Tax reform in the coming budget is an urgent need. In this direction, push for GST is required. The GST will create a single, unified Indian market to make the economy stronger besides boosting tax collections.”
If we import finished ink cartridges then duty payable charges are 16.48%. At the same time, when we are importing refilling ink for same cartridge than duty payable charges becomes 28.85% as per applicable rate of taxes. Further due to a notification by Custom dept.
pertaining to valuation of goods, 28.85% duty gets increased by another 4.6 times to make it around 50-60% on account of loading of prices. Loading as per Custom dept. is not accepting rates per units, means rejecting commercial invoice made by reporters and banks. As a result, For Imaging industries raw material is imported at almost double rate than its actual value which is truly annoying for businessmen.
Briefly, the industries have sent a clear message that they are waiting for new government to deliver its good days (Acche Din aane wale hai) promise!
Mr M A Mannan,Country Manager, Corsair Memory India
The present government of India has been pro-industry since its inception. With more positive vibes from the present government, the budget would be of utmost important towards industry growth. The IT industry would look ahead towards drop in CV duty which was recently increased by 2%. Semiconductor industry is totally dependent on China and “Make in India” is not possible for these products we expect duty to be dropped to bring positivity in the present slow and dim market.
Mr. Ramesh Loganathan , Vice President and Managing Director Progress Software
President HYSEA – Hyderabad Software Enterprises Association
“I hope something more substantial is set aside towards ITIR and also the Pharma city. We (Hyderabad) are positioned very well for the Make-in-India initiative given we have a strong defense/aerospace presence and also pharma/life sciences. I believe some incentives to boost these segments and local manufacturing would help the city and state.
From the IT Industry perspective the long elusive transfer pricing clarity is one serious expectation from this budget. The various skill development initiatives getting to a mainstream operational mode is another expectation. For the Startup ecosystem, clarity in operationalising the 10K Cr startup fund will be great. The implementation will boost growth thereby enabling startups. More specific policy support that incentivize and support incubators will be a major boost to early stage ecosystem. Moreover, Programs/initiatives to seed the startup thought and initial idea prototypes in colleges; is necessary. A substantial mindset altering initiative will be very helpful in getting more graduates to think about starting up and making in India.
Mr Rajiv Shah, Director of Asia Powercom Pvt Ltd
“The upcoming budget 2015-16 is an opportunity for new government to speed up the reform process unveiled over its first eight months in office. The market growth rate has already started improving and the forecast for the next year is even better, we need a blueprint for sustained and sustainable growth over the next decade or two. Income Tax and Companies Act- both have been a major concern to all the businesses. The government also has been postponing the introduction of DTC and GST. Biggest benefit will be that multiple taxes like octroi, central sales tax, state sales tax, entry tax, license fees, turnover tax etc will no longer be present and all that will be brought under the GST. Business now will be easier and more comfortable as various hidden taxation will not be present.”TiE Hyderabad Fostering Entrepreneurship Globally
Mr. Safir Adeni, President – TiE (The Indus Entrepreneurs)
“We would expect government to focus on minimizing indirect taxes and not imposing retrospective taxes. The industry would also certainly like to see a pro-investor tax policy and avoidance of double taxation for foreign investors to enhance investments in the country.
In order to boost the Start-up ecosystem, we have 4 suggestions for the government. Firstly, it should adopt tax policy framework of countries like Singapore and New Zealand for faster growth of Start-ups. It should also avoid ‘Angel Tax’ which negatively impacts the fund raising activities of Start-ups as they have to dilute more stake to cover the tax amount. Thirdly, there should be a structured disbursement of the incubation fund as a streamlined process. Lastly, Government should review Companies Act to make it simpler and less expensive for Start-ups to maintain compliances.”
Alan D Souza, CEO, Vavia Technologies
“After Mr. Arun Jaitley’s session with the CEOs of Indian software and hardware companies, it is quite evident that this year the government is definitely focusing on entrepreneurship and innovation. As a start-up we expect the government to promote investments on IT infrastructure and motivate entrepreneurs to adopt new technologies. Further to this the sector expects the government to introduce various IT and software parks to promote growth.”
Mr. Pramod Saxena, Founder & MD, Oxigen Services
“We are hoping that this year government gives Infrastructure status to Payments Industry. Additionally, we hope that government would encourage electronic transactions by giving tax concession to merchants accepting electronic transactions instead of cash and payments fee be exempted from Service tax.” says Pramod Saxena, founder and CMD, Oxigen services India.”
Ambika Sharma, Founder, Pulp Strategy Communications.
“We hope that this year’s budget will focus on providing growth incentives to entrepreneurs and the IT Sector startups. We expect the government to actively support the development of India’s high potential firms by providing a positive ecosystem for growth. We are Positive that with the new focus on Make in India and the Digital growth plans the budget will be inclusive and focused on progressive growth” says Ambika Sharma, Founder, Pulp Strategy Communications.
Mr. Y Guru, Chairman & Managing Director, Celkon Mobiles
“What the Government does to leverage the unique position that India is in today will define if we are going to end up being a super economy or a country that could have been one. The intrinsic strengths of the country on their own cannot be the drivers of growth, the government needs to really create hard and soft business friendly environment to give credence to its intent of driving growth. The need of the moment to showcase the fact that this government means what it says.
