Finance Minister Arun Jaitley on February 28 presented the first full year budget by the Modi Government. Some of the top industry players have reacted to this year’s annual budget. Below are quotes from some of the top tech heads:
Bhaskar Pramanik, Chairman, Microsoft India
The Finance Minister has presented a broad-based Budget focused on accelerating India’s inclusive growth. The Budget reiterates the major programs and initiatives that have been previously announced – Jan Dhan Yojana, Skill India, Swach Bharat, Make in India and Digital India.
The Budget retains the focus on financial inclusion, education, health and agriculture. It has increased focused on infrastructure development, housing and manufacturing in India. Overall, Budget 2015 is wide in its scope and takes into account the interests of diverse sections of society – middle class, farmers, youth, aged and the disabled. It endorses a vision of India where there is a house for every family with24 hour power, potable water, and all accessible by road, and where at least one member of the family is employed. And all by 2023, when India celebrates its 75th year of Independence. The FM also talked about building a better social security system for its citizens to provide financial security.
The budget talked about financial discipline, a monetary policy framework with RBI, that will keep inflation at less than 6 per cent, but look at possible double-digit growth. The FM is looking at reducing the fiscal deficit to 3 per cent but in three years’ time to release additional investments.
The focus on infrastructure and housing investments is good, as it will kick-start the economy and have a ripple effect across all Industries. The FM understands the need to kick start infrastructure projects through increased investments, the need to revitalize PPP with the GOI taking additional risk.
The focus on technology as a backbone for government processes and systems is the right approach example GSTN, JAM was stressed.
- Focusing on startups and MSMEs
The Government has recognized the need to support startups, and incubators and has acknowledged that a culture of innovation needs to be fostered. Budgetary allocations for incubators, a mechanism for supporting self-employment and talent utilization will allow startups and MSMEs to access the funds and talent, creating new avenues for growth and employment.
- Boost to Digital India, Make in India and Skill India
Speedy implementation of the national fiber optic network will enable more rural communities to benefit from the ecosystem of services that can make governance more effective. The trinity of Jan Dhan – Aadhar – Mobile that the Finance Minister referred to, is indeed positive in a mobile-first, cloud-first India.
The Government has also shown its commitment to skill development to equip the nation’s youth to take advantage of economic opportunities. The formation of the National Skill Mission that will consolidate efforts and outcomes and budgetary allocations to financially support youth in their skilling efforts will enable the country to benefit from its demographic dividend.
The focus on job creation through the Make in India program, and providing gainful employment to India’s youth is commendable and a future oriented outlook.
The Finance Minister has focused on the ease of doing business in India. We look forward to policy moves in the coming year that rationalize and streamline approvals for setting up business that can help investments and boost economic development. I am positive about the reaffirmation of the Government’s commitment towards PPP as a key drive of infrastructure creation. This would provide more opportunities for innovation-led companies to partner in India’s growth.
- A simpler tax environment
The Finance Minister has provided a firm timeline for the implementation of GST, and this will help companies effectively plan for the next year. Deferring GAAR by two years, and the fact that the Government is looking to implement its provisions prospectively from 2017, is also a welcome move. It is an indication of the GOI thinking to make tax less adversarial.
The reduction in corporate tax, albeit over the next four years has certainly welcome. More because it also comes with the reduction of exemptions. Exemptions create confusion. I welcome the simpler framework the Government is proposing.
There was a mention of removing SAD on components to remove the duty inversion. This can help local manufacturing of electronic goods as part of the Make for India initiative
The reduction in tax on royalties for technical services will help greater technology adoption in industry and that is welcome.
- What was missing?
We must hold the Government accountable for delivering on their budget promises. Many of the announcements made in previous budget, which were geared to minimize/resolve transfer pricing litigation are yet to be implemented. It is nice to make a mention of the measures for dispute resolution in the speech, but the key is implementation.
We will also need to see if some of the other Tax related concerns of the IT and ITES sector have been addressed. These include resolving ambiguities in taxation of software products and services. In that context, the service tax rate going up is a concern, because of the impact it could have of driving people to use pirated software. Especially, because of the dual tax on software – the net tax rate for software is above 20 per cent.
