Budget 2018: Here's What The IT Industry Expects

by Sohini Bagchi    Jan 31, 2018

budget

Over the last two decades, India’s IT-ITeS sector has emerged as one of the most powerful and dynamic one in the economy, creating phenomenal wealth, employment, exports and economic value. The sector has contributed massively towards GDP growth and has been the backbone of the country’s exports as well as a flag bearer of innovative start-ups.

The Indian IT sector’s expectations from the upcoming financial budget 2018 is massive as they believe the government should consider introducing certain policy initiatives towards ensuring ease of doing business and maintaining global competitiveness in the sector. In 2017 multiple advancements were seen in the technology services sector, with fast growing use of digital payments, artificial intelligence, cloud and analytics. Tech leaders believe budgetary allowance for digital payments, IT tax regulations, data security and privacy-related issues are expected to be the major highlights for in the upcoming budget.

CXOToday takes a look at what technology leaders expect from the upcoming Union Budget 2018.

“In the past few years, The Indian Government has initiated a series of initiatives, directed at driving overall change for the positive in the Economy, and results are sure to follow suit. One positive impact for example is the fact that The World Bank now ranks India as one of the top 100 nations in terms of business friendliness, a significant jump of 30 points from the preceding year. I believe more success and impact is yet to come. The upcoming budget will be an important one, as it will be expected to provide the ‘booster’ to this forward direction. This government has demonstrated that it values technology led governance for transparency & efficiency. A stronger thrust on research and development that enables more indigenous innovation and increased investments in future technologies will be welcome. I do believe that we will see more of citizen focused & friendly decisions, and initiatives to bolster investment into India.”

Anil Valluri, President, NetApp India & SAARC

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“The industry is still reeling under the APA (Adv Pricing Agreement) leading to confusion around the double taxation component of transfer pricing. We are looking for further clarity on this. Further, the development centres are looking for a more favourable deduction of Section 35 (2AB) to further India’s image as and R&D capital. On the startup fronts, local governments have set the precedent for bolstering innovation and entrepreneurship, and conditions like angel tax for domestic investors being higher than foreign investors must be relooked at. The government can also heed to IT association’s requests to set up a more central initiative around new tech reskilling, as there are initiatives being undertaken by organizations who find it feasible.”

Suman Reddy, MD, Pegasystems India 

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“Budget 2018 assumes huge significance as it comes post the implementation of GST. It is gratifying to see the impact this reform can bring through a uniform nationwide tax structure and by digitizing data through a single platform. While, the government’s Digital transformation strategy can help increase transparency and better governance, at the same time it is critical for Govt to embrace next generation Technology and data strategy to be able to better discover insight using Advance Analytics Platform and AI tools to drive speed in reforms , better resource and revenue utilization, financial inclusion in areas like education and health and improving citizen services to accelerate  faster economic growth.”

Souma Das, Managing Director, Teradata India

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“This will be the Union budget after implementation of GST. We are hopeful that the government will roll-out many schemes and good-planning measures in thisbudget to achieve a GDP growth rate beyond 7% and increasing consumer confidence/spending. Mitsubishi Electric India wants to be a contributor to this growth story and we expect that various reforms would be announced in this year’s budget which would be positive for our industry.”

- Rajeev Sharma,Head-Corporate Services & Strategic Planning, Mitsubishi Electric India 

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“A reduction in the corporate and dividend tax rate and the abolition of all surcharges/cess etc would go a long way in bolstering organisations and helping them build a significant competitive edge in the global economy. A slash in the Minimum Alternate Tax (MAT) rates would also be very welcome. The funds saved have the option of being ploughed back to expand capacity and production thereby propelling the growth engine further. It would be very helpful if  the applicability and implementation of Place of Effective Management (POEM) was moved to April 2018 as enterprises continue to grapple with the nuances of implementing GST.”

