Budget 2013 disappoints IT honchos

by Team CXOtoday    Feb 28, 2013

Budget 2013Clearly, it was a lacklustre Union Budget 2013, that was presented today by Union Finance Minister, P. Chidambaram. There was little to write home about for the Information Technology industry, which saw hardly any mention in the Minister’s speech earlier today.

The only saving grace perhaps is for the semiconductor industry, which was given a 0 per cent customs duty. The downside is the 10 per cent surcharge for organisations with Rs 10 crore or more turnover. This will not go down well with many of the large and medium enterprises.

With tongue-in-cheek, Chidambaram also mentions Azim Premji in his speech saying, “Premji, India’s Warren Buffet, believes in higher taxes for the rich to feed the poor,” before announcing increasing the tax on the rich. This will really hurt many C-level executives who will have to shell out more from their pockets.

We will still remain laggards in IT equipment manufacturing
It has always been pointed that India’s IT equipment manufacturing capability constantly fails to catch-up with its software and services capabilities. And it seems this year’s budget wouldn’t make any dramatic difference in this trend as Anwar Chirpurwala, Executive Director of Manufacturers’ Association For Information Technology (MAIT) said, “The key positive aspect is that the Government aims to strengthen the ESDM industry as it plans to provide appropriate incentives for semiconductors industry with zero customs duty on plants and machineries. While the budget provides an allowance of 15 per cent for investments in addition to depreciation to an investment of Rs 100 crore or more – we feel that no one would import machinery unless it benefits the BOM (Bills of Material) costing. If there is no commercial sense in manufacturing then why would someone invest?”

Anwar further added, “It is disappointing in terms of IT manufacturing. On one hand, the government is talking about the National Manufacturing Policy with an objective of raising the share of manufacturing in GDP to 25 per cent within a decade, and creating 10 crore job opportunities and on the other hand it has failed to rectify the anomaly in the tax by not addressing the inverted duty structure. The prevalent rates of Countervailing Duty (CVD) and Special Additional Duty (SAD) for IT equipment result in an increase in the cost of a finished product that is manufactured in India.”

PVG Menon, President, India Electronics and Semiconductor Association (IESA) too expressed similar concerns as he said: “Higher excise duty on mobile phones above Rs 2000: This is a blow to domestic mobile handset makers, as excise duty on instruments priced above Rs 2,000 has been raised to 6 per cent from the earlier rate of 1 per cent.”

The software industry too wasn’t too pleased with this year’s budget. Jagdish Mahapatra, Managing Director, McAfee India & SAARC said, “From an IT standpoint, this is a marginally encouraging budget. We were hoping for the discontinuation of Minimum Alternate Tax (MAT) on SEZs and apportionment more grants to ensure secure data access, which hasn’t been considered. The other disappointing aspect is the surcharge for MNCs in India has increased from 2-5 per cent, if the taxable income exceeds Rs 10 crores.”

More disappointing reactions

“A Union Budget should be the country’s blueprint for increasing its competitiveness. In our country the Budget has unfortunately become a kind of Kirana store price revision exercise–this will cost more, that will cost less. The questions we should instead be asking on every Budget item instead is–in the long run will it make us more or less competitive as a country?” asked Vineet Nayar, Vice Chairman and Joint Managing Director of HCL Technologies Ltd

The silver lining
Though this budget did not bring much cheer to the IT manufacturing industry, it however, was a positive one for the MSME sector, as Partha Iyengar, Country Manager, Gartner Research, India, explained, “The big specific positives of the budget are that he (the Finance Minister) has focused both in terms of the letter and spirit of the Budget on the key planks of growth for India and health of every industry, including IT, which is Infrastructure, Education, Skills Development, and incentives for the growth of domestic manufacturing. Some of the other positive areas are support for entrepreneurship, the MSME sector, both in terms of financial and overall support.”

Some of the other positive reactions inspite of the disappointment:

“The FM’s intentions are very clear: to move India back to a higher growth plane. And given his lack of runway, he has taken lots of small measures which together could boost growth. From a technology perspective, allowing funding for technology incubators located within academic institutions to qualify as CSR expenditure as per new Companies Act will give a huge boost to entrepreneurs and start-ups and increase the engagement of the corporate sector and start-ups,” said N. Chandrasekaran, CEO & MD, TCS

“Even though, there is no clarity on the timeline for the implementation of reforms like DTC and GST, the statement that the Government is focusing on implementing those is comforting,” S. Gopalakrishnan, Executive Co-Chairman, Infosys.

