Union Budget 2019: What IT Industry Expects From Modi 2.0 Govt
PM Narendra Modi-led NDA government is going to present the 2019 Union Budget on July 5. The newly-appointed Finance Minister Nirmala Sitharaman will be making history as she will be the first full-time woman finance minister in India to present the Budget. Here’s what experts/analysts in the IT industry say on the budget expectations from the new Government and how it could impact the IT industry.
Anil Valluri, President, India & SAARC Operations, NetApp
“The re-election of this government ensures continuity of the Government’s compelling vision for India to boost the economy and put India on the technology superhighway by 2030. Through the Union Budget 2019, it would be key for the Government to put the spotlight back on its flagship initiatives like Digital India enabling digital infrastructure as a utility to every citizen, governance and services on demand, and digital empowerment of citizens. With the help of technology, the government should focus on catalyzing the smart city programme, to become growth engines for the country’s economy. We definitely look forward to see the government fortify the investments in the Artificial Intelligence sector as indicated in the interim budget, so that the benefits of AI technology can reach the masses. Priority should be laid on delivering this in the short, medium as well as long term – in order to shape the architecture of our society into a global one.”
Mahesh Makhija, Partner and Leader, Digital and Emerging Tech, EY
“With the goal of making India a $5tn economy by 2024, the government is likely to introduce measures in the budget to encourage growth of start-ups, especially in new growth industries like AI and machine learning. We would expect the government to further expand on the measures announced in the interim budget and allocate additional funds to support deep tech segments like AI, Robotics and Machine Learning.”
Ashok Kumar, Founder & Managing Director, RAH Infotech
“In the Union Budget 2019, we look forward to the Indian government being startup friendly. Startups require a continuous flow of fund, operation and regular upgradations,.To meet this requirement, both the governments, central and state, must take measures/initiatives that are specifically focused towards the development of startups. The government must conduct programs, formulate policies and schemes to encourage new age startups. The government should introduce a policy framework that ensures seamless operations, efficient company registration and less of paperwork.
Another key area, where we want our government to take action is “demand-supply-cost gap”. With various technological developments in the IT industry, evolved customers buying patterns, variable GST rates in goods/IT products, the government should consider reducing the current 18% GST.”
Sunil Goyal, MD and Fund Manager, YourNest
“As the start-up ecosystem matures, it faces several working capital issues which, in turn, hinder its long term growth. We believe that the current norms for GST & TDS are blocking significant money. A workable solution, within the guidelines and definition for startups is much desired. The Government must ease the current process of obtaining approval of reduced rate of TDS with this simple amendment. Mandating banks to give a loan under priority sector lending for startups to deposit GST until receipt of payment can ease the capital concerns of startups. A long lasting solution will be to make TReDs grow at a rapid rate like UPI.”
Kushal Nahata, CEO & Co-founder, FarEye
“The Budget 2019 should include regulations that will drive organizations to digitalize key logistics and supply chain processes. For instance, by mandating digitalization of certain key accounting, billing, and logistics processes the government can ensure greater levels of compliance (especially with regards to environmental sustainability) and tackle corruption better. Also, this year’s budget should highlight the current state of eWay bill adoption. The pace of development of some crucial infrastructure remains slow. There is a need to speed up the development process of projects like the Dedicated Freight Corridor (DFC). We are also expecting announcements with regards to building integrated transportation hubs or Multi-Modal Logistics Parks.
The government can plan to introduce special windows to help logistics startups compete with large technology providers when it comes to winning government tenders. Also, there is an urgent need to simplify GST, especially with regards to the logistics industry. Once multiple types of businesses are brought under an organized trade structure, supply chain organizations will be able to deliver better value propositions to customers and hence boost revenue collections for the government. Deploying a uniform GST rate across the country is another initiative that the government needs to talk about in this year’s budget.”
Shrenik Bhayani, General Manager, Kaspersky (South Asia)
“As India progressively moves forward on its path of digitization with the government introducing advanced technologies in various sectors and even concentrating their focus on digitally advancing villages, we hope that cybersecurity will be part of the budget plan.
From huge critical infrastructures to an individual with a mobile phone all need to have the correct cybersecurity practices in place. In my opinion, the government should spend its cybersecurity budgets on making people aware of the challenges and threats, conduct trainings for the government employees and also promote the same for the Indian companies. What is also required is for the government to spend on updating the old operating systems to save ATM’s from attacks like Wannacry and keep the other systems in check by implanting advanced security frameworks that are needed to be ready to fight cybercrime.”
Sumit Sood, Head of India & Asia Pacific, GlobalLogic
“Our vibrant democracy and strong economic growth, provide a unique opportunity for India to lead the world into the digital future. Would be fantastic to see a budget that provides impetus for investments into technologies that enable an environment friendly & transparent future. Leveraging technologies like AI & Drones for water conservation, agriculture management etc. and Distributed Ledgers for transparency in public spending & record keeping can help India take a huge leap forward.”