In the telecom industry context the scope to leverage the industry to aid the overall growth is tremendous. We are in a new era – hence business investments in current times should not be viewed plainly in terms of Plant & Machinery but investments in terms of technology and infrastructure should be given more weightage when formulating incentives. Incentives on investments are required to accelerate the economic growth and improve the business sentiments and therefore have a positive spinoff all around. Therefore the government should re-define the policies related to investments and provide for rebates/ incentives accordingly.
The Government has the opportunity to support and encourage with various benefits/ incentives/schemes for those companies who have global aspirations and are taking Indian brands to a global market place. These companies may or may not be manufacturing the products in India – but the resultant impact on the perception of what India can do, could be significant.
In order to boost the sector the government should refund 100% of import duties for all exports made by Indian companies.
We believe reduction of import duties with an option to allow businesses to Make in India will be a welcome move. This will give a huge boost to the Make in India initiative and also enable Indian businesses to exponentially grow.
Creating a suitable ecosystem for manufacturing in India and more importantly creating a favorable perception of India being business friendly is extremely necessary at this stage. I believe the government should take this aspect on priority. Reducing Corporate Income Tax to 20% to enhance growth is another aspect the government should be consider – as a rider they can create a mechanism that this is linked to the investments being made. ”
Mr. Jerold Pereira CEO at Videocon Mobile Phones.
India is already one of the world’s largest mobile phone markets, and is fast becoming one of the world’s largest smartphone markets. The Make In India initiative started by the Government is a great opportunity for the country to focus more and more on building indigenous capabilities both in the hardware and software sides of this technology-driven industry.
We are optimistic that the upcoming budget would send the right signals to key players at all levels of the value chain, particularly those players required to help the country build its own eco-system and infrastructure required to support local manufacturing. The collateral benefits are greater employment opportunities, higher quality standards, better pricing, and more.
Mr. Pardeep Jain, Managing Director, KARBONN
“As India is going to achieve a 25% share in global mobile phone manufacturing by 2019, the industry expects that the Union Budget will encourage domestic manufacturing with policies like tax holidays and interest subsidies and help the Indian telecom sector reach new benchmarks. The mobile segment in India has immense potential and can be looked at as a great platform to create millions of jobs in the country. In Budget 2015, the Government should be introducing policies that encourage local manufacturing of mobile phones and help increase mobile phone user base in India. The indigenous handsets will strengthen the Digital India initiative, as mobile players would be able to cater to the masses in large volumes.
The demand of mobile devices is increasing and domestic manufacturing has not been able to match up to the ever-changing needs of Indian mobile market. The need of the hour is to boost manufacturing to save money by reducing imports and increase the export of homegrown products. Addition to that, the strong willingness and campaigns around Digital India initiative will help in developing a digital environment in the country and create an eco-system of digital literacy and Indian Information Superhighway. With the favourable policies along with locally manufactured products, we expect to see billion hands using mobile phones for communicating and sharing data in coming years.”
Micromax chairman Sanjay Kapoor
India is one of the fastest growing mobile phone market in the world but still it lags behind China as majority of handset makers including the Indian brands manufacture their devices in China. It’s very essential that the government provides a filip to the manufacturing sector in the country by making its policies more powerful and competitive too, as opined by Micromax chairman Sanjay Kapoor. He added that he hopes that the government will no more stick to their age-old policies and help in motivating the sector and formulate more supportive rules and regulations to speed up the eco-system in order to promote manufacturing of smart devices in the country.
Kapoor also said that if the government fails to comply with the demands then it will be difficult for smartphone manufacturers to provide the latest technology at affordable prices, that’s an aim of the Digital India initiative. Karbonn MD Pradeep Jain also said that indigenous products will help the country to realise the vision of programmes like Digital India and Make in India, and mobile and Internet will expand their reach to more vast consumers. He said that the government is expected to introduce some friendly policies in Budget 2015 that will include tax holidays and interest subsidies to give a huge boost to domestic handset manufacturing and increase the mobile phone user base in India.
Mr. Ritesh Suneja, Chief Financial Officer, LAVA International
“The budget will play a very critical role in shaping the future growth of mobile handset industry in India. Smartphones today have a huge potential to boost education, healthcare in the country and the government should try to ensure that it reaches in the hands of every Indian. We expect that the government will take measures to promote domestic manufacturing and investments in technology, especially for companies like Lava International which are now looking to tap India’s manufacturing potential and create jobs in the country. Industry players should get incentives and taxation reforms such as a ten year tax holiday, interest free loans, exemption of special CVD (SAD) on mobiles accessories and parts, components for post sales warranty repair, exemption of BCD/CVD on Capital goods and removal of retrospective amendments in tax laws amongst others. A level playing field should be created between E-Commerce and physical retail segments by putting a uniform VAT rate structure for mobile phones, until GST gets implemented.
Additionally, companies should also get full support in the cost for skill development for enriching the existing talent pool in the country. Talking about investments, we expect the government to also take measures in providing 100% clarity, transparency and ease for foreign investments in the country. A lucrative return on capital is very important for the investors to invest and is most critical for India. Overall we believe there is a positive sentiment in the industry and the budget announcements will augur well for the Indian consumer and economy.”
Mr. Prakash NathTandon, Tandon& Co.
We want more tax rebate and betterment in budget plan that can help us to grow more this year.
Mr. RajendraChoudhary, Satyam Stationary
We expect improvement in Vat and other tax charges. At the same time, import duty should be minimized so that we can purchase more raw material.
Mr. Prassannem, Vasavi Systems
Government should minimize service tax and technology implemtation costs should be reduced considerably.
Mr. Matthew, Green Systems
We want Indian Government to push GST so that unified Indian market can be created to make the economy stronger.