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ITVAR News surveyed the Information Technology Industry sector to know about their expectations from this year’s Budget. Read on to know about different expectations and hope the Finance minister of India gives these expectations due weightage. The cat will be out of the bag very soon. Yes, Of course we are definitely talking about the Union budget for 2O12 - 2O13 which will be out tomorrow, and keeping the fingers crossed, everyone is having certain expectations from the budget, whether it is the case of GST or be it the case of Foreign direct investment india. ITVAR News surveyed the Information Technology Industry sector to know about their expectations from this year’s Budget. Read on to know about different expectations and hope the Finance minister of Indiagives these expectations due weightage.
Finance minister of India should demarcate the line between treating software as goods or services - Jagdish Mahapatra, Managing Director, India and SAARC, McAfee
As the Information Technology, ITeS and Business process outsourcing india industry have been significant contributors to India’s gros domestic product; the Indian government has adequately provided concessions and provisions in the past to ensure growth in this sector. We are positive that they would continue the trend in this regard. From an industry perspective, following are our key expectations from the Union Budget year 2012 - 2013 : The 2011 Union budget had provisions in decreasing the surcharge tax limit on corporate tax to 5% from 7.5%. This definitely helped Indian enterprises tremendously and we wish to see this continued in the budget this year. We hope the Minimum Alternate Tax which levied taxes on SEZs, severely affecting foreign investments in India is discontinued or reduced drastically. This would ensure continued momentum on investments which would strategically benefit our country in the long run. One of the main highlights in the last budget was enabling e-filing, e-payment of taxes, computerisation of commercial taxes and the creation of ‘Sevottam’ which has elevated the movement for country’s development in automated mechanism for tax administration. This has been crucial in boosting technology adoption amongst Indians. In this budget, we hope that the government enables more options in tax, pension and similar activities through an online platform to make it convenient for Indian citizens.
Another crucial matter that needs to be addressed by the Finance minister of India is clearly demarcating the line between treating software as goods or services. Hence relevant taxes can be imposed and companies can comply with the appropriate laws. As the software products industry is largely reliant on the channel ecosystem, the government should consider reduction of TDS for software resellers from the prevailing 10% to 1-2% to align with the corporate tax rate. Further clarification is also required in the definition of ‘Place of Effective Management’ in the proposed Direct Tax Code, given that we are the Indian subsidiary of multinational company. We would also like to take this opportunity in assuring our support to the government’s UID project and assistance required in the security requirements for the program. Also as India has witnessed sophisticated cybercrime cases affecting both enterprises and consumers, it has become increasingly important for us to have an evolved security system in place. Entities such as CERT have been playing a pivotal role in enhancing the security of India's Communications and Information Infrastructure through proactive action and user awareness, we would expect the Union Budget to apportion more grants to ensure secure data access for all Indians.
Empowering rural India should be the Prime Focus of the Government - Naresh Wadhwa, President & Country Manager, Cisco India and SAARC
India has already made its mark in the global technology map. However, in order to become a nation to reckon with, there are a few basic hurdles it needs to overcome in terms of broadband penetration, financial inclusion, education and healthcare. Empowering rural India is of utmost importance and the government needs to do so by provisioning for broadband penetration and financial inclusion. In fact, according to Indian Council for Research on International Economic Relations, for every 10 per cent increase in Internet and broadband connections, India could contribute up to USD 17 billion to the gros domestic product. With this in view, the government is on the right track with its allocations last year to connect over two lakh Panchayats in three years. However, it will be necessary for the government to take more steps in this direction. Access to quality health care is another key to achieving rural empowerment. The budget for this segment was raised marginally last year and it would be good to have an allocation for rural health care programs with provisions for technology that would help modernize this sector to expand its reach through remote healthcare solutions and telemedicine. Furthermore, the government announced a big budget campaign ’Swabhimaan’ in the budget last year to promote banking and provide services to about 20,000 villages.
In order to meet this goal, the budget this year too would need to make provisions accordingly. This will also create opportunities for the Information Technology sectors and infrastructure sectors to help banks reach the unbanked and bring the bulk of the country’s population into the banking fold. The Information Technology industry has been facing a shortage in skilled workforce for some time now. To bridge the industry and academia divide, it is important for institutions to introduce more vocation oriented courses at the plus two and degree levels and the government should take steps to incentivize this. By 2025, a majority of our young population will enter the workforce. To empower them to contribute meaningfully to the economy, it is imperative for the government to ensure that the most basic criterion – education – is met. Last year, the union budget increased allocation for the education sector by 24%. It included grants for leading institutes, Sarva Shiksha Abhiyaan, post-matric and pre-matric scholarships etc. It is encouraging and important to create a skilled workforce necessary for our country’s growth, and hopefully this year’s budget too has a similar allowance. The setting up of the National Knowledge Network is also a significant step in helping to take higher education in the country, to the next level.