Rajendra Chitale, CFO, Crayon Software
“While the overall intention of the Government is in the right direction, it needs to take strong steps in reducing the bureaucracy and make life simpler and easier for doing business. Paying TDS on 7th of the next month means paying this out of your own pocket as the sales proceeds are not received by then. This causes a huge cash flow issue to businesses – especially those in the trading business and those with very low margins. Ideally this due date should be shifted to the end of the next month to ease out the cash flow pressures on businesses – say 26-27th of the month. Not to mention GST payments as well.
Also would need more clarity on notifications issued earlier – especially considering the changes in business models – due to which earlier notifications are no longer relevant and have lost the very purpose for which they were issued. 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.”
Sanjay Motwani, Regional Director, Raritan Asia Pacific – a brand of Legrand
“Companies in India have been benefiting immensely from government’s mission of Digital India. We hope that the budget will focus on initiatives that drive the process of digital adoption and improve existing reforms as a part of ‘Digital India 2.0’. The industry is positive that the ongoing projects like smart cities, digitalisation, state data centers will maintain its pace. New technologies like IoT, AI, ML empower most or all of these segments and we are confident that the budget for every segment is going to contribute directly or indirectly to the IT industry.
The government’s vision of Digital Economy 2030 for digitisation of government process. Since private transactions will demand huge data centers by public and private stakeholders, we are expecting stronger and improved compliance policies on data security. This will enable more users to adopt digitization in all aspects, making Digital India and Make in India campaigns a success, faster than projected.”
Anjali Amar, Country Manager, Verizon Enterprise Solutions
“India is entering an era of technology-led disruption and innovation, heralded by the 5G revolution and digital connectivity, which will transform communities, open up business and collaboration opportunities that we can’t yet imagine, and become a critical lever to creating a better world.
The Interim Budget which was announced early this year paid attention to strengthening the digital transformation and development of disruptive technologies across various sectors. The successful implementation of the Digital Village project will play a vital role in India’s digital transformation and vision to become a USD 5 trillion economy in the next 5 years.
With this in mind, it is important for the Government to continue to work with the private sector and to encourage technology research, digital infrastructure development and initiatives towards training and skills development to take advantage of the next-generation of technologies.
Technological development has outrun regulatory development but the tech industry deserves a strong and balanced regulatory framework which is technology neutral, flexible, dynamic, transparent and future-proof. The right regulatory and public policy environment is critical for driving investment – and investment which will, in turn, fuel the innovation which will be needed to bridge the digital divide.”
Nikhil Morey, Founder, Tono Systems
“After the success of Swachh Bharat, Cooking Gas and Electrification of villages – the next big thing is piped water to every house. I think major budget should be allocated to water problems. Chennai is going through major water problems and the global media has addressed the issue. There may also be an allocation for MSME development budget like earlier NDA government did in the past term. Skill development of micro SME is extremely important for boosting local manufacturing.
Local manufacturing for displays will grow as government continues to boost incentives for exports and fulfil local demand. Samsung has already planned for a 1500 cr plant in Uttar Pradesh, which is expected to be operational by April 2020. With the likes of the rest will follow. GST could come down to 18% from 28% for projectors and larger televisions; this could possibly add more money in customers pocket to spend on bigger displays.”
Saurabh Saxena, Country Director, Micro Focus India
“The 2nd term of the Government at helm ensures a perfect opportunity to rehabilitate the economy for sustainable development in India. India is heading towards becoming a knowledge economy. With the rapid digital transformation happening across industries, the cybersecurity concerns have also risen significantly. It is hence imperative for the government to ensure data privacy of Indian citizens, so that they are truly empowered to use IT infrastructure and e-governance services. We look forward to collaborating with the government to help our nation in their digital transformation journey. As such, we hope to have policies around Information Technology that would provide the industry with certainty and enable them to invest in long-term strategy. Moreover, we hope to have tax friendly policies that would contribute significantly to the country’s GDP, and owing to the huge workforce and India’s potential, we are confident that the government will come up with innovative reforms.”
Sriram S, Co-Founder, iValue InfoSolutions
“IT will continue to drive success of all types of business with innovations around AI, ML, social media, Cloud, IoT, Cybersecurity, Blockchain etc. Success of IT innovation will determine overall success of other industries including government’s digital drive and hence IT industry, as the enabler for success of all other government and private business, should be accorded special status. Policy and framework to promote home grown IT innovations is the urgent need of the hour to promote growth and provide large scale employment opportunities. Local manufacturing needs special promotion to reduce dependence on imports of basic electronic goods such as mobile and other house hold items there by promoting employment and reducing dollar outflow for low tech mass volume goods.”
