Post-Budget Reactions from IT Industry

"We as a constituent of the ever-evolving communication sector of the country would like to welcome the forward-looking Union Budget for 2012-13. By taking progressive policy measures the Finance Minister has been able to put forth a proposal which will definitely take the country on a path of progression. While we all acknowledge the contribution of the mobile phone industry to the growth of the Indian economy, it is heartening to know that the expected GDP growth for the financial year of 2012-13 will be in the range of 7.6%. This growth of the Indian economy being supplemented by the growth in the mobile phone sector of the country is definite to channel the sector on an evolutionary conduit. We welcome the Finance Minister's move to cut customs duty on memory cards for mobile phones which while complementing the usage of storage cards will definitely help in increasing the usage of extensive mobile phones in the country. Another welcoming move which will definitely help in the emergence of India as a communication superpower of the world will be the exemption of mobile phone parts from basic custom duties which while bringing down the manufacturing cost of mobile phones will aid in deeper penetration of mobile phone manufacturers into the untapped portions of the Indian market. These all measures while acting as a liberator to the Indian mobile phone industry will also send in positive signals to the quest of India in becoming a communication superpower and will make real the dream of 'affordable mobile connectivity', for all".

--Pradeep Jain, MD, Karbonn Mobiles

''With Excise duty increase the required Stimulus for growth has been curtailed and would be inflationary. This puts pressure on the already slow manufacturing sector. Initiatives to bring down Subsidies from current 2.5% of GDP to 2% in 2012-13 and 1.75% in 2013-14 is welcoming. GST & DTC reforms still not aggressively pursued as expected by the Industry and People. Another welcome aspect is the 12th Plan period promises 50 Lakh Crore Investment in Infrastructure with 50% private participation-implementation would still remain a major challenge. Overall not a very clear and definitive growth budget."

--Sandeep Nair, the President and MD of Emerson Network Power

In the backdrop of challenges pervading the economy, we see that the Union Budget 2012 has announced economic and tax reforms to set the stage for sustained growth and development. As part of the 12th Five Year Plan, we welcome the government's move to outline policies that will generate domestic demand recovery.

As a foreign corporation with an Indian subsidiary, the government's plan to introduce tax reforms for the enactment of Direct Tax Code Bill is encouraging for us. The move to set up the GST network as a National Information Utility and operationalize it by August 2012 is also favourable for the industry. The budget has also recognised the role of technology in creating a citizen centric governance framework, reflected in the subsidy provided for Aadhaar tablet enabled payments for various government schemes in atleast 50 districts within next 6 months. This is particularly of interest to us as we at Citrix are helping customers to enable on-demand access to desktops, applications and data on tablets in their workplace which results in increased productivity.

That said, there have been no mentions of clearing the ambiguity around treating software as goods (subject to VAT) or as service (and subject to service tax). We were also hopeful of revisions around the Minimum Alternate Tax (MAT) on SEZ as last year it saw the investments in SEZs going down. Amendments towards this end would have helped the industry create a conducive environment to attract both local as well as foreign investments into the country.

--Sanjay Deshmukh, Area Vice President - India Subcontinent, Citrix Systems India

It is surprising to see that there is no direct focus being given to the IT industry in the budget this year. World over, this decade is defined as a decade of information technology driven inclusive growth and the lack of focus on IT in the budget would not do any good to the already deteriorating image of India as an investment destination. Having said this, there are lot of indirect opportunities that will arise as the government lay specific focus on areas such as skill development, micro finance banks, national land bank, custom duty relaxation on mobile phone parts, etc. Companies who can focus on these priority segments from an IT stand point are poised to benefit from the large scale that India offers. Telecom, manufacturing and infrastructure are the key verticals to focus on. Flexibility on VC investments, opening up of Adhar platform etc. would also provide ample opportunities to tech focused startups.

--Praveen Bhadada, Director, Market Expansion, Zinnov

"On the whole it has been a very average budget. There was an opportunity to make some clear moves to move the needle on growth and investment. Instead, we have been given a safe budget. The increase in excise duty and service tax will hurt growth and will likely cause inflationary pressures. For the IT industry, I expected to see MAT exemption to SEZ units, which did not happen. On the positive side, I welcome the increased investment in education, health care and housing."

-- Rajdeep Endow, Managing Director, Sapient India.

Last year, due to unfavourable global factors, India's economy was largely affected. This year, the Finance Minister has proposed a fair bill which is for the most part populist in nature. It bodes well for new investors and also creates a wonderful picture in the health, education, NREGA etc. sectors. For the IT industry however, this is a moderately encouraging bill and has made few strides in the development of the sector. Certain benefits we see that will accrue to the industry at large would be:

· Scale and roll-out UID in 50 districts: As mentioned in our pre-budget quote, we firmly believe that UID will be a catalyst for the development of the country. Not only will it enable financial inclusion, it will also help the rural populous in gaining identity and for the daily wage workers.

· Introduction of mobile-based Fertilizer Management System has been designed to provide end to-end information on movement of fertilisers and subsidies. Nation-wide roll out during 2012: Pervasive technology so that all sectors in the country can avail the benefits for the betterment of their living. This will benefit more than 12 crore farmer families.