Green infrastructure cannot be ignored when it comes to CAGR growth - Koji Oda, MD- NEC India
We look forward to a more holistic approach towards budget 2012. Not to miss, we expect it to be progressive in terms of giving thrust to innovation and lay greater emphasis on adoption of technology in varied sectors. In today’s scenario, there is increasing deployment of Information Technology sector in the growing fields of education, retail, healthcare and public safety & security. As in FY 2011, we hope to see further momentum in these sectors. Among the most important steps undertaken by the government last year, the Union ministry had sought to develop seven cities around the Delhi-Mumbai Industrial Corridor (DMIC) with a total investment of about $90 billion within a decade. We anticipate that this pilot project to develop these ‘smart cities’ will enable the overall development of the country and ensure safe and secure infrastructure with an eco-friendly environment for the citizens. This project has opened doors for technology solution providers in the biometric security and surveillance domain for sustainable delivery. The biometrics market in India is expected to grow at a CAGR of 42.4 percent over the period 2010-2014. This trend is expected to grow with more and more government projects being undertaken hence we hope that this will be a major focus area in the Union budget 2012-2013.
When we are talking about growth in CAGR, a vital subject such as green infrastructure cannot be ignored. Sustainable development and adoption of green business practices has become the cornerstone of any debate on environment. With India's economy recording a steady growth rate, it has become even more important for sustainability to feature prominently in the country's development plans. India has managed a good growth rate with various initiatives to combat climate change. There is no difference between development and environment. Conservation is not just about restraint but progressing in a sustainable manner. Towards this, we see a larger role being played out by corporate and government on energy savings and environment responsive implementation of technology. We are hopeful of government’s increased influence in the upcoming budget. While we talk of sustainability and growth, one factor to impact the economy very strongly is proliferation and raising the standard of education in the country. With the emergence of increasingly robust connectivity infrastructure and cheaper computers, school systems around the world are developing the ability to provide learning opportunities to students “anytime, anywhere”.
E learning Online Training
Economic reforms and liberalization should be taken to the next level by the Finance minister of India- Narendra Nayak, Director Sales, C S C India echoes his budget expectation for the IT sector.
“I believe that the time is apt for the Finance minister of India to display positive intent in taking economic reforms and liberalization to the next level. The world is undergoing a transition from an internet economy to an ‘As- a -Service’ economy and for India to realize its full benefits, this budget should display adequate vision to achieve last mile broadband connectivity on priority. It acts as a major hindrance towards the country trying to maintain its leadership position in the Information Technology industry world. The government must also spend on upgrading technology infrastructure in the country as well as invest heavily in e-governance. This will serve many purposes. It will create demand locally, bring efficiency and transparency to government, as well as improve education through e-learning ( Online Training)."
Sustainable Investment across all sectors- The Key to healthy gros domestic product growth rate - Manish Sharma, Managing Director, Panasonic India on consumer durable industry:
“In order to maintain a healthy gros domestic product growth rate, it is vital to have sustainable investment across all sectors in the country. For 2O12 - 2O13 budget, we believe the Government should continue with stimulus packages ( price wise) such as on excise duty to be maintained on electronic items, import duty on key components such as LCD Panels to encourage local manufacturing. This will boost the consumer durable industry. To encourage consumer spending and create positive sentiments in the market, the Government should relax the interest rate “
Digital inclusion will be the key growth factor of the Indian economy - Rajendran, Chief Marketing Officer, Acer India
Despite the spate of political compulsions, we believe that the Government. would do well to announce a budget that is both progressive and ensures stability. Overall, as an industry, we are clearly looking for more support in terms of IT friendly, Information Technology usage-catalysing policies. There is a need for the government to simplify processes and procedures and root out energy-sapping inconsistencies. For e.g. the process for importing refurbished spares for warranty support is currently cumbersome and requires coordination and clearances amongst 3 Ministries/departments which often takes months together for mundane things like absence of the full quorum . Another example is the illogical method of 'MRP abatement based' determining import duty for PCs. It leads to a lot of avoidable wastages across the full supply chain. Apart from this, there is a need to have a uniform tax structure across the country to have a stable, predictable, level playing field for all players. The introduction of Goods and Service Taxx which will hopefully lead to the removal of the plethora of levies and taxes (octroi, entry tax, turnover tax etc etc) would be a welcome step in this direction. Another aspect that the Government should seriously consider is to provide tax breaks or investment sops to boost vocational training in the field of PCs/Hardware.