Harsh Chitale, Whole Time Director, HCL Infosystems said, “There was not much spotlight on IT and technology as such but, it’s good to see the serious intent of the government to pass a GST law. Moreover, the government’s move to modernize and develop infrastructure will be much appreciated by the industry.”

Pradeep Nair, MD, India and SAARC Autodesk, said “What should please us in corporate India is the fact that the FM has laid a lot of importance on two specific areas which are imperative to boost growth- namely infrastructure development and Medium and Small enterprises. In particular, the move to extend MSME benefits for a period of three years post moving to a higher category is welcome.”

“While this year’s budget can be viewed by some as a moderate one, I believe it is a positive one, in view of the economic conditions. It focuses on enabling faster, sustainable and more inclusive growth as well introduced some key reforms for promoting overall economic development. Definitive measures around fiscal consolidation especially the announcement of the GST law and allocations towards CST compensation are very welcome,” says Anil Valluri – President, India & SAARC Operations, NetApp Marketing & Services.

Rajat Jain, MD, Xerox said, “I would like to call out two definitive measures as positive signals that will have rapid impact.” He pointed at the announcement of a GST law that will be drafted by the State Finance Ministers & the GST Council and allocation of a sum of Rs 9,000 cr towards the first installment of the balance of CST compensation for States is a welcome step towards much awaited fiscal consolidation.”

Suresh C Senapaty - Executive Director & Chief Finance Officer, Wipro, said: “The budget delivers on the promise of fiscal prudence, continues to drive progress on reforms and chalks out initiatives like investment allowance to ensure growth is not ignored. Reforms have progressed in the areas of Direct Tax Code, GST, financial markets regulatory authority for Road sector and Tax Administration Reform Commission to bring about a tax regime, which will be more proactive in closure of issues rather than litigious. It addresses sustainability initiatives through investments in renewable energy, waste to energy projects in PPP model and has incentives for wind energy projects. The budget has proposed steps towards inclusive growth with measures around financial inclusion, investments in education and welfare of women and children. Overall, the budget is balanced and realistic.”