Abhishek Goenka, CEO & CFO at CoWrks
“The complexity of doing business remains very high. For every positive initiative taken, there has been, perhaps unintended, measures that drag down the entrepreneurial spirit. No doubt we have had a marked improvement in the rankings and that is commendable, but if there is one area that the Government really wants to focus on, it should be on simplifying business. This requires a concerted effort, a plan that includes the smallest of steps to be taken and perhaps should be done without a slogan attached to it.
2. Corporate tax rates in India continue to be high, and rather than having a system of different companies paying different rates, a uniform 25% rate to begin with is overdue.
3. The implementation of GST has by and large been a success and some of the niggles that remain will be ironed out over a period of time progressively. However, and while the Budget is not the place for GST amendments, the continuing inconsistency on not allowing credits on construction of commercial buildings for rent needed to be addressed, as it stands out as an eye-sore.”
Shashank Dixit, Founder & CEO, Deskera
“Right on the top of my wishlist for this year’s budget are schemes to create jobs as that is integral to a lot of other systemic issues outside of unemployment such as affordable housing. More, high-quality jobs typically help address all other societal problems. I strongly feel SMEs taking to digital tools and becoming more efficient, will drive better jobs and outcomes. These initiatives will help us avoid stimuli, such as Universal Basic Income Schemes and other alternatives. The only other piece on my wishlist is to abolish the angel tax for government recognized startups and SMEs. It’s unfair in structure and policy and curbs growth within SMEs and is largely detrimental to building a world-class startup and SME ecosystem in India.”
Javed Tapia, MD & CEO, Clover Infotech
“The Indian IT services industry is at a watershed moment. It has strongly aligned itself to ride the global digital transformation wave. There is a huge demand for skilled talent in IT services and the budget should earmark funds to address this. A thriving IT services sector will not only augment exports but also fuel the growth of our consumption economy. The government must introduce favourable policies, tax benefits etc. for skilling manpower and provide much needed employment boost. Enabling IT companies to strengthen India’s digital capabilities and train and employ human capital to seamlessly work on new-age digital technologies is the need of the hour.”
Bhavin Turakhia, CEO, Zeta & Flock
‘’For the upcoming budget, two key areas to focus on are – technology and India’s salaried population. India’s online economy has made significant strides, shifting from a largely ‘cash on delivery’ model to now clocking a massive number of online d
igital transaction. In the upcoming budget, an increased focus on giving better sops to build an infrastructure that can continue to empower individuals digitally will further boost our economy. Also, with technological disruption being key for startups’ growth today, we would urge the government to encourage investments in technology hubs that will help strengthen technologies such as AI, ML etc. The government must also work towards bringing in some respite to GST, by reducing the tax slab for technology services and products, encouraging the early adopter market to flourish.”
Suresh Pansari, Co-founder and Director of RP tech India
“The Government should reduce Tax compliances and support ease of doing business at faster pace. This will reduce transection cost. Newly drafted GST Laws are highly complicated for Business entities, hence, it should be simplified. The Government should reduce scope for same product for multiple classification to avoid confusion. Only Central Government should give advance ruling, which should be acceptable across India.
The Government should focus on specialization of Industries in different States, to increase productivity and reduce production cost. The Government should also introduce Honest Tax Payers policy in order to increase faith in Tax Payers. It should also remove arresting Power unless it related to national security.”
Dr. Arun Singh, Lead Economist, Dun and Bradstreet
“The government’s commitment to support entrepreneurs could be evidenced in the form of credit guarantee schemes, easing of regulatory requirements for start-ups and time savvy technology introduced for tax compliance. In the Interim Budget, the government increased allocation to Interest Subvention Scheme for Incremental Credit to MSMEs by 25% over the previous year’s allocation. Given the current slowdown in MSME credit, it is expected that the government would announce further measures to improve the ease of access to finance for MSMEs.
- An increase in the target for lending under Pradhan Mantri MUDRA Yojana (PMMY) is anticipated. Either new schemes that provide collateral free loans of up to Rs 5 mn would be launched under PMMY or the existing ceiling of Rs 1 mn would be raised.
- There may be an increase in fund allocation for setting up new technology centers.
- Some measures to improve the welfare of small traders, such as establishment of National Traders’ Welfare Board, creation of a National Policy for Retail Trade and a scheme on the lines of Kisan credit card and providing merchant credit cards to registered merchants are also likely.”
Kishan Jain, Director, Goldmedal Electricals
“We are hopeful that the government would continue the good work it began carrying out in its first term with regards to GST, Make in India, and the host of initiatives it has undertaken in the power / FMEG sector. In the upcoming budget, we also expect that the Government continues its keen focus on improving India’s infrastructure as this coupled with ease of doing business would ensure India becomes a USD 5 trillion economy by 2025 as envisioned by the Prime Minister. Additionally, I am confident that the Government will continue to promote manufacturing in India through its ‘Make in India’ initiative as this would not only provide a boost to Indian companies but also aid in creating more employment opportunities.”
