How IT will benefit from Budget 2014

The Narendra Modi led BJP Government today announced a slew of measures to revive the Indian economy when Arun Jaitley presented Budget 2014. IT will benefit, said industry captains.

The government today proposed an allocation of Rs 7,060 crore in this financial year for developing 100 smart cities in the country.

To encourage development of smart cities, requirement of the built-up area and capital conditions for FDI is being reduced from 50,000 square metres to 20,000 square metres and from $10 million to $5 million, respectively with a three year post completion lock in.

The following are some of the comments from the Indian IT and telecom industry:

Koichiro Koide, MD, NEC India

The budget depicts the government’s effort in promoting the use of new technology and integration of technology across sectors.

We welcome government’s decisions of allocating Rs. 7,060 crore for development of 100 smart cities and modernisation of satellite towns in the country, and an additional allocation of Rs. 3000 crore towards modernisation of police departments. This will promote investments in use of modern technology, making our cities smarter and safer. The government’s intent on giving infrastructure a boost gives us an opportunity to work with various bodies and organization to develop a safe and secure social infrastructure for the people of the country.

The commitment to develop e-visa facilities at nine airports, and encouraging departments and ministries to be integrated through e-platform by the end of this year further indicates the government’s intent to adopt and promote new technology for better governance. Moreover, resource allocation towards Technology Development Fund and plans to take broadband connectivity pan-India will benefit the sector tremendously.

Neel Ratan, executive director, Government and Public Sector, PwC India

With the urban migration trend, the only way for us to sustain as a society is to invest in new cities. These new cities need to focus on leveraging technology to improve service delivery, quality of life and at the same time optimise the usage of resources. Although actual creation for 100 new cities will require large financial outlays however the current budget allocation is a step in the right direction.

This announcement will definitely excite the stakeholders including urban planners, city administrators and industry to come together and create sustainable models for new cities. It is essential to focus on the right governance and regulatory frameworks to ensure speedy execution and benefits realisation. Since smart city concept, on the whole, is a nascent development hence it will be prudent for the stakeholders to take insights from the planners of the few smart city initiatives like GIFT, DMIC and Naya Raipur. Conceptualising and developing new cities is a time taking process therefore this announcement will give the required thrust to fast track the planning of new cities.

It has been witnessed during the recent past that technology companies have become vary of the government contracts, which has led to their reduced participation. To reinforce the level of confidence in the investor community, it is pertinent for government to work out measures which help in “Ease of doing business” with government.

Sandeep Ladda, India Technology leader, PwC India 

“Liberalisation of FDI in eCommerce sector will provide much-needed certainty to foreign players and to a sector that has the promise to provide increased commerce and generate employment in the country. This will also provide boost to the sector and create healthy competition so as to benefit all the constituents in the ecosystem – consumers, government, eCommerce players, and retailers in general”.

Arup Roy, research director, Gartner India 

Overall I would view this budget to have a positive push to industries across the board and augurs well for IT industry as well. This budget focuses clearly on growth, development and job creation with particular focus on infusing growth in manufacturing and infrastructure sectors.

From industry perspective, the policies that would have major positive impact on the domestic IT uptake are: ‘Digital India’ program; “Good Governance”; and “one hundred smart cities” program. Also, FDI cap increase in defense and insurance sector is a huge positive and has direct bearing on IT industry. This budget has also set aside funding for adding new top-notch educational institutions such as the IITs and IIMs in various cities, which is likely to have a long term impact on generating technical and management talent.

Lastly the focus on micro and small and medium sized businesses and their enablement/empowerment with various schemes is a huge positive and is likely to have positive impact on the IT industry as well as such companies get empowered to resort to technology. The orientation towards growth across sectors augurs well for the domestic IT industry however things more or less remain ‘status quo’ from offshore or exports perspective as there is no change in the position there. One area where we would have expected some concrete decision taken would be retrospective taxes and the position thereof. But overall, this is a balanced growth oriented budget with focus on accelerating on the fundamentals.

Edgar Dias, regional director, India at Brocade

A promising budget with initiatives to enhance connectivity by building infrastructure to bridge the gap between rural and urban India. The smart cities and digital India programme of the government will ultimately create an economic value for the country by aiming to increase employability and reducing immigration. Good to see empowerment of the rural areas for businesses to flourish for a speedy economic growth. The measures to boost domestic manufacturing sectors, revive SEZs, support start-ups and set up new industrial clusters are all initiatives towards creating a progressive and advanced India.

Budget 2014 - Modi and Arun Jaitley

Praveen Rajpal, CEO, Rockstand

The Union Budget 2014 is an optimistic move by the government for the entire IT and telecom industry. We welcome the recent developments and applaud the government’s decision to support start ups especially in the Technology and software space. The government’s decision to support start-ups through incubation centres will propel young entrepreneurs to initiate private ventures and reinvest in the nation’s economy. The government decision to allocate separate funds to support various e-governance projects and to uplift the education system across the country is a great move.”