Sanjay Rohatgi, Vice President, India, Symantec
“Continuing on the direction set last year, this is an excellent budget focusing on the outcomes and not just the outlays-aligned with the flagship programs, namely Make in India, Digital India, Skill India and Swach Bharat. Technology is going to be a critical enabler whether it is for making GST operational; direct benefit transfers and cashless transactions; e-Biz portal or enabling booking of unreserved railway ticket through mobile phones for the masses. However, to ensure wider adoption of technology, it must be safe and secure to foster end-to-end trust. Overall, a pragmatic and progressive budget, indeed.”
Nigel Eastwood, CEO, New Call Telecom
“The Government delivers on its promise of strengthening the infrastructure sector. We, at New Call Telecom, strongly believe that small and medium sized companies hold the key to growth and by giving start-ups a boost will only expedite their growth story. The reduction in corporate tax from 30 per cent to 25 per cent over next 4 years is a welcome one. The reduction on taxes on technical services from 25 per cent to 10 per cent will also cut down costs for service providers like us who have focused plans for realizing the Digital India dream. Overall the budget looks realistic and a stepping stone to India’s growth story. I second the Finance Minister - India is about to take off.”
Sanjeev Sarin, Founder & CEO, Ozone Networks
"In my view, the budget reflects a lot of confidence that the new Government has shown since the time it took charge of the office. It also projects a highly positive and optimistic roadmap for companies and investors looking to do business in India, thereby giving a boost of confidence to FDI in India and clearly sending out a signal that its simpler and lucrative to do business in India. It's a budget for the working class and professionals. It gives a big boost to the farming and manufacturing sector and also encourages employment opportunities by giving preference and building a strong foundation to domestic manufacturing in India. A very encouraging step forward is the decision to induce investment by 70,000 crore in the infrastructure sector for FY 15-16. Health & Education has been a strong focus in the budget and the Government should be lauded for its decision to provide concession to senior citizen on medical expenses."
Rodney Noonoo, CFO, Xerox India
The Union Budget 2015-16 is a positive budget and steps in the right direction. I appreciate the fiscal discipline and intent to reduce the fiscal deficit that stood at 4.5 per cent of GDP in 2013-14 to 4.1 per cent for the financial year 2014-2015 and subsequently reduce it to 3.6 per cent in 2015-16 and to 3 per cent in 2016-17. Overall I see a spirit of enablement, long term growth with announcements of multiple schemes aimed at bringing a change in the economic and social ecosystem that includes job creation, skill development, bridging the social divide etc.
The efforts on overhauling India’s business environment and boosting the country’s presence in the global map of ease of doing business is commendable. Right from cleaning up the links to tightening of processes and stringent laws for eliminating black money, monetizing gold-Sovereign Gold Bond will have a populist sentiment around it.
The commitment to further this process through online central excise and service tax registration in two working days, issuance of digitally signed invoices and maintenance of electronic records and cutting down of paper work and red tapism will be a significant move in digitizing India and IT industry players like us will look at working more closely with the Government on such projects.
The government had promised to make it easy to do business in India and the intent is evident in the budget. The announcement to roll out GST from April 2016, reduction in corporate tax from 30 per cent to 25 per cent over 4 years, reduction of tax on royalty and technical fee as well as re-assurance on retrospective taxation will complement the efforts of improving investor sentiment and making India the next business destination.
The focus on critical sectors like infrastructure and power & renewable energy construction as well as focus on skill enhancement are also steps in this direction. While revised service charge rates increases the risk of more cash transactions at a micro, small industry level, but this is perhaps a necessary and important a step towards GST implementation.
The Budget on paper looks to be an outstanding ‘business plan’ with a roadmap for the next five years with right balance between social and economic objectives with focus on critical areas and now it is really upto how well it is executed on the ground.
Sanjay Deshpande, Co-Founder and CEO, Uniken
The first full-fledged budget of the Modi-led government has served to provide a broad directional roadmap for fiscal planning, infrastructure investment, planned expenditure and policy reforms. The government’s vision has been clear since they took over the reins 9 months ago – to lead India on a path of economic transformation. And, towards this end the government has rightly recognized the need to reimagine India as a hub for manufacturing & innovation.
