comscore Union Budget 2017: Here’s what the tech industry expects from Arun Jaitley’s fourth budget
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Union Budget 2017: Here’s what the tech industry expects from Arun Jaitley’s fourth budget

From tax rebates to newer policies promoting digitization, here is a comprehensive wish list of the tech industry for the Union Budget 2017.

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Union Budget 2017-18 is set to be tabled in Parliament by Finance Minister Arun Jaitley on February 1. Like the previous year s Union Budget, this year too the industries are expecting an increased focus on initiatives like Make in India and Digital India. The budget also comes approximately four months after the government demonetized the old currency notes, and started pushing for digital economy. The industries across sectors are also looking for several tax reforms including the much talked about General Sales Tax (GST) and several other measures that not only improve ease of doing business in the country but also empowers indigenous companies. Here s a comprehensive wish list of India s tech industry. Also Read - How to book COVID-19 vaccine slot via Paytm App, get Covaxin and Covishield shots with these simple steps

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Union Budget 2016-17 saw an increased emphasis on local manufacturing and making imports of the components expensive. This year too the government is likely to continue the measures in order to bolster the Make in India initiative. The handset players are also looking for relaxation in taxations for making affordable handsets, bringing down the price of these devices further. Affordable handsets are also expected to play a key role in adoption of digital payments, considering the government is already pushing initiatives like BHIM app, UPI, USSD and Aadhaar-based payments.

Thanks to the Make In India campaign, we have already seen major global smartphone manufacturers set up base in India. The government can now further work upon directionally establishing and strengthening the component ecosystem in India to further enhance manufacturing value chain in India, said Peter Chang, Region Head – South Asia & Country Manager for ASUS India.

While the consumer durable industry awaits to recover from the demonetization phenomenon, it also anticipates to be placed in the lowest – 18 percent slab in the upcoming GST reforms, said Manish Sharma, President and CEO, Panasonic India and South Asia. …Further, a clarity on Duty Differential for mobile handsets will give the necessary impetus to Make-in-India under the GST regime.

Even though the government already has policies in place for local manufacturing, the handset players are looking for measures in this Union Budget. The players have also wished for measures to make the country, not only self-dependant in terms of manufacturing, but also evolve it into an export hub.

To make India an export hub for electronics amidst growing competition, the Budget should include benefits like 10 years tax holiday for local mobile manufacturers, continued differential duty structure to encourage enhanced local manufacturing in India, increased incentive under MEIS scheme to five percent from the current level of two percent, exemption of duty on import of capital goods used in the manufacturing of mobile handsets and components, redraw e waste norms which are regressive and unpredictable, said Ritesh Suneja, Group CFO, Lava. ALSO READ: Budget 2017: Government may cut excise duty for manufacturers of PoS machines, ATMs, fingerprint readers

A clearly laid out research and development policy is necessary to succeed in a highly technical industry like ours and will help bring component manufacturing base in India to save precious foreign exchange, said Rajeev Jain, CFO, Intex Technologies Ltd. In the end, to create a truly inclusive digital economy, affordable mobile handset or consumer durable items up to certain value should be given a concessional duty treatment.

Telecom

The telecom industry currently faces a range of challenges including, but not restricted to, expensive spectrum prices. Though the industry has seen a radical change with the entrance of Reliance Jio, incumbent players are under immense pressure to come up with more lucrative plans and offers to retain their customers and compete with Jio s free offers. Reliance Jio s meteoric rise has already caused its first casualty in the form of Vodafone, which has confirmed plans to merge with Idea Cellular.

The Cellular Operators Association of India (COAI), which represents majority of the telecom players, has stressed the need for lower and uniform rates of tax for telecom services. Currently, service tax at rate of 15 percent is payable on telecom services. The body has cautioned the government that any further increase in the tax under GST could have a direct impact on the increase in the cost for subscribers and overall the telecom industry.

“In order to ensure a uniform tax practice among taxpayers and eliminate unwarranted litigation, it is important for the Government to clarify that section 35ABA of the Income Tax Act, which is applicable from FY 2016-17, regulates spectrum allocated after April 1, 2016. The spectrum allocated prior to April 1, 2016 shall continue to be governed by section 32 of the Act, said COAI DG Rajan S Mathews.

Mathews also reflected upon the need to bring attention on the issue of withholding on discounts extended to prepaid distributors. …In order to bring the ongoing litigation to an end, given the low margins earned by the distributors, a lower withholding tax rate of two percent may be prescribed for telecom distributors, he further said.