Your say
Sign in to post a comment, or Sign up for an account.
Hey what a brilliant post I have come across and believe me I have been searching out for this similar kind of post for past a week and hardly came across this. Thank you very much and will look for more postings from you.
... 22 Nov 2014, Davidalan1122
I really appreciate that you wrote this article and shared some really good information on this specific topic. I was in vital need to get some information on this topic and thanks to you, I’ve got that! Thanks, once again! american residential warranty
american residential home warranty
american residential warranty services
home residential warranty
... 18 Nov 2014, Aditech
It is a great website.. The Design looks very good.. Keep working like that!.
bearpaw emma
... 15 Nov 2014, Davidalan1122
Thanks for this wonderful post.Admiring the time and effort you put into your blog and detailed information.
andrew forester’s restore my blood sugar
... 15 Nov 2014, Ashleydanielle
It was wondering if I could use this write-up on my other website, I will link it back to your website though.Great Thanks.
megashare pretty little liars season 5 episode 7
... 9 Nov 2014, Ashleydanielle
This is really a nice and informative, containing all information and also has a great impact on the new technology. Thanks for sharing it,
... 8 Nov 2014, Ashleydanielle
here I will explain how to What Is Apple Pay? take care of the most important organs of women’s health please visit if you are interested thanks ... 4 Nov 2014, Shahbaz123
The distance learning really suited me as I work fulltime but I still had plenty of time to get the required Assignments completed on time.Coaching Classes for ... 2 Nov 2014, Eilly
What a fantabulous post this has been. Never seen this kind of useful post. I am grateful to you and expect more number of posts like these. Thank you very much.
ex factor brad browning ebook
... 1 Nov 2014, Ashleydanielle
This article gives the light in which we can observe the reality. This is very nice one and gives indepth information. Thanks for this nice article.
ex factor brad browning ebook
... 1 Nov 2014, Ashleydanielle
This type of message always inspiring and I prefer to read quality content, so happy to find good place to many here in the post, the writing is just great, thanks for the post.
best whitening cream for men
... 30 Oct 2014, Ashleydanielle
Must confess that you present powerful steps on this blog, MrqePromoCode You definitely know what you were talking about and Your intelligence on the post could be giving us new knowledge.Pretty great post. I simply stumbled upon your weblog and wanted to say that I have really loved browsing your blog
posts.Simply wish to say your article is as astonishing. AutoPartsPromoCode The clarity in your post is simply great and i could assume you are an expert on this subject. Well with your permission let me to grab your RSS feed to keep updated with forthcoming post.
InkPromoCodeThanks a million and please keep up the gratifying work.I was very encouraged to find this site. I am sure to all the commenters
here! It’s always nice when you can not only be informed, but also entertained! I’m sure you had fun writing this article
... 27 Oct 2014, Marycom
Great things you’ve always shared with us. Just keep writing this kind of posts.The time which was wasted in traveling for tuition now it can be used for studies.Thanks
how can i make her more attracted to me
... 20 Oct 2014, Davidalan1122
Great article Lot’s of information to Read…Great Man Keep Posting and update to People..Thanks
megashare pretty little liars season 3
... 13 Oct 2014, Ashleydanielle
This is such a great resource that you are providing and you give it away for free. I love seeing blog that understand the value of providing a quality resource for free.
... 5 Oct 2014, Davidalan1122
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
cirurgia plastica no nariz
... 4 Oct 2014, Ashleydanielle
Very useful post. This is my first time i visit here. I found so many interesting stuff in your blog especially its discussion. Really its great article. Keep it up.
... 28 Sep 2014, Ashleydanielle
Interesting topic for a blog. I have been searching the Internet for fun and came upon your website. Fabulous post. Thanks a ton for sharing your knowledge! It is great to see that some people still put in an effort into managing their websites. I’ll be sure to check back again real soon.
... 23 Sep 2014, Davidalan1122
I think that thanks for the valuabe information and insights you have so provided here.
... 14 Sep 2014, Davidalan1122
This topic has always been one of my favorite subjects to read about. http://mrqe.us I have found your post to be very rousing and full of good information. .I would like to thank you for your best written post, its informative and your writing style helped me to read it till end. http://couponcodes365.us I liked the way you wrote it. http://mrqe.in You did not divert from the topic even once which I have
not seen in many other writersand www.usafashiontv.com
... 12 Sep 2014, Mrqeus
You know your projects stand out of the herd. There is something special about them. It seems to me all of them are really brilliant!
megashare legally blonde
... 6 Sep 2014, Ashleydanielle
Superbly written article, if only all bloggers offered the same content as you, the internet would be a far better place..
... 3 Sep 2014, Tgggo1122
It was wondering if I could use this write-up on my other website, I will link it back to your website though.Great Thanks.
... 27 Aug 2014, Tgggo1122
It was wondering if I could use this write-up on my other website, I will link it back to your website though.Great Thanks.
... 21 Aug 2014, Tgggo1122
Superbly written article, if only all bloggers offered the same content as you, the internet would be a far better place.. e zigarette starterset ... 12 Aug 2014, Ashleydanielle
I am typically to blogging and i actually recognize your content. The article has actually peaks my interest. I am going to bookmark your web site and maintain checking for brand new information. taxi lech ... 7 Aug 2014, Ashleydanielle
slim 24 pro assists in washing out damaging toxic compounds and shedding people several added pounds. Even if we eat balanced and wholesome meals, it will get contaminated by these toxins. Transform Fat To Fit With slim 24 pro ... 6 Aug 2014, Pandit
Really great post, Thank you for sharing festas infantis ... 1 Aug 2014, Sheilaf
Very interesting blog. Alot of blogs I see these days don’t really provide anything that I’m interested in, but I’m most definately interested in this one. Just thought that I would post and let you know.
bow wow pet insurance
... 23 Jun 2014, Ashleydanielle
I know what you mean, it is not the best budget, but you should deal the situation like it is!
bavaria cruiser 40
... 17 Apr 2014, Steveberlin