Jitendra Chaturvedi, Director & Co-Founder, Batooni Mobile Advertising
“The economy has seen tightening of regulations in the past few years. Now the time has come to unleash the animal spirits of entrepreneurs and let a million businesses flourish. We need a jungle of new businesses and ideas that generate employment for a large number of semi-skilled people, and not curated gardens that favor a few. I hope this budget reduces the compliance burden so that businesses may focus more on growth.”
Amit More, Founder and CEO, Finzy
“With GDP growth slowing down to 6.80% and credit growth consequentially plummeting, it’s very important that this budget focuses on making funds available to Banks/NBFCs and MSME segment to spur capital expenditure and job creation. And in parallel increasing savings ratio and percentage of financial assets of individual investment portfolios. We would urge Finance Minister to consider following to spur liquidity, savings and fixed income investments. In addition, to promote financial inclusion, savings and investments through means of alternate finance industry, this budget should consider increasing the lending limits of Rs 10 lacs for P2P Lending industry.
The FY 19 20 budget should consider increasing investment limit of Rs 10 lacs to Rs 100 lacs for all non-regulated lenders and removing limits for any entity regulated by Reserve Bank of India (RBI) or Securities Exchange Board of India (SEBI) from investing in loans originated by P2P Lending platforms.”
Rajesh Ranjan Singh, COO, WISH
“A lot rides on the allocation for the healthcare sector in the upcoming Union Budget, especially considering the fact that the interim budget left a lot to be desired in terms of a concrete future roadmap to improve healthcare delivery systems. Health spending needs to go up from 1.15 % to 2.5 % of the GDP by 2025 if we are to get closer to meeting the UN’s sustainable development goals and achieve universal health coverage. Although the healthcare sector attracts a lot of investments from private players, most of them go to secondary and tertiary centers while the bedrock of the health industry, primary healthcare, is in shambles with just one primary healthcare center for every 51,000 people. The proposal to set up 1.5 lakh Health and Wellness Centers in rural areas by 2022 is ambitious, but the government needs to leverage public-private partnerships to make it a reality. We also hope that the Union Minster allocates resources to roll out more programs that focus on promoting preventive care practices to reduce the disease burden of non-communicable diseases, which are currently responsible for 61% of all deaths in the country, a number that is only set to go up due to rapid urbanization and lifestyle changes.”
Udaya Bhaskar Rao Abburu, CEO-MD, iRAM Technologies
“Today, MSMEs are facing the problem with liquidity due to non-corporation from banks. Although the government has the CGTMSE scheme, it is still not being implemented properly by banks. My expectation from the budget is that MSMEs and Indian start-ups should be given preference to participate in smart cities projects. In order to boost domestic manufacturing, we expect our honorable Finance Minister to provide duty exemption to those vendors who import raw materials for smart cities projects. This will give price parity for Indian manufacturers to compete against Chinese imports.”
Prashanth G J, CEO, TechnoBind
“Budget 2019 would be a crucial session for the Indian government to push their initiatives stronger. We expect the budget to address the dip in GDP growth rates and take constructive steps to boost the economy. 2019 Budgetary support should take the Farm sector crisis on priority which is the backbone of Indian system and would clearly impact on overall country. It should also focus on fixing the financial sector issues and help in bringing back the cash liquidity on track. Special funds and innovative programs should be allotted to fix the unemployment issues which would help in designing the future of India.
As an entrepreneur, I would also expect support for bringing back the credit availability and liquidity back on track which is critical to boost growth. Steps towards widening the tax base are absolute must. I would personally like the agricultural income to come under the tax bracket. Both governmental as well as private investments should be supported to see traction in all the verticals. Reviving private investments will be a good expectation from this budget as this will spend government spend which is only limited given the fiscal prudence that the current government wants to maintain. Overall, a clear roadmap for tax reforms, especially corporate tax must be planned which will help enterprises plan their investments. Well planned strategies must be laid out and executed to bring back stuck capital to the banks will again uplift Indian banking sector.”
Shibu Paul, Vice President – International Sales, Array Networks
“From this budget, we would require government to create policy frameworks that will incentivize investments from big players in manufacturing locally in India. Creating transparency in governance and reducing regulatory compliances should be taken into the consideration with special focus on reduction of customs duties for advanced networking and security products which is currently at 20% to 5%. We expect the import/export process to be made digital and transparent so as to have an efficient RMA system for customers. There should be clear actions, policy and reforms to promote latest technologies like AI, IoT, Zero Trust, Machine learning, 3D printing, blockchain and simultaneously ensuring training facilities for all the mentioned technologies as part of skill development. Declare IT as a special focus sector for the country and roll out 5G in line with global markets.”