To further bolster the digital eco-system of the country, the Hon ble Government should announce dedicated spending on ICT just like some other sectors like education, health and other infrastructure, said Chandan Kumar, Director Marketing & Integrated Solutions, Huawei India. A fixed percentage of the government budget spend on digital infrastructure will give multi fold returns to India s GDP and help bridge the digital divide by bringing more and more Indians to the digital mainstream.

With the expansion of 4G network, there has been a huge surge in OTT services. Players are seeking more measures from the government that helps increase penetration of faster internet in the country. In 2017, I expect Government to help us sustain the momentum. For the same, certain funds should be dedicated solely to boosting the reach of internet, especially to tier 2, 3 and 4 cities and towns. Since majority of OTT viewership is still subject to Wi-Fi, improving the broadband access and Fiber optics network shall also be considered under the budget, said Uday Reddy- CEO, Founder, YuppTV.

Fin-tech

Apps like Paytm and MobiKwik have become mainstream apps after the government s demonetization move. These wallet apps have seen a massive spike in terms of user adoptions and transactions. Exploiting the opportunity, mobile wallet companies have aggressively pushed their services with new partners and inclusion of new features. Paytm has now already shifted to payments bank platform whereas the likes of Airtel have also joined the bandwagon. These companies are expecting initiatives that help increase penetration of internet and concessions on adopting digital payments.

Tax rebates can be given to merchants doing a significant share of their sales through any digital method. In addition to digital payments, initiatives should be taken to increase access to credit, said Madhur Deora, CFO, Paytm.

Given the decreasing cost of smartphones, the innovation in the fin-tech industry, and the awareness and momentum created by various digital initiatives, India has a real opportunity over the next couple of years. Conducive policies for digital infrastructure, and creating a level playing field between traditional financial institutions and innovative financial technology companies can help us drive financial inclusion for hundreds of millions of Indians, Deora added.

Besides upgrading infrastructure, companies also believe there s a need for promoting digital literacy. Steps should be taken to promote digital literacy and connect cities, towns and villages with high-speed internet networks so that every citizen is empowered with access to a mobile broadband connection. Access to online services should actually be a fundamental right, said Bipin Preet Singh, Founder & CEO, MobiKwik.

Startups & E-commerce

The government has already been encouraging local entrepreneurship with missions like Startup India. Results of these efforts are quite evident with a number of new startups making a name for themselves in the Indian market. Since startups mostly rely on internet, the players are looking for the government to encourage digital payments, faster connectivity and reforms that make it easier for new players to set up their companies.

Keeping the startup industry in mind, the most important thing for a government to do, is to steer clear of setting too many policies and rules as well as making doing business very straightforward and easy. Minimum governance is actually very good, said Abhiraj Bhal Co-founder, UrbanClap.

We hope that the government announces measures that can ease the friction experienced by users while executing digital transactions. While the efforts of the government on this front are laudable, we would like to see an enabling framework that allows innovative and seamless solutions to be operationalized for digital transactions. This would include permission to allow merchants and/or card networks to authenticate digital transactions in the background while providing users the ease of a one-click payment, said Shweta Rajpal Kohli, Head-Public Policy, Uber India. ALSO READ: E-commerce players seek sops on digital transactions in Union Budget 2017-18

This year the Railway Budget will be presented alongside the Union Budget and we are hoping for the government to announce developments in terms of security and modernization to eliminate incidences of derailment and other accidents! said Aloke Bajpai, CEO & Cofounder, ixigo. …We also anticipate a lowered GST on travel related services and the government investing heavily in the development of travel infrastructure.

In this budget, building on the anti-corruption theme, we expect to see rollout of direct tax reforms to provide stronger disincentives for black economy, land registration reforms, greater push towards digitizations, new programs for economic inclusion & make in India, Sanjay Sethi, CEO & Co-founder, ShopClues.

IT

Just like the mobile phone players, the IT industry is looking for more rebates on desktops and other telecommunications equipment. The IT industry has been seeking an extension of the excise duty differential benefit scheme to cover all ITA products including desktops, laptops, telecommunications equipment, etc. This would mean a zero duty on all inputs for manufacturing of electronic components and parts, including dual use inputs for all ITA-1 items which results in inverted duty scenario, said Alok Ohrie, President and Managing Director, India Commercial, Dell EMC.

Similar to the decision in 1998 to set aside a specific budget for IT across government projects paved the way for induction and adoption of technology throughout India, the government should consider setting aside at least 8 percent of its overall IT budget specifically for cyber security starting with the upcoming budget, said Sanjay Rohatgi, Senior Vice President, Asia Pacific and Japan, Symantec. Alongside investment in infrastructure, we need to focus on developing a world-class and competent workforce.

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  • Published Date: January 30, 2017 5:45 PM IST



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