Finance Minister Arun Jaitley is all set to release the Union Budget 2016-17 on Monday. Jaitley is one of the key members of the NDA-led Central Government who brought initiatives like “Make in India” and “Digital India” in the past. These programmes helped the entire technology sector to make growth at an ever faster rate. Thus, expectations are quite high for this time.
Technology companies are looking for some execution towards the programmes that the Indian government announced in the past. “This year’s budget needs to walk the talk and show real execution towards the government’s intent of making it ‘easier to do business in India’ as well as towards ‘developing India as an innovation hub’ for India and the world,” says Debjani Ghosh, vice president — Sales and Marketing Group and managing director — South Asia, Intel Corp.
“We also hope that the budget relooks at procurement norms to focus on quality and cost-based procurement and brings in a single independent authority to ease Digital India implementation. There is a dire need for a strong and well-structured innovation agenda/policy for Digital India and Make in India to be a reality.”
Ghosh also mentions that the budget this year needs to extend duty incentive schemes for all the ITA goods including PCs as well as mobile phones and tablets.
“Several IT hardware players have their manufacturing facilities in India that are currently under-utilized due to weak demand. The suggested duty differential will spur the domestic consumption leading to increased production, thereby boosting manufacturing by these players and creating a winning proposition for the government on ‘Make in India’ especially because this can be done without extending any capital support or incentives (e.g., MSIPs) since the facilities already exist,” she concludes.
Suneet Singh Tuli, president and CEO of DataWind, which is the company behind affordable Aakash tablet, expects some “serious attempts” by the government to pass GST bill. This is considered to simplify the current indirect tax structure for companies that are especially in the manufacturing business.
“We are hopeful of a common GST compliance which will be done by all kinds of businesses, whether manufacturers, service providers, traders, etc. We hope that the GST rate is reasonable and in the range of 3-5 percent,” Singh said.
Prime Minister Narendra Modi last month kick-started his Startup India campaign for enterprises in the country. Although the campaign already brought some tax relief for entrepreneurs, startup founders are expecting to receive a simplify tax regime from the Union Budget.
“Firstly, 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,” says Shashank ND, founder and CEO of healthcare startup Practo. “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. We need to take concrete steps to pick up the pace here and, at least, meet the targets set within the programmes themselves.”
Similar to startups, domestic handset makers are expecting improvements in the existing taxing policies. The manufacturers are also looking for some new facilities to bolster local manufacturing in the country.
“Being a domestic mobile handset manufacturer, we expect the budget to further encourage and felicitate an environment for the creation of a mobile ecosystem that will give impetus to domestic manufacturing,” says Keshav Bansal, director, Intex Technologies.
“Digital India and 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.”
Manish Sharma, managing director, Panasonic India and South Asia, notes that the government needs to drift entrepreneurship, agriculture, and infrastructure as well as adopt a “pragmatic approach” to mark growth.
“While factors like inflation, oil prices, and rupee valuations will continue to have a major play in the way India manoeuvres itself in the in the difficult global times, we request the government to provide the requisite impetus to entrepreneurship, agriculture, and infrastructure and position India is a great investment hub,” Sharma says. “We urge the government to adopt a pragmatic approach to strengthen the Indian economy and take India to glorious heights of progress.
Multinational companies are quite interested in watching the success of initiatives like “Skills India” and “Make in India”. But they also recommend enhancements in the existing technological infrastructure to the government to fulfill its promises.
Kenny Ye, managing director of UCWeb India, which is a subsidiary of Alibaba-owned UCWeb and is the maker of UC Browser, says that the technological infrastructure enhancements will drive IT penetration in India.
“While the current government has announced encouraging initiatives like Start-up India, Skills India and Make in India, the centre must look to enhance the technological infrastructure that will help fulfill these dreams and drive IT penetration in the country,” Ye says. “Increased access to internet connectivity in rural India and higher mobile internet penetration in Tier III and IV cities should be a priority to fill crucial gaps in the internet ecosystem, spur domestic spending and boost economic growth.”.
Apart from the expectations that tech companies have from the Union Budget, the Telecom Equipment Manufacturer Association of India (TEMA) has submitted a note to the finance ministry to suggests benefits for the telecom and IT sectors.
The Association recommends the implementation of 5 percent cess on users of telecom services to enable R&D support. Also, it highlights an extension of the existing Income Tax Act section 35D benefits for domestic telecom equipment manufacturing companies that are complying with the PMA provisions. This is considered to encourage local production of electronics and telecom equipment in the country.
The Cellular Association of India (COAI) has also recently sent its budget recommendations for the Union Budget 2016-17 to the finance ministry. These recommendations included suggestions on the rate of interest, Cenvat Credit, deductibility of spectrum fees paid and tax withholding on distributors margin on the sale of SIM cards and prepaid vouchers in the country.
As these are just some of the recommendations and suggestions, final picture will emerge on Monday. Market analysts and experts are not estimating any surprising announcements, but some improvements are likely to be announced in favour of the society.