Budget 2016-17: Industry reactions on Jaitley’s speech in Lok Sabha

Here’s what the industry thinks about Finance Minister Arun Jaitley’s General Budget 2016-17 speech in Lok Sabha today.

Let’s go through the Industry reactions

DataWind

“We’re pleased with the broad expansion of the social net for those at the bottom of the pyramid. Such support via healthcare, employment and skills development is broadly acknowledged as a means of poverty alleviation. We applaud the government for the move towards organic farming and the general support for farmers, which will not only support environmental sustainability but strengthen the rural backbone of the country.  The digital literacy scheme for rural households is a key element of these activities and can play a significant role in their successful implementation,” said Suneet Singh Tuli, CEO, DataWind.

“We believe that the manufacturing sector should get the required thrust.  Enabling the frame-work of setting up 1,500 institutes of skill development will help augment the numbers of those entering the labor market for the first time and those employed in the organized sector. Doing away with the multiplicity of taxes will create a much needed boost to investor sentiment,” he added.

“We are happy that the government is expected to streamline or eliminate the inverted duty structure for several sectors which will embrace the needs of privately owned manufacturing companies. Overall, the Finance Minister has attempted to cover the needs of the country in totality within inherent limitations. The world would be watching closely as the expectations set out will be translated to action,” said Tuli.

Commvault

"The large budget outlay for infrastructure segment, smart cities, Digital India, education, healthcare, citizen service projects, insurance and Skill India will a give boost to modernisation programs. This will create a spinoff effect on an enterprise's IT spend too. Besides, bank recapitalisation will help in improving the health of banks, and thereby allow them to finance old as well as new-age ventures,” said Ramesh Mamgain, Area VP, Commvault India and SAARC.

FreeCharge

Govind Rajan, COO, FreeCharge said, "Fair price shops are lifeline of India, especially in tier 2 and beyond markets. Government's proposal to automate 3 lakh Fair Price Shops is a great step towards the overall Digital India agenda. This will streamline the processes within these shops and will make it easier for consumers to make purchases. With the recent announcement by Government around waiving off surcharge and convenience fee, this move will further open up the scope for automation of payments at Fair Price Shops by embracing new forms of digital payments like wallets.  We are also excited to see Government's push towards research & innovation and 80% discount on filing patent applications by start-ups will further see new home-grown innovations coming from start-ups. This will  not only  bolster the ‘Start-up India, Stand-Up India’ initiative but also create a great environment for tech innovation in  the country."

Sterlite Technologies

“Overall, it is a robust Budget amidst rough global times, with bold moves that will enable rural development. A total outlay of Rs 2.2 lakh crore, for roads, highways and Railways, shows heavy focus on infrastructure development to boost connectivity. The outlay on Digital National Rural Mission is very positive in-line with the BharatNet creation,” said Dr. Anand Agarwal, CEO, Sterlite Technologies

“With the aim to achieve the targets of ‘Digital India’, two schemes enabling digital literacy for rural India, e-procurement for agricultural produce, and digital depository to store school & college certificates, come at a crucial time when the country is about to leapfrog through the deployment of BharatNet.  The Budget has missed the industry expectation for a clear roadmap for GST rollout. However, the clarity on lack of Dividend Distribution Tax on InvITs clears out the confusion on this matter and paves the way for listing of Infrastructure Investment Trusts,” he added.

AskmeBazaar.com

"Honourable Finance Minister has presented a business friendly budget which is encouraging for young and fast growing India. Taking the “Start-up India” action plan forward, the budget allocated Rs. 500 cr for SC/ST & Women entrepreneurs. The announcements made during the budget also include a 100 per cent tax exemption for 3 years for start-ups, which is a welcome step. The Minister also proposed an amendment of Companies Act to allow new start-ups to register in one day. These steps will help to create a favorable business environment in the country,” said Kiran Murthi, CEO, AskmeBazaar.com.

"We welcome this budget as a progressive step in the right direction with an intention to promote entrepreneurship and encouraging start-ups in India. Also, the Finance Minister reiterated the Government’s focus on rolling out GST. We are hopeful that GST will be a reality soon, thereby ensuring uniformity in tax rates and regulations. Overall, we are positive that the announcements made today will lead to strong economic growth of the country,” he added.