All of the above will however become relevant only if the Government promotes the ‘adoption of IT’ as an action item with mission-critical priority. Some elements of this could include the pan-India publicity for expounding the benefits of Information Technology sector use (literacy, education, transparency, productivity, employability). There is also an urgent need to accelerate the automation of numerous Indian Government Citizen services interface. Presently the spectrum of such services is vast and only some forward looking states have taken initiatives. Getting it done across the country, will definitely improve efficiency, bring in transparency and boost the productivity quotient for India. As an industry we clearly expect more consistency & stability in terms of policy and increased support to help our industry make technology more affordable to the masses. Some of the challenges that we face in this direction are time varying, including diverse interpretations of the classifications of certain products leading to varying taxes across states. We sincerely hope that the Government provides a clear direction on the introduction of Goods and Service Tax during this budget. Such a positive step will help the industry immensely. Also given the rapid rate of technological advances in the field of computing, a higher depreciation rate with a defined life of 3 years would help timely refreshes for extracting the best from what technology has to offer to better the productivity quotient across the economy. Beyond this, if the Government can look at ways in way it can streamline certain processes for component imports, abolishment of MRP-abatement based import duty determination, and uniform interpretation of classification of products, the industry and country in general will benefit.
Goods and Service Tax will also help create a level-playing field for the industry. In this budget, we are looking for a clear direction from the Government on a time-bound introduction of Goods and Service Tax. The Government needs to have a committed time frame for implementation of Goods and Service Tax so that the Information Technology industry sector can plan well in advance and pass on accruing benefits to the consumer. An extensive dialogue amongst all stake-holders, done in a spirit of partnership would help progress Foreign direct investment india in multi brand retail. Else vested interests would tend to obfuscate the issue. At a fundamental level, Foreign direct investment india in retail will certainly bring a positive multiplier effect across the ecosystem. Digital inclusion will be key for the growth of the Indian economy. The government needs to promote the adoption of broadband. The current uncertainty in spectrum auction should be resolved soon so that mobile service providers can continue to provide high-quality voice and data solutions and competitive prices. There is also an urgent need to accelerate automation processes for Govt-citizen services interface. This will help all our citizens access services more efficiently. These activities will go a long way in contributing to the growth of gros domestic product in India.
PCs in sub 10k category should be incentivized - Ajay Kogta, Country Manager, Strontium India
PC penetration in India is just 7 % and a strong boost up is required from Government side to increase PC penetration. PCs in sub 10k category should be incentivized to make it reachable to common man. We expect the budget this year brings in pricing policies and taxation schemes which benefit the Information Technology.. We wish that our honorable Finance minister of India (He is expert) extend the tax incentives and hike the Minimum Alternate Tax (MAT). Populist budget should not burden users with more taxes, so looking at no more new taxes on memory components. Also tax exemption limit for salaried employees should increase as the need of strong employee base will keep increasing; the Information Technology sector hopes that the budget will have some relief for the Manufacturers and salaried employees. We are hoping that another important yet delayed tax reform, the Goods and Service Tax will be passed during the Union Budget 2012 presentation. Even if Goods and Service Tax is not passed a timeframe should be given in this year budget, it will have a positive impact for the Information Technology sector companies. The Goods and Service Tax is a major tax reform which will centralize the Value added tax, which is still disjointed and gets cascaded from the producer to consumer. The Goods and Service Tax will definitely be a boon to centralize the tax structure from the sales perspective.
Though at this point of time political pressure is immense on Government of india, so its looks difficult that they will be able to convince all states on Goods and Service Tax issue, but Goods and Service Tax rates should also be lower than current tax structure for more growth of Information Technology. Foreign direct investment india should help to generate additional jobs and it should not destabilize large sets of people to create jobs for others. There is lots of scope for Foreign direct investment india in areas where our country can improve. India is far behind in manufacturing of technology products compared to China, Foreign direct investment india in manufacturing of technology products should be given a boost. Lets see on 16th March what incentive our FM brings for this industry but personally I think the Information Technology industry sector is hoping that the Direct Tax Code will be passed during the Union Budget 2012 presentation. The Direct Tax Code will help boost the gros domestic product which is lingering about 6% right now.
Foreign direct investment india in Retail- Can make its positive presence felt - Atul Jain, Country Manager (India & SAARC), NETGEAR Technologies India
The budget should meet up the demand of the common people who are already feeling the pain of inflation due to many direct and indirect taxes which attract price rise ( cost )without having any respite from Inflation. Moreover, the impact of Direct taxes should be minimized so that common person get benefited and the cut in the indirect taxes which directly impacts the common commodities inflate. Not only this, Foreign direct investment india definitely bring in lots of opportunity for the people as well as the industries which are debt ridden the worst example is the current state of domestic airlines. The Foreign direct investment india will bring in and open more job opportunities, as well as more competitive rates which will directly benefit the consumers. Today’s need for India’s gros domestic product is to build up the overall economic growth and not just Information Technology TRaining sector. However some of the key focus areas for Government to focus on to create more Information Technology Infrastructure, timely execution of Information Technology / e-governance Plan, Health care to have a good spurt in the overall gros domestic product. Just stay tuned to ITVAR News as we will bring you Post Budget Coverage- The ITVAR News way keeping you posted whether the budget has lived up to the expectations of the Information Technology sector Veterans or has it disappointed them.
Source: IT VAR News Network
