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Union Budget 2013: Reactions from the IT Industry - Part III
IT News Online Staff
2013-03-01

Sanjaya Sharma, CEO, TATA Interactive Systems

The Union Budget 2013 looks very positive for the education sector, a prerequisite for any country's growth and development. The Government's allocation of Rs. 65,867/- crores for the overall education sector and another one of Rs. 3,983/- crores specifically for the primary education segment are indeed encouraging steps. Its allocation of Rs. 13,215/- crores for Mid Day Meals in schools and the Rs. 17,700/- crores for Integrated Child Development Services are other positive steps to achieve 100% literacy.

I also reiterate that there is a need for a PPP model in the sector not just to execute the delivery, but also deploy modern technology infrastructure across schools enabling rapid proliferation of world-class education.

Another positive announcement was the Rs. 1000/- crores allocation for the national skill development fund. Every sector in India is challenged with severe crunch of skilled workforce and such initiatives will help achieve its target of skilling 50 million people in the 12th Plan period, including 9 million in 2013-14. But, the gap is also widening at the same time and there will be a need for around 50 crore skilled workers across sectors in India by 2022. The Government and NSDC in particular should look at employing technology as a strategic partner to fast track and bridge this gap.

Sanjay Deshmukh, Area Vice President - India Subcontinent, Citrix
The Union Budget 2013-2014 has been an affirmative, balanced and realistic one that will boost our economic growth, even though it hasn't been particularly relevant from an IT hardware and software perspective. On a positive note, provisions for post offices deploying core banking tech and schemes for modernization and technology upgradation in the textile sector; would benefit the sectors immensely.

The budget indicates that there is a pressing need for the public sector banks to be compliant with BASEL3 norms which underscores the need for better data management that can be realised through technologies such as virtualization and cloud services. Additionally, incentivising the semiconductor wafer fab manufacturing facilities along with provisioning zero customs duty for plant and machinery is a move in the right direction.

V. Laxmikanth, Managing Director, Broadridge Financial Solutions
Overall a simple budget that attempts to bring in inclusiveness. Certain areas which needed immediate attention are addressed by the Finance Minister in Union Budget 2013. Current requirements of our country and the economy are around revival and sustaining the growth rate, the budget however has focused on arresting further fall rather than inducing growth.

CAD seems to be on top on the FM's agenda and he has recognized it to be the biggest concern. Though he has not dealt on the topic in detail - he has emphasized on the foreign investments and ECB route to bridge the $75 billion gap.

It was very motivating to see Government recognizing the need to give a boost to start-up/Incubation eco-system. With the announcement of expenses/investment made on incubators qualifying as a CSR spend and hence eligible for rebates will bring in an enhanced support from the industry towards encouraging innovation. A very innovative move considering it is tied to the initiative being recognized as CSR by the Government and yet leading to investments in the product arena, building a stronger eco-system.

As a part of his inclusive agenda two aspects have been addressed regarding women - funding to enhance the security and a bank for the women by the women.

The good news is that need for increasing the investments on all fronts has got a prominence in FM's speech, which is likely to lead to GDP growth and improvisation of rating of the country though the impact could be an increase in inflation down the road.

As required, infrastructure gets significant allotments which are need of our country. Innovative methods have been proposed to mobilize funds in infrastructure like infrastructure debt funds, India Infrastructure Corporation Limited in partnership with ADB will extend credit policies etc. Education, skill development and health have also received attention at the budget presentation with 17% increased allocation to Ministry of HRD for various education and skill enhancement schemes.

For the IT sector specifically, Union Budget 2013 does not carry too much given that no new SOPs or relief have been announced, instead an increase of surcharge on the income above Rs. 10 crores has been added.

For General Public:
Widening of the tax base was imperative - hence we did not see much change on the exemptions - however on the housing front increase in exemption is positive. A welcome move by the Finance Minister to focus on women welfare and development through a series of interesting initiatives like Women oriented bank along with suitable allocation.

Chidambaram has done a balancing act by not making it a populist budget.

Dun and Bradstreet India
IT & ITeS
- Zero customs duty for equipment required for setting up semi-conductor (electronic chips) plants.
- Rangachary Committee has been formed to provide clarity on taxation matters related to research and development activities in the IT sector and for safe harbour.

Marginally Positive
The removal of customs duty on electronic chips would boost manufacturing of high tech electronic products in India. Moreover, the formation of the Rangachary Committee would help to solve issues pertaining to taxation of development centres, tax treatment of onsite services of domestic software firms and those related to finalising safe harbour. The initiatives taken in the Budget, thus, will have a marginal impact on the sector.

Telecom
- Excise duty on mobile handsets costing more than Rs. 2,000/- increased from 1% to 6%.

Negative
The telecom sector has been facing issues like high debt, pressurised margins and huge spectrum costs. The sector expected revisions in taxes and levies from this Budget. However, the consistent tax structure is a disappointment for the sector and is expected to have a negative impact. Moreover, increase in excise duty on high-end mobile handsets to 6% will negatively impact the mobile handset industry.




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