The government has demonstrated great foresight in recognizing the potential of start-ups in contributing to this vision. Encouraging the spirit of entrepreneurship will provide a fillip to innovation, boost employment, enable an inflow of foreign exchange through exports, foster self-sufficiency and indeed, significantly contribute to India’s renewed economic growth.
As with the interim budget, this current budget recognized the start-up sector as an area for growth and development and has sought to launch a mechanism to boost entrepreneurship SETU (Self-Employment and Talent Utilisation), that has been envisaged as a Techno-Financial, Incubation and Facilitation Programme, is a welcome initiative. I am confident that the 1000-crore allocated by the government to SETU will go a long way in supporting all aspects of start-up businesses. By creating an ecosystem that allows start-ups to flourish, particularly those in the technology domain, the government can unlock India’s potential to create disruptive products and services.
With a progressive vision and timely investment, a pro-entrepreneurship Industry will lend itself to achieving sustained growth and create a global brand for India.
Altaf Halde, Managing Director - South Asia, Kaspersky Lab
"Overall the budget is well structured. The announcement regarding bridging the digital divide between the urban and rural India is a welcome move. The announcement of allocating Rs 150 core to create world class IT hub in India under the Atal Innovation Mission is very encouraging. Skill development also got a special mention in the budget aiming the youth to be entrepreneurs rather than job seekers. This was followed by the announcement on supporting the startups. For IT sector, this announcement will for sure be a boosting one.
“The rationalisation of service tax by including education cess is a good move. The increase will however impact our software sales. The lack of infrastructure development was a concern and it is well addressed in this budget with clear road maps and allocation. This will contribute to the overall development of the country. Reduction in corporate tax is also encouraging. The affirmation in the speech of Finance Minister Mr. Arun Jaitley, addressed the lost confidence among corporate India."
Anil Valluri, President, NetApp India & SAARC
“The budget by the Finance Minister, Mr. Arun Jaitley is a bold and an assertive one. We are pleased to know that local businesses and budding entrepreneurs stand to make a mark globally through various schemes that will help them prosper. A number of steps have been announced to improve the ease of doing business; creation of Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs. 20,000 crore, and credit guarantee corpus of Rs. 3,000 crore is a positive step to encourage young, educated, skilled workers who aspire to become first generation entrepreneurs or expand their activities. With robust growth in the Digital India initiative announced last year, it is heartening to see that the Government wants to further expand it and increase the network connectivity to more rural areas. A progressive and investment focused budget overall from which we hope to see tremendous growth for the Indian economy.”
Keshav Bansal, Director, Intex Technologies
“A good budget, it was big and bold in the proposals with a good vision. The much awaited GST announcement for April 2016, will surely rejuvenate the industry as manufacturing sector will become more competitive and support the ‘Make in India’ initiative, it will be interesting to see how it will be rolled out in the coming months. Another complementing factor was the focus on skill development, National Skill Mission will be a great initiative to develop youth employability thus contributing to the growth of our country. With focus on growth and job creation, it is sure to drive India’s global competitiveness.”
Debasis Chatterji, CEO, Netxcell Limited
“The budget was great in terms of showing the direction for accelerating economic growth. The government has taken a long-term approach by focus on improvement in existing services. The Jan Dhan Yojana, Coal Auction and Swacch Bharat program have given a very good start by dealing with the fundamentals of government fund distribution honestly, starting thermal power plants and to make India disease free. The budget showcases the fundamental change in the government’s thought process and is different from so called popular measures. The initiative to build 6 crore toilet under Swacch Bharat Yojana, will trigger growth in FMCG and ancillary industry and create lots of service jobs.
It was a good budget for the It industry with an initial sum of Rs 150 crore announced to create a world class IT hub to take advantage of our competitiveness. Further the reduction of Corporate tax and support to tech Start-ups with a mechanism for techno-financial incubation corpus of Rs 1000 crore; has given tremendous boost to the IT sector and startup ecosystem. Implementation of GST has been the greatest economic reform so far that will aid India to become business friendly. From the telecom industry perspective, there were a lot of expectations from the industry however the budget failed to offer any concrete initiatives for the sector.”