MebelKart

“Budget 2016 comes with a huge boost for start-up ecosystem. The government fund announced today will provide SC/ST and women entrepreneurs with easy access to funding. Budget 2016 focuses a lot on ease of doing business. With tax exemption in the first three years and ease of registering business, it becomes easier for start-ups to focus on growth in their critical years. The development of skill development centre will create more employable talent and will bridge the demand-supply gap in the ecosystem. In terms of infrastructure development, budget comes as relief and will enable e-commerce companies to have access to different markets. We welcome the budget and look forward to an exciting year ahead,” said Rahul Agrawal, Ceo and Co-Founder, MebelKart.

GlobalLogic India

“We welcome the Government’s plan to launch a mission to provide Digital Literacy for rural India, as it is a very forward looking move. One that will take the country closer to the goals of Digital India. The drive which will bring about 6 crore rural households under the umbrella of being digitally literate in the coming three years is definitely going to put India on the road to becoming an economic power. In addition, the move to create a digital repository for all school leaving certificates and diplomas will give the education system an edge it had hitherto lacked. Moving away from a paper-dependent to a digital-led system is a hallmark of all modern economies.” said Sumit Sood, MD, GlobalLogic India.

He further added that “With significant attention on start-ups and Digital India, in the Budget, the Government has focused on tier-2 cities by providing higher budget allocation. This includes subsidies for infrastructural development and internet penetration. We believe that these steps provide a stronger thrust to the Digital India vision of the government. The Budget also reflects the Government’s increased focus on technology to support India’s economic growth.”

SpiderG

“This union budget is well balanced and perfectly linked with the vision of prime Minister’s ‘Startup India Standup India’ campaign with 100% deduction on profit for startups for 3 out of five years. This exemption will reduce compliance burden and cash outflows. The decision of allotting 500 crores for Startup segment is a welcome move which will encourage entrepreneurship in coming years,” said Ashwani Rathore, CEO and Co-Founder, SpiderG.

“Capital gains tax exemption on investments and lowering the period from 3 years to 2 years for definition of long term Capital Gains in unlisted companies will pave way for new angel investors to invest in startups. With this initiative there will be growing funding support for startups in coming years,” he added.

“Entrepreneurship learning through (Massive Open Online Course) MOOCS will provide access to educational resources across the country. The one day registration process for start-ups will also help the eco system to grow. These positive moves will spark a new energy in the startup sector which is expected to raise US $700 million and will generate around 5000 jobs in the next 12 months,” he said.

Kaspersky Lab

"The overall Union Budget 2016-17 is encouraging for the common man, especially the tax relief in HRA. The announcement of Digital literacy scheme to be launched to cover 6 crore additional rural households is a welcome move. This will not only boost the fast adoption of digital technologies across the country but also encourage digital means to reach out to consumers and different markets. Start-ups getting 100% tax exemption for 3 years except MAT is again a good call taken by the government, as this will entice budding entrepreneurs to start their own business and since we are targeting this sector for our software business, it could prove beneficial for us as well. Besides, it will also help in creation of more and more jobs in the country. Overall, it's a balanced and realistic budget in difficult times,” said Altaf Halde, Managing Director - South Asia, Kaspersky Lab.

Lenovo India

“We are happy that the budget establishes a strong emphasis on technology in almost all the development areas highlighted by the Finance Minister. Technology has been  recognized as an important enabler across initiatives ranging from agriculture to skill development to PDS to public procurement. Also, the announcements on the Rural Digital Literacy and the Digital Saksharta Abhiyan are positive strides to bolster the ‘Digital India’ vision,” said Rahul Agarwal, MD, Lenovo India.

“‘Make in India’ and ‘Digital India’ remained important items on the agenda in the Budget this year. The changes in the customs and excise duty rates on components & sub-components reaffirm the ‘Make in India’ vision of the government. This will help in building a robust component ecosystem in the country, which is very important for becoming a manufacturing hub,” he added.

“While the government’s focus has remained on giving an impetus to domestic manufacturing, we were hoping to see the duty differential policy being extended to PC manufacturing but could not happen. We will have to engage further with the government in this area,” he said.

Oxigen Services

“We are happy with the general direction of the budget as it lays emphasis on development of the rural sector, digitisation and reforms in banking. The digital literacy mission that has been announced which will target 6 crore households with financial literacy, with this the digital connect and payments connect will play an important role. Also, statutory status to Aadhaar will play a very big role in promoting digital payments, social benefit transfers and allowing several services beyond banking & insurance to be also be brought into its fold, whether it is government subsidies or government payments it will open a way for more government payments and subsidies to flow into the financial inclusion program,” said Pramod Saxena, Chaiman & MD, Oxigen Services.