Ravi Swaminathan, managing director, AMD India & VP (Sales & Marketing) AMD South Asia

We welcome the announcement for the IT sector, the budget looks very pragmatic and realistic. The government has pledged to support the growth of domestic information technology capabilities in both hardware and software, focused on enabling the timely delivery of citizen services and creating new jobs opportunities, especially in rural areas.

The FM talked about Smart Cities and Digital India which clearly speaks about government’s intention to go aggressive in developing the nation by taking help of technology. It recognizes the role of technology in creating a citizen centric governance framework.

Talking about the micro – Exemption on all inputs/components used in the manufacture of personal computers from 4 percent special additional duty (SAD) would help revive the subdued demand and promote domestic manufacturing in the country.

Sameer Shah, co-founder & COO, Bonzai Digital

For us this Budget has been both encouraging and surprising. The proposal by the Finance Minister of setting up Rs.10, 000 crore venture capital fund will to attract new entrepreneurs is a very encouraging sign. Any announcement that helps take the start-up space forward is positive. We hope that the implementation on ground matches the intent. However, the plan to extend service tax on advertising in mobile phone media space is a bit unexpected since mobile advertising is a growing medium in India and is still in its nascent stage. Re-introduction of service tax in this emerging & growing sector is surprising. We will have to wait and watch the impact on growth of mobile advertising in India.

Hemant M Joshi, partner, Deloitte Haskins & Sells LLP on Telecom, Media and Technology

The budget offers exciting opportunities to TMT sectors. GST roadmap,which states that GST will be implemented by end of year, would result in multiple layers of taxation and also avoid litigations. The budget encourages local manufacturing of electronics products.Although there are few negative aspects such as imposing 10 percent customs duty on specific telecom products and service tax on mobile and online advertising, overall the budget provides positive picture.

Modernisation of cities and providing high speed connectivity to build smart cities will need roll out of new efficient technologies such as 4G and optic fibre deployment.The 24/7 power to all households, rural power infrastructure and emphasis on solar power will need sophisticated telecom infrastructure for building robust and reliable smart grids across the length and breadth of the country.Mobile banking and the vast business correspondent model of telecom operators will help in fulfilling the social objective of financial inclusion.

The emphasis on e-Governance, computerisation, e-Visas, FDI in e-Commerce, digital classrooms, etc. will enable in the making of digital India and offers opportunities to IT and software companies. In addition, budget provides support to new start-ups through technology development fund which will promote growth and proliferation of Indian technologies.

The new TV and radio channels proposed for farmers, north east and rural communities will help to reduce the information and digital divide.

Though some of the allocations look modest, but the cascading effect of all the proposals would offer big opportunities in the short and medium term for the technology, media, and telecom sectors.

Uday Challu, CEO, iYogi 

I welcome the Finance Minister’s move of allocating INR 10,000 crore to support the start-up ecosystem in India. A special focus on software start-ups  will encourage entrepreneurship and product innovation, and reduce our reliance on the services sectors. Also, the government’s intention to revive SEZs and make them effective instruments of industrial production is a much  needed move and will ensure better infrastructure for new set-ups.

The government’s commitment to infrastructure and specifically to the development of 100 Smart Cities with an outlay of 7000 crore is commendable. This and the fund allocated for Internet connectivity in villages will help enable social and economic growth of underserved regions  and communities across India, and is an example of the strong initiatives we were expecting from the new government.

Satyen V. Kothari, chairman and founder, Citrus Payment Solutions

It is heartening to see that the new government has recognized the importance of entrepreneurship, digitisation and enhanced connectivity as the means for progress for the country. Despite the well-intentioned proposals of the budget, the pressing need in the country is for reduction of red-tape, bureaucracy, and complexity. As entrepreneurs, we create jobs, aspire to accelerate progress, and improve lives of ordinary people. The government should be our best friend in these endeavours and work hard to help us in our combined mission to make India a better country in the next decade. We would have liked to see a simplified tax and regulatory policy as a big step towards supporting our community so that we can focus on the constant challenges of growing our businesses in an increasingly competitive global environment.

Sanjay Kapoor, Chairman, Micromax

Given the current situation, budget creation was an arduous task by any standards! The Finance Minister has made pragmatic choices around available resources and has articulated a road map towards reducing the fiscal deficit and fueling economic growth. While all of us hope he achieves the ambitious target of containing the fiscal deficit, executing it seems very challenging.

His focus on giving fillip to the infrastructure seems exhaustive and he has rightfully protected the common man’s interest in his first budget. While we welcome his stand on retrospective tax policy and intent to finalise GST this year, the current Government has the potential and mandate to take a stronger stance on subsidy and policy.

InfotechLead News Team

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