-Pratibha Advani – CFO, Tata Communications  

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“Union Budget 2018 has to take many positive steps towards aiding India’s smooth transition into a digital economy. With the constant sophistication of the cybercrime owing to the massive digital advancement and the government stressing towards digital payments, we could expect an overall digitization budget following the significantly intensifying number of cases of cybercrimes and data breaches. We can certainly expect cybersecurity to be a key agenda for the government this year.”

- Keith Martin, Head, Asia Pacific, Corporate Business, F-Secure

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“In last years budget, the Finance Minister announced the setup of CERTFIN. While the initiative was much needed, we hope to see much more specific action points in the 2018 budgetthat will align with the digital transformation journey that the country is undergoing. The 2018 budget must support development in the cybersecurity infrastructure by focusing on people, process & technology. The expectations are for benefits to local organizations for a much needed push to increase qualified cybersecurity professionals, set up local compliance across all sectors for Data Security & to waive off taxation for homegrown cybersecurity technologies.”

KK Mookhey, Founder & CEO, Network Intelligence 

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“Looking at the current situation and the government initiatives like digitization in India, it is expected that the budget which is soon to be announced will focus a lot more on creating funds to battle the growing concern of cybersecurity in India. Cybersecurity according to me deserves to be in the top 5 list of concerns in India.”

Shrenik Bhayani, General Manager, Kaspersky Lab (South Asia)

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“We have huge expectations from the upcoming Union Budget 2018, given it would be the last complete budget to be issued by the current Government. In the current tenure of BJP Government, India has soared high on the ease of doing business and we hope that the Finance Minister would continue relaxing the business environment in the country. To the same accord, we expect a relaxation on the import duty. Furthermore, the GST slab must also be reduced, in order to foster business. Lastly, on 14th December 2017, 10 to 15 % of the tax was asked to proposed by the government on the IP surveillance industry, which got implemented from the very next day. It came as a sudden setback in the industry, with vendors refusing to pay the same on payments that were in the process. WIth this budget announcement, we expect the same to be streamlined, in order to create a healthy business environment.

Sanjeev Gulati, Country Manager-India & SAARC, VIVOTEK

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“One significant expectation from this year’s budget would be tax simplification, rationalization and further reduction in corporate tax rates especially for small enterprises.  Also, aspects relating to the Place of Effective Management (POEM) and transfer pricing must be highly simplified. The government must also consider incentivizing businesses to generate high quality technology talent.  Another expectation in the budget session is to significantly simplify the GST returns filing process to allow filing of returns once a quarter. The administrative overheads would be significantly improved if the process and timelines for GSTR-1, GSTR-2 and GSTR-3 forms are simplified.”

Srividya Kannan, Founder, Director – Avaali Solutions 

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“The new budget should take special measures to efficiently upgrade the digital infrastructure in all parts of the country. Right now we need more high-speed internet networks to penetrate further into the cities, villages and towns. As these areas become smartphone friendly, handset brands can look forward to expand their reach to remote regions and facilitate connectivity. I also suggest that the government should reduce the GST on mobile handsets from 12% to 5%, especially for the smartphones under INR 10,000. With a 12% GST mobile phones are costlier by 4-5% and has also taken away the benefit under duty-differential, being offered to local manufacturers. To put “Make in India” as a driving force for the electronic manufacturing sector , Government needs to act swiftly to provide benefits to the local manufacturers, as lack of part suppliers along with a complex tax regime is already hurting the make in India initiative as a whole”.

- Syed Tajuddin, CEO, Coolpad India.

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 ”Post GST, the budget has lost a lot of its importance as a large part of the expectations from the budget were related to Indirect taxes, we think that the government will go for a modest / populist budget to ensure a balanced / positive sentiment before the elections. The budget needs to make it easier for companies to shift their manufacturing into india, right now we see a lot of companies scrambling to shift their base without the infrastructure in place or 100% clarity in the rules. We will need long term clarity in the taxes which can promote trust and allow people to invest into manufacturing, we believe India has the capability to become a major export hub for consumer durables but needs good and stable policies to ensure that we can explore this potential.”

