What IT Industry Expects From Budget 2019

by Sohini Bagchi    Jan 28, 2019

budget

Technology is at the helm of every affair not only in the private sector but also in the government. The PM’s ambitious programs such as Make in India, Digital India, Skill India program and other initiatives have already placed India on the global platform, all eyes are on the Narendra Modi Government as it is set to unveil its Union Budget in Parliament on February 1, 2019. CXOtoday highlighted the views of some of the leaders in the IT industry prior to the Big Day.

CP Gurnani, MD & CEO, Tech Mahindra

“We need to sustain our global competitiveness and ensure continued support to the start-up ecosystem. We need to further improve the ease and cost of doing business in the country by enabling a feasible policy and tax framework. In Budget 2019, we hope to see more initiatives towards the training and skill development of our youth, thus, addressing the employability issues in crucial next generation technologies such as Artificial Intelligence, Blockchain, 5G, Machine Learning, and Cyber security. Additionally, continued thrust to the Digital India program is essential”.

K G. Prabhu, CFO – DIGISOL Systems

“Players in the IT Industry are excited about Union Budget 2019-20 as this will be the current government’s last budget before the general election. Expectations from IT sector is bit high as the ruling government has been focusing on making India a digitally empowered country since 2015 and has undertaken many initiatives in order to implement the vision. For the year 2019, we are bullish that the union budget will focus more on Smart cities and Digital India initiative in order to shape the IT infrastructure and increase adoption of technology to encourage digitization.”

 
Shibu PaulRegional Sales Director-APAC, Array Networks
 
“From this year’s budget we are expecting reduced duties on IT networking products. There should be a strong domestic manufacturing policy favoring global companies to invest more in India. The budget should reassess the preferential market access policy and ensure that honest tax paying citizens are given privilege and preference.”

 

M A MannanCountry Manager - SAARC at Corsair

“With the implementation of the GST, the industry has flourished a lot; there has been a complete full stop for grey channel market or grey imports. The government is committed to the growth of manufacturing sector and the strides made by ‘Digital India’, ‘Make in India’ initiatives. This evolving aspect of the IT industry brings in immense business opportunities, but requires a special attention for its optimal utilization. So, to further encourage the electronics manufacturers and take these initiatives to next level government should roll out new schemes and incentives. Also, with the fast paced developments in the IT industry, changing consumer buying patterns, variable GST rates for the various sub-parts in consumer goods, the industry is going through a demand-supply-cost gap. Hence, to address these challenges, the current 18% GST bracket can be brought down to 4-8%, which will help the IT industry as well as the consumers.”

 
Rajendra Chitale, CFO at Crayon Software Experts India Private Limited

“With initiatives like ‘Digital India’, ‘Make in India’ and ‘Personal Data Protection Bills’, Government has certainly put India on a Digital Innovation fast track. With Budget 2019, we require government to create policy frameworks that incentivize big businesses to invest in manufacturing locally in India. Further, we would also expect the Government to remove the day-today hurdles and obstacles faced in implementation of these initiatives.

Government had provided for non-deduction of withholding tax on reselling of software licenses - primarily considering the very low margins in this trade and the fact that resellers are not making any changes to the licenses purchased from the OEMs. With the changes in technology - pure play software licenses are being replaced by a bundled package - Azure, Amazon web services, etc. (Together referred to as “Cloud Services”). However, the concept largely remains the same - Resellers are not making any changes to these bundled packages and the margins are also very low. Would urge the Government to come out with specific notification to extend the scope of the term “Software” as defined under NOTIFICATION No. 21/2012 [F. No. 142/10/2012-SO(TPL)] S. O. 1323(E), DATED 13-6-2012. Another area on implementation is to remove the bureaucracy and speed up the process of refunds - on Income tax as well VAT/ Service tax refunds.”

 
Sonit JainCEO of GajShield Infotech

“We would like the budget this year to give a strong push to Make In India which may include larger tax exemption limit for employees working in companies which are manufacturing products locally in India. A strong push towards rural e-infrastructure with added emphasis on security compliance and data protection would be beneficial. Implementing zero GST set-off for companies using SaaS application hosted outside India will enforce companies to setup data centers in India thus boosting jobs as well as infrastructure. Incentives should be given for making digital payments for the additional transparency they provide. This year’s budget should promote companies manufacturing IT products locally by giving them added advantage like tax exemption or incentive on IT exports.”

Krishna Raj SharmaDirector & CEOiValue InfoSolutions

“It’s exciting times doing business in India, which clipped China recently as the fastest growing large economy in the world. It is also set to surpass UK and become the 4th largest in size during the year. Digital and Digital Transformation (DX) are the buzz word across the state and central government and corporate across size and vertical for some time now. Data has indeed become the most valuable IP for both government and corporate for targeted programs with higher impact, faster results and efficient growth. Enterprises have realized the importance of DX to enhance their business relevance and remain competitive in a fast evolving world, with new business models driven largely by technology

 
The Government can look at tax slabs for corporate like in the case of individuals so that large entities pay more and SMBs pay less tax to ensure that they support them in creating new jobs. Recent 10% reservation for economically weaker section cites 8 lakh as the threshold earning for this new policy. Taking cue from this, income tax slabs need to get revised from the current 2.5 lakh slab to 6 lakh+ slab if not 8 lakh+ slab for individuals.