BVR Mohan Reddy, Executive Chairman Cyient Ltd. and Vice Chairman, NASSCOM
“Budget has a positive thrust on Startup and Technology but concerns persist:
Positives: For Start-up and SMEs, the Self Employment Talent Utilization (SETU), the techno-financial incubation scheme is a big positive; Atal Innovation Mission (AIM) platform to foster R&D and Innovation is another positive. Tax on royalty / fee for technical services reduced from 25 per cent to 10 per cent will be helpful in reducing cost of technology and give more incentive for technology deployment. Public Procurement Dispute resolution Bill is likely to streamline the government procurement process, and also address some of the pending disputes. This will give a fillip to Industry participation in domestic markets.
Negatives/Misses: Increase in Service Tax rate, by 1.5 per cent, is disappointing. Further, with mounting backlog in service tax refunds, the Industry will be impacted. Angel tax continues – Fair market valuation applicable to angel investments and capital receipts taxed in start-ups. This problem is un-addressed in spite of the focus on entrepreneurship and start-ups. Duality in service tax and sales tax applicability to product companies not addressed”.
Sanjay Kapoor, Chairman, Micromax Informatics
The Union Budget 2015-16 was very critical as it outlines new government’s commitment to reinvigorate the economy, kick-start investment cycle and also maintain fiscal prudence. They have the advantage of a stable political regime & lower inflation, courtesy oil prices! In the light of this two things that I expected from the budget were growth & infrastructure enhancement, including the Digital infrastructure like access, backhaul & storage. My first reaction after hearing the budget speech of Finance Minister is that government is making a concerted effort to ‘listen’ to the stakeholders. It's a sincere approach to problem solving with growth, competitiveness, inclusiveness, realism & long-term transformation at the core.
If we reach the forecasted levels of 8-8.50 per cent GDP growth we will not only be the fastest growing economy in the world but would be growing discretionary incomes and thus the domestic consumption. Though, there could be some disappointment with the fact that the set targets on curtailing the fiscal deficit will not be met, but I guess Finance Minister is being honest & pragmatic here still outlining a very measured, but positive approach for the future.
There is an undoubted focus from our Government on Infrastructure development both physical and digital but the task in hand is very arduous. Allocations are still small and our execution track record as a nation is poor. We will need to really attract global funds & resources to make this happen and the budget is pressing hard on transparency & ease of doing business in India to attract large infrastructure investments. On the digital side the vision is grandeur but the modus operandi looks flaky. The success will lie in blemish less execution. It will also be an acid test for the PPP approach, which many of us are firm believers of. Policy makers need to be clear that, getting this right is not a project, company or industry issue but an issue about India's future competitiveness.
As the global standards are going up, investment in National Skills Mission planned to empower youth, and investment of Rs 15,000 crore schemes to skill rural India is a heartening move.
"Make in India" is a great opportunity given India's disposition to address the supply side economics & create employment. To succeed, we will need a line item by line item cost & policy comparison, including IPRs, with competing countries essentially China.
On the taxation front, the trend towards reduction in corporate tax is a positive step while increase in service tax was inevitable given the migration to GST regime. The overall direction of the budget in this regard should not invite any complaints from the industry. The abolition of wealth tax is a welcome move, which is countered by an increase in tax for the super-rich people in the country. This was again an inevitable move as the super-rich must take on the mandate to pay differential tax to maintain the balance. I expected steps towards bringing taxation for rich farmers, so that the tax benefits could actually reach the deserving.
Proposals in the budget to bring positive changes in social welfare, especially pension schemes are encouraging. However, we will have to analyse the fine print of the budget to evaluate the extent of positive change, which will be reflected through these recommendations.
In summary, I see this to be a competitive & growth driven budget for which I congratulate our FM. Budget is not just a one day event but a continuous process with clearly defined objectives and predictability. The delivery however is contingent to flawless implementation. Union budget 2015-16 is true to Mr. Jaitley statement, which said, “It is India's turn to fly”.
