Here are some initial reactions to the Budget 2015 announcements by the Finance Minister Arun Jaitley. The corporate India surely seems to be on the positive side of things.
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.”
Partha Iyengar, Country Manager (Research) – India, Gartner
Overall, the budget is a ‘feel good’ budget. It has a pragmatic and good balance of social programs, industry (large and SME) friendly programs and tax reforms, without going overboard to be populist or ‘politics driven’.
In terms of the IT industry specifically there is a nod for the needs of the IT industry in terms of making a statement that the needs of the IT industry will be addressed in terms of ease of doing business, capital access etc. However, without reviewing the details of exactly how this is to be done, we will need to adopt a wait and watch approach to see how effective it will be.
Reducing the tax on R&D and innovation investments to 10% is a very positive move, both from the point of view of facilitating technology transfer as well as incenting companies to invest more in driving innovation. Along the same lines, the nod to the ‘start-up ecosystem’ in the country is a major positive. This is the first time such language has made its way into the budget and a good reflection of the fact that job growth has to be broad based by facilitating the SME segment and even the start-up culture in the country.
The increase in infrastructure investments across the board is another positive measure. Here however, the devil, as always is not in the budget pronouncements but the actual implementation of those announcements, which is where the challenges have always been. The fact that there wasn’t a strong acknowledgment of that fact and plans to ensure implementation oversight of these massive programs remains a concern. As an example the NOFNP program has been dragging on for many years now, and other than reaffirming the desire to accelerate implementation, the fact that a hard (new) deadline was not established and committed to is a concern.
On education and skills development again, there are some strong announcements like creating a skills development fund, an innovation platform, and basic education availability within 5 kms of every village. BUT, where are the teachers going to come from? So I would have expected a stronger technology driven approach to expand rural education, which is missing from the budget announcement. The traditional classroom based approach to expanding education access will be a major challenge and instead a strong technology / remote education process would be more effective.
All in all, this is a pragmatic and growth oriented budget which incorporates the ‘rising tide lifts all boats’ philosophy while also specifically addressing some burning rural and social issues.
Pramod Saxena, Founder & MD, Oxigen Services
“In continuation of the PM Jan Dhan Yojana, we believe that this is an additional positive push to promote cash-less transactions and usage of digital money. The digitization of money at lower level and the JAM trinity (Jandhan, AADHAR and Mobile Access) will redefine and transform the economy to cashless. This will help in further alignment of the mobile wallets, cash in and cash outs and overall the mobile technology. We at Oxigen operate through Mobile, Pcs, Biometric point of sale terminals and BCs. Furthermore, our cash in/ cash out ports will further assist us in materializing the cash less dream. We are very positive on this push and support digitization at all level.” says Pramod Saxena, founder and CMD, Oxigen services India.
Rodney Noonoo, CFO, Xerox India
The Union Budget 2015-16 is a positive budget and step in the right direction. I appreciate the fiscal discipline and intent to reduce the fiscal deficit that stood at 4.5% of GDP in 2013-14 to 4.1% for the financial year 2014-2015 and subsequently reduce it to 3.6% in 2015-16 and to 3% 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% to 25% 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.
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.”
Alok Ohrie, President and Managing Director, Dell India
“We’re glad to see a positive budget announced by the Hon’ble Finance Minister. This reaffirms the reform stand taken up by the government and its commitment to investors here. Some of the forward looking statements made by the Finance Minister have a bearing on our sector – exemption of SAD, reduction of Basic Customs Duty on electronics components, inputs etc., ease of doing business, encouraging startups and the big boost to healthcare. However, we’ll need to review the notifications before any predictions could be made on the impact on the sector. The economic survey has indicated that a clear political mandate for big bang reforms coupled with a benign external environment can propel India to a double digit growth trajectory. Today’s announcement only goes to support this. Dell has been a major contributor to the IT sector in India. Apart from being India’s most trusted technology brand, Dell’s manufacturing facility for electronics has been shouldering the ‘Make in India’ mantle for more than 7 years. In addition, we’ve been eagerly awaiting these announcements that boost the manufacturing capabilities of the country that will eventually grow the sector”.
Amar Babu, President, MAIT
“Budget 2015 is a balanced budget that touches upon many areas of infrastructure, universal social security vision, insurance for all, education among others. From an IT industry perspective, it is a mixed bag with the inverted duty structure being finally addressed with the removal of SAD on all components. The removal of customs duty on components and concessional structure of 2% without CENVAT credit are positive steps to encourage tablet manufacturing in India. However it disappoints as no initiatives have been taken to increase PC manufacturing and promote exports. In this budget, we might have missed an opportunity to drive ‘Make in India’ in computers.”
Khwaja Saifuddin, Senior Sales Director – South Asia, Middle East and Africa, WD
“The budget carries forward the government’s vision of Digital India and Make in India, and had some encouraging announcements especially regarding the development of infrastructure, employment generation and training of the youth. The support that is likely to be meted out to start-ups and SME’s through MUDRA Bank is expected to help the existing 5.77 crore small business units in the country expand their operations besides assisting new start-ups. The proposed reduction in the rate of income tax on royalty and fees for technical services from 25% to 10% will empower small businesses and start-ups digitally and make them important contributors to the Digital India initiative. Similarly, steps taken to enhance the employability of the youth through National Skills Mission and Deen Dayal Upadhyay Gramin Kaushal Yojana will result in the industry having an educated and trained workforce, a must for the Make in India initiative to progress. As the Financial Minister mentioned, this would turn ‘job seekers’ into ‘job creators’. Besides this, the proposal to reduce the basic rate of Corporate Tax from 30% to 25% over the next four years is a welcome move. Not only will this make the business environment in the country more lucrative, it will also lead to higher investments, job creation and growth.”
S. Rajendran, CMO, Acer India
“We’re happy and welcome this positive budget which has defined a clear roadmap on many aspects addressing the need for stability in policy framework. Some of the bold announcements made by the Finance Minister and have a direct bearing on our sector – infrastructure spending, direct transfer to beneficiaries, committed date of April 01, 2016 for Goods & Service Tax (GST) and enhanced social security thrust will convey a reassuring message to potential overseas investors. However, we’ll need to review the provisions before any predictions could be made on the impact they will have on the sector. IT industry expected more from the budget. While some progress has been made towards addressing the inverted duty structure and dual Central Value Added Tax (CENVAT) structure for encouraging local assembly/manufacture of tablets and smartphones, keeping out PCs with the attendant increase in Excise duty/CENVAT from 12.36% to 12.5% in addition to the jump to 14% in service tax bodes ill for increasing demand for this category which is already suffering from woefully low penetration rates. We are eagerly hoping that with the clear direction spelt out, there would be more reform oriented policies and measures as the year progresses so the momentum for an accelerated GDP growth continues.”