· A central "Know Your Customer" depository to be developed in 2012-13 to avoid multiplicity of registration and data upkeep: A brilliant reform movement, this will not only reduce duplicity in our system but also help the banks in maintaining the correct financial requirements of every individual. This will go a long way in the financial inclusion movement.

· DTC and GST Bills: We welcome these proposals that are aimed at bringing in uniformity in the taxation process.

--Jagdish Mahapatra, Managing Director- India and SAARC, McAfee

The benefits announced for key sectors like infrastructure, agriculture and education are bound to improve the overall economic scenario. However, the budget does not bring any relief to the consumer electronics industry, which has been reeling under the impact of rising input costs and rupee depreciation in recent times. The rise in excise duty may lead to an increase in prices of consumer electronics products.

--Mahesh Krishnan, VP-Home Appliances, Samsung India

heartening to see Government of India putting consistent efforts to strengthen the education sector as a whole and to improve the quality by promoting private-public partnerships. The much anticipated Model Schools scheme is a landmark of sorts for the sector and is expected to be a huge step in making quality education accessible to all. This coupled with enhanced spending on SSA, RMSA and skill-development augurs well for integrated education service providers. Move to allow QFIs invest directly in corporate bond market will enhance liquidity. Overall I am pretty sure that we are on course for the 7.6% GDP growth projected for FY '13.

--Sanjeev Mansotra | Chairman & Group CEO - CORE Education & Technologies

Small and Medium Sector Enterprises face difficulties in raising capital and are often dependent upon banks for the same. The move by the honorable finance minister Mr. Pranab Mukherjee to set up a 5,000 crore India Opportunities Venture Fund with SIDBI is likely to ease some of the difficulties faced by MSMEs. The move is also likely to encourage new entrepreneurs to set up their own businesses which in turn will result into more employment opportunities.

"The increase in the tax slabs will also help in increasing disposable income of customers which in turn help them increase spending and investments. This will further augment the growth in the retailing sector (or even e-commerce sector, a modern and smart way of sale & purchase online). Further, the growth sentiments portrayed by the finance minister for the economy lays the ground for increased confidence among the masses which will usher in sense of well being and improved spending." he added.

--Navin Joshua, Founder of Fashos.com

Budget 2012 is yet again a reflection of the tightrope walk imposed on the FM by challenging economic climate and its left leaning allies. The underlying populist compulsions seems to be very fast eroding his credibility as someone with fresh ideas - and much less the courage to implement them. The budget fails to deliver a clear signal to the industry that Government is serious about "action" in reforms. Promises are a plenty - ranging from FDI in Aviation to fast tracking the DTC but all of them seem to be missing a concrete timeline and sound like a repeat of 2011.

Yet again "policy pedicure" style effort seems to have been made in support of the manufacturing, banking and agri based industries, even SME's find a mention with revision limit on compulsory Tax Audit - but the budget sorely lacks of a single game changing move. Knowledge based industries like IT, ITES & even Pharma seems to have been totally given a miss by the FM. 2nd budget in a row with a flavor of "stale", it's bound to cement cynicism amongstthe most optimistic entrepreneurs. The budget does carry adjustments like - easing of sectoral caps on VCs but they range from being nominal to well short of long term impact.

Where the political compulsion gives him breathing room, the FM does deliver good news - National Skill Development Fund to 1000 Cr and increased support for the Farmers and agri business ecosystem are good moves. Aam Admi does go home with a a few goodies, and beneficiaries of social safety net are better taken care of - so to that extent thank you Mr. FM - but is this all we can expect from you ?

--Lavanya Rastogi, OSSCube

We welcome the Union Budget 2012-13 presented by the Hon'ble Finance Minister (FM) today.

While the FM called for speedy reforms today, the Budget did not indicate much in that direction. The key highlight, however, was 'GST' which is now expected to be operational by August 2012. We hope that this timeline is met as it would certainly help address the multiple taxation issue faced by the MSMEs currently. We had also expected some effective mentions to simplify taxation and also consolidate multiple departments to allow better compliance by MSMEs. This still remains to be looked at by the government.

Another positive for MSMEs in this budget was allocation of Rs 5,000 cr to SIDBI for venture fund which would enhance equity availability to MSMEs. Exemption of capital gains tax from sale of property when proceeds are used for investment in SME would also help augment funds for SMEs to a certain extent.

The fillip to handloom, powerloom and leather clusters is seen as a positive move for growth of small enterprises in these sectors.

With the manufacturing sector facing deficit in skilled manpower, the FM's proposal to provide weighted deduction for expenditure on skill development will help bridge some gap. Also, the move to raise the turnover limit for compulsory tax audit for SMEs to Rs. 1 crore from Rs. 60 lakh would also bring relief to many SMEs.

We believe that there was a scope for bolder announcements for MSMEs which could have brought a sea-change in their productivity and growth by eliminating the challenges faced by them.

--Dinesh Agarwal, Founder & CEO, IndiaMART.com