Indian Telecom Industry Responds to Union Budget 2013

Computerworld March 1, 2013
The Indian telecom industry believes that the budget lacked clarity on investment related policies and in overall boasts of no benefits to boost the sector.

Debasis Chatterji, CEO, Netxcell Limited (Telecom Sector)

"I feel that the budget is on the expected line and there is no surprise. On macroeconomic front Finance Minister has proposed the reduction of fiscal deficit to 4.8% which will be big challenge keeping in mind the non-plan expenditure of INR 11.1 trillion. On government revenue front, enhancement of surcharge on corporate income tax from 3% to 10% for a turnover of more than INR 10 Crores is a dampener. As such there are no benefits to boost telecom sector. On the contrary, enhancement of excise duty from 1% to 6% on mobile phone, costing more than INR 2000, is going to make smart-phones more expensive. As we know that Smart Phones are needed to experience 3G and 4G therefore because of this price rise subscribers in tier 2 and 3 cities and upcountry will fill the pinch to buy smart-phone to experience 3G & 4G. We have to wait and watch how this budget is going to generate employment and growth while keeping inflation under reasonable control."

Ramesh Loganathan, Vice President Products and Center Head Progress Software

"In my view this budget is more of sustainable medium-term substance rather than short-term considerations’ driven. I am particularly impressed with the thought that has gone into helping foster a Start -Up ecosystem. Directly relating to the IT industry, the strong support provided for semi conductor segment is a good thing. The incentives for semiconductors industry including zero customs duty on plants and machineries, and the 15% investment deduction allowance introduced for investments of INR 100 crores or more in plant and machinery is appreciative

A slight disappointment to the IT industry is the lack of any new stipulations clarifying the transfer-pricing computation which is an issue the industry has taken up with IT authorities and finance ministry for a few years now, to ensure more transparency and clearer guidelines on how this is treated and computed.

Overall, I am quite happy with the budget this year it reflects in many ways the maturity of our economy and the policy framework."

Suman Reddy, Vice President and Managing Director, Pegasystems 

"The overall budget was an attempt to increase investments both domestic and foreign and also increase the revenue by raising the tax implications. From the IT sector’s perspective, we had high expectations from this budget to have some clarity on the transfer pricing and hoped for a structured framework in terms of policies for long term growth of the IT sector. We also had expectations on the infrastructural incentives for early stage startups. Most of these were unanswered in this budget. However the announcement of providing extended benefits for MSMEs upto 3 years of them graduating to a higher category is commendable. Also the policy implementation for considering private sector involvement in a certified institutional incubation center as a CSR activity is appreciated. On the other hand this budget lacked clarity on investment related policies. Though the finance minister mentioned in his speech, the objective ofIndiabeing recognized as a country favorable for business and acknowledged the areas of concern such as easy policies and simplified regulations to achieve these objectives, there were no definite policy decisions taken on the same which was disappointing. Also there was no clarity on the policy framework for bringing in the FDI and FII."