Xavient Information Systems

“Once again, no attention has been given to SEZ and IT sector units which are contributing a lot to the economic development of the country. MAT was imposed on SEZ units few years back which discouraged service sector exporters and particularly IT sector exporters to set up business inside SEZs and since then, every year, there has been expectations that it would be rolled back. In general, there is nothing for medium sized corporates and individuals in this budget and rather cost of services have been increased in form of increased service tax which is a major disappointment for all.” said Ashish Jain, Director - Finance, Xavient Information Systems.

Aqua Mobiles

“Apart from 30 - 35 percent relaxation in the corporate tax and a reduction in the import of IT and Hardware products, there is nothing to boost the mobile phone industry of India. We were expecting some good reforms in the structural changes, easy registrations and approvals, etc. The budget is not in the line of ‘Start-up India, Stand up India. It is good for the Agriculture sector, but nothing has been offered to the manufacturing and trading businesses,” said Govind Bansal, Co- Founder - Aqua Mobiles.

Dell India

“Today’s announcement of Digital Literacy Mission Scheme in rural areas is a key stepping stone to achieve next level of human capital transformation. India is going through a massive transformation with Smart Cities, Make in India and Digital India initiatives that will have far reaching impact in the growth of urban and rural India. Technology is not only the backbone for these initiatives but also a critical stakeholder for the success and sustainability of these programs,” said Ravinder P Singh, Director – Solutions Strategy & Business Development, IoT, Smart Cities & Digitization, Dell India.

“We welcome the government's initiative as this will help in building digital infrastructure from the ground up that will help India grow much faster and better to enable economic growth. Dell being a global leader in ICT Technology and end user computing, we consider this as a good opportunity to work with both the government and private sector and be an active player in this journey.  We are committed to support these initiatives by providing the next generation of technology solutions and being the digital architects for such programs," said Singh.

Sify Technologies Limited

“In order to make the Government’s social and infra spend effective, a good monitoring and audit system through independent accounting firms across the country is critical. Even if 1% of spend towards audit is actioned, the productivity of spend will increase by 3 times and we will see intent matching action; Intent has to grow beyond mere announcement in the newspapers. Equity of economic growth through social spend will also curtail inflation in the long run and help economic growth,” said M P Vijay Kumar, CFO, Sify Technologies Limited.

“One is surprised (though happy) to see no change in service tax rate. Is this a hint that GST rate will be sub 20%? If so, this would be good,” he added.

“We have managed fiscal deficit owing to the oil scenario. Capital asset formation is not happening and we are not seeing much measures in that direction. Exports are key. With present exchange rates and the “Make in India” campaign, exports should have been given some thrust. We cannot bank on present oil prices to support our forex needs in long run,” said Kumar.

“Taxing Dividend in hands of individual is retrograde. As profit is already after tax and there is dividend tax of 20%, another tax in the hands of the individual is unwarranted. It will also impact HNIs investing in start-ups / encouraging enterprise. Capital market has lot more role to play for economic growth and this could have been avoided,” he added.

UCWeb India

“Finance Minister Arun Jaitley has presented a well-rounded and constructive budget, focusing on most critical aspects of the economy,” said Kenny Ye, MD, UCWeb India.

“Thrust on farm sector, increased spending on rural development and infrastructure planning shows that this government means business. The record digitization plan outlined is another major positive. The new digital literacy mission scheme will cover 6 crore additional households and bolster employability of rural youth. There is also the much-needed thrust on entrepreneurship training, higher education and skills development that will help make India a knowledge base. While the reduction in corporate tax is welcome, it is applicable only to select companies and is a minor negative. Measures to reduce tax hassles and address disputes, on the other hand, are a positive,” he added.

“Tax exemption for Start-ups, amendments to Companies Act and allocation for Stand-up India scheme will further aid cost and ease of doing of business in India,” said Kenny.

New Call Telecom

“Overall I would view this budget to have a positive push to industries across the board. This budget focuses clearly on growth, development and job creation with particular focus on start-ups by giving them support via exemptions for 3 out of 5 years.  With government initiatives like National Digital Literacy Mission for Rural Households and Stand Up India Scheme in place, these will help boost the startup scenario for the SCs, STs women entrepreneurs as it will help reach out to these under-served sectors of the population by facilitating digital technologies for consumers and markets. This is a balanced growth oriented budget with focus on accelerating on the fundamentals,” said Nigel Eastwood, Group CEO- New Call Telecom.