Rakesh Dugar, CMD- Mitashi Edutainment

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 “With the Smart Cities Mission being a priority for the government, we can expect increased capital allocation towards projects in this direction in the budget announcement with a vision to develop the essential smart infrastructure. As India makes its way towards becoming a digital-first economy, we can also look forward to a sustained push aimed at enabling more businesses to make a seamless digital transition. It would also be interesting to see what financial, infrastructural, and regulatory provisions are made for the ‘Make in India’ initiative. For India to become a global manufacturing hub, the government will have to ramp up its efforts to provide essential support for the ‘In Country, For Country’ companies. Creating an environment where businesses can thrive will encourage more players – both indigenous and international – to explore the possibility of manufacturing within India. The increased economic activity that this facilitates will, in turn, give both the GDP and employment generation a massive boost.”

Rajiv Bhalla, Managing Director-Barco Electronic Systems

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“We expect the budget to be pro-growth with relaxations in corporate tax rate and MAT to boost software product industry growth. Liberalization in software export norms will help Indian software companies to reach across the globe. We also expect a simplified GST structure.”

Diwakar Nigam , MD and Chairman, Newgen Software

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“2018 will be a year of growth and buoyancy for the Indian economy. Last year’s budget did not see much in terms of provisions for the ITeS sector and the demands of the sector especially wrt software products and services were left out. This year disruptive technologies and digital services like Artificial Intelligence, Machine Learning, and Robotics Process Automation will drive growth creating a huge demand for skill development. We are expecting sanctions that will aid to further R&D in India and the streamlining of taxes post the GST implementation to facilitate ease of doing business.”

- Aloke Ghosh, CFO, Infogain

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 ”The Consumer durable market is expected to grow at a CAGR of 13 per cent from FY05 to FY20 which reflects the huge potential of this sector which is yet to be unleashed. Currently the government has placed refrigerators, washing machines and other electronics of daily use in the 28% slab rate under the goods and services tax. We expect the 2018 budget to east the slab rate and place the appliances under the 18% slab. After all, the consumer durables electronics & appliances industry is no more a luxury but a necessity for consumers at large”.

- Anurag Sharma Director of Akai India 

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“Today, a small merchant in India already enjoys one of the lowest cost structures in the world for accepting digital payments. However, merchants continue to be biased towards cash because of the tax impact (direct and indirect) of digital transactions, which leave a trail.  Government must consider a preferential tax rate for small businesses with majority (say 50%) income received through digital channels. This will eliminate the barriers cited by small businesses, expand the tax base, and accelerate the gains of demonetization. Government may also consider tax breaks for fintech companies which are making significant investments in the high volume, low margin digital payments market to provide innovative solutions to merchants and consumers”.

Anand Ramachandran, CFO, TechProcess Payment Services (Part of Ingenico Group)

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“Last year the consumer electronics industry saw a decline by 10-15% due to 2 major reforms (GST & Demonetization). However, despite the initial decline, we welcome the reforms introduced by the government. But televisions have been put under 28% GST, therefore we saw a larger decline in sales in Q3. As a result offline trade has taken the maximum hit and we expect GST on television should come down to 18%. If the government does not consider a reduction, we may see jobs cut down by 35%. Many companies have already started laying off their workforce. If India wishes to maintain its ‘fastest growing economy’ tag ,then we must increase consumerism, which can’t be achieved by placing a 28%  tax bracket on a consumer electronics like smart televisions. In contrast, some of the biggest markets in the world have a tax structure below 12% on television and their market size is growing substantially. In India, the average screen size which was predicted to be at 38” in year 2017-18, still remains at 33”, in comparison. The expectations from this budget for the consumer electronics industry is high and we hope that the Government is able to balance the reformed taxes with the income-expenditure of the layman.”

Avneet Singh Marwah, Director and CEO of Super Plastronics Pvt. Ltd. (Kodak HD LED TV India)