Larger wish of individual and business is for continuance of reforms by any government coming to power so that India continues its journey of realizing its potential in its economic growth journey focusing on inclusive growth of all.”
 
Rajaram Vidyavar, Director-Commercial Netrack Enclosures 
 

“Budget 2018 elevated country as a hub for ease of doing business. Also, the recent announcement of new SOPS for MSME sector that involves less and easy steps to access credit will surely boost the Indian MSME sector.

 
The government is all set for Union Budget 2019 and there are lots of expectations from this session. We would like this budget to provide directions to key decisions expected to take place in IT and Manufacturing sectors. The industry is also anticipating revised schemes which will boost the ‘Make in India’ and ‘Digital India’ initiatives. Tax deductions on locally manufactured products and special packages for Indian manufacturing hubs will surely achieve zero imports by 2020, hence boosting Indian economy.”
 
Prashanth G J, CEO at TechnoBind
 
“I have many expectations from this budget and at the top of it is the Easy Availability of credit, especially to the MSMEs. The last 18 months have been tough with the banks tightening their lines and now in the last 6 months the NBFC scene has compounded the issue. MSMEs want easy availability of credit to sustain and grow their operations.
The other expectation would be that the government would use the budget as a financial tool to boost the Digital India efforts and drive the adoption of Digitization right up to the SME. This will have a huge effect on the economy by not only increasing productivity but giving businesses a step forward to competing in today’s modern business environment.”

 
Rajarshi BhattacharyyaCountry ManagerSUSE
 
The Government’s vision of Digital India has come alive and is slowly bridging the digital divide. With initiates like ‘Digital India’, ‘Make in India’ and ‘Skill India’, the government has certainly put India on a Digital Innovation fast track. By 2019 Budget, we would require government to create policy frameworks that incentivize investments from big players in manufacturing locally in India. Creating transparency in Governance and reducing regulatory compliances should be taken into the consideration. 
 
Sandeep  Pachpande, Chairman, ASM Group of Institutes

“The use of new technology is increasing so is the unemployment among the educated youths, even after having a degree in higher education. In the new budget, this needs to be addressed by providing a suitable ecosystem. Self-financing education institutes are increasingly finding it difficult to sustain growth due to various multiple controls, and fee restrictions. In the upcoming budget, my expectation is that the education system in India be more “Liberalised & Globalised”. Steps should be taken to remove GST on all education-related products and services.   Education loans should be made easily available to all at lower interest rates.” 

 Sundararajan.SExecutive Director, i-exceed

The government launched the Startup India scheme in January 2016 and the scheme has played a pivotal role in establishing the startup culture in the country. It has also helped in improving the Ease of Doing Business ranking of India by 30 places in the latest World Bank’s report. In addition to these initiatives, we hope that the 2019 budget would bring in more tax sops for companies that create software intellectual property (IP) in technology platforms, software products or software solutions amongst others. Such companies require very high initial investment and often go through a long gestation period before they can expect results and positive outcomes. The Government of India can give benefits and tax breaks for IP creation, and encourage selling such technology platforms, products and solutions in overseas markets. It should also give priority for using them in the applicable government entities. This truly reflects the theme of Make In India and helps in generating additional employment opportunities as more IP gets created and usage increases.  

Anupam Bhat, CFO & Co-founder, Goals101

“In the last few years, Fintech has already begun transforming the Financial Services ecosystem in India and while the Government’s intent to provide an enabling environment is clear, the industry hopes for further ease in policy and processes. As the hotbed of the next billion Internet users, Fintech companies would increasingly look at serving rural India. Increasing digital transactions penetration would require concerted awareness efforts and it is hoped that the budget would account for incentives to companies looking to invest in and grow this market.

As data security and privacy becomes increasingly critical, it is expected that the Government, through the budget and other policy measures, would balance this against the commercial realities of viably operating in the Fintech space and thereby bring in valuable information and benefits for the consumers at large. Finally, an issue that is broader to the startup and unlisted companies – angel tax. The interim budget would hopefully reconsider provisions of the Income Tax Act as applicable to investments in unlisted companies by investors. This shall provide much-needed relief to the startup space and promote innovation, which is one of the current requirements for the Indian economy.”

Rakesh Dugar, CMD, Mitashi Edutainment
 
As the country heads towards the general elections, we expect the government to favor expansionary economic policies that would give space to growth-boosting measures with the interim budget, some of them have already been announced like raising the GST limit and seat reservations in education and we can expect more announcements like personal and commercial tax concessions, interest free loans to farmers, job reservations and other policies favoring local businesses. 
All these announcements will likely weigh down on the government’s finances, but with inflation low the government can afford to be less conservative and push ahead with a few crowd-pleasing measures without very adverse effects in the long run.
 
The appliance and consumer electronics (ACE) industry offer immense growth opportunities, not only for companies in terms of consumption but also in manufacturing and job creation. This is why the industry has seen many investments in machinery and manufacturing plans by several Indian and multinational companies. However, an unsteady environment with multiple changes in tariffs, free trade agreements, and anti-protection laws have not allowed domestic players like us and other domestic manufacturers to flourish to our full potential.