Dassault Systemes

“The budget seeks to provide an environment to boost growth and employment generation with a clear focus on the rural segment. Finance Minister, Arun Jaitley has crafted an effective budget aimed at inclusive growth through the support provisions of the National Digital Literacy Mission and the allocation for MNREGA. The focus is on next level of growth coming through strengthening the infrastructure projects. Enhancing educational skills and greater support for higher education is a concerted step in that direction. With a target to skill 1 crore youth in the next 3 years under the PM Kaushal Vikas Yojana, are efforts taken in the right direction to build India a self-reliant nation in the years to come,” said Dr. Chandan Chowdhury, Managing Director-India, Dassault Systemes.

“The budget emphasizes on tax simplification, lower corporate tax, tax holiday for start-ups and infrastructure spend which is the need of the hour. Last year’s budget was big on intent and 2016 looks like the year of execution,” said Chowdhury.

“We believe that program such as Digital India, Start-Up India and Smart Cities need a strong technological infrastructure that must be supplemented with budgetary support from the government.  The Rs. 2.31 lakh crore earmarked for the infrastructure aligns well with the vision to build connected cities via highways and railways. 2016 budget carries forward the government’s thrust on taking our economy towards global standards of governance by making it more investment-friendly, fairer and transparent. The major focus of the budget is infrastructure and rural economy,” he added.

Teradata India

“It is commendable work by the Government to underline the right priorities to focus on under the nine pillars called out by the finance minister. This budget, has inculcated the effective use of technology across all the tactical essentials, keeping in line with the Digital India initiative. The positive call for large investments in the infrastructure sector is indeed a great step forward," said Sunil Jose, Managing Director, Teradata India.

"The promise of increased investment in the infrastructure, agriculture, rural and social sectors would back India’s continued journey of comprehensive and sustainable growth. Secure technology infrastructure enabling trust will be important for the successful implementation of projects like e-marketplace, digital treasuries for certificates and e-procurement. Governmental backing for Aadhaar should have obligatory privacy provisions. Additionally, the announcements on the Rural Digital Literacy and the Digital Saksharta Abhiyan are positive initiatives to boost the ‘Digital India’ vision. Overall undoubtedly a popular budget, with all aspects around rural distress, concerns around the need to boost public investments in infrastructure, ease of doing business in the country and tax reforms being covered," he added.

NEC India

“The Union Budget 2016 has laid out big investments for the infrastructure sector which is a positive in the transformation of India envisaged by the NDA Government. We hope that the investment in infrastructure sector will also focus on execution of the smart and safe cities initiative," said Koichiro Koide, MD, NEC India.

"The statutory backing for Aadhaar will reduce leakage and ensure targeted disbursal of subsidies to the needy, eventually driving financial inclusion," he added.

Further, "we hope that government’s ongoing reform programme will also result in the passing of the Goods and Services Tax bill soon, which in turn will contribute to the ease of doing business in India," he said.

EY

“Telecom sector had high expectations from the Finance Minister, since several existing tax provisions were exerting additional burden on the industry and required urgent revamp. Proposals introduced in Finance Bill 2016 are a mixed bag for the telecom sector. Proposal to amortise spectrum fee rather than allowing tax depreciation would have a negative impact on the cash flows of the telcos besides resulting in ambiguity and litigation risk for the prior years when the operators have largely taken the position that spectrum is an intangible liable for tax depreciation. Clarification that consideration for sharing and trading of spectrum would be liable for service tax however is a huge positive though it still needs to be seen if the states adopt a consistent position as regards levy of VAT on such transactions,” said Vishal Malhotra, Tax Partner, telecom practice, EY.

“Reduction in rate of withholding tax on commission from 10% to 5% is again a welcome step though the industry would have preferred if the rate had been reduced to 2 percent which is more in line with the dynamics of distribution of pre-paid services which comprises approximately 90 percent of the revenues of the operators. Introduction of dispute resolution and settlement provisions would again be a positive and should help reduce litigation facing this sector. Applicability of BCD will also result in increased financial burden for the telcos though introduction of lower excise duty regime for routers, modems and other CPE equipment may promote local manufacturing of such telecom equipment, similar to mobile phones,” he added.
“Telecom sector had high expectations from the Finance Minister, since several existing tax provisions were exerting additional burden on the industry and required urgent revamp. Proposals introduced in Finance Bill 2016 is a mixed bag for the telecom sector. While clarification introduced in taxation of spectrum fee and applicability of BCD may result in increased financial burden for the ailing telcos, the same may reduce future litigation. Withdrawal of customs duty exemption on battery, chargers & headsets and Introduction of lower excise duty regime for routers, modems and other CPE equipment is in line with the government focus on local manufacturing and digital India. Reduction in rate of withholding tax on commission to 5% is a welcome step for the telecom industry,” said Prashant Singhal, Global Telecommunications Leader at EY.