Union Budget 2016: A mixed bag for Indian IT enterprises

IT business and industry leaders are happy that the budget is aimed at the growth of the rural and agricultural sector--but for their own sector, it has still remained a smorgasbord of expectations and promises.

Finance Minister Arun Jaitley’s union budget 2016 is tilted heavily toward development of the rural and agricultural sectors. However, like every other year, it was a mishmash for consumers—cigarettes, aerated drinks and readymade apparels have become expensive, while footwear, pension plans and sanitary pads have become cheaper.

According to NASSCOM, India’s IT industry lobby, the budget is in the right direction with extensive technology adoption in governance, but for startups, the plan, which has caveats, needs more improvement.

“Our wish list for Budget 2016 included three key priorities – policy bottlenecks including ease of business; nurturing start-ups, products and ecommerce sector; and clarifications on transfer pricing to enable inward investments in India. Budget 2016 only partially covers these priorities. Extension of Section 10AA for SEZ units till 2020 is a positive outcome, though the imposition of MAT on startups will not allow the full impact of the benefits to be realized,” said Mohan Reddy, Chairman, NASSCOM, in a statement.

Anil Valluri, president, NetApp - India and SAARC, said that the focus on infrastructure, with substantial allocation and the continued focus on empowering through additional allocations, is good for the economy.

“The digitization of the government sector, like setting up of Digital Literacy mission, which will cover six crore rural households in India, ensures transparency and the huge focus on promoting startups will only help create more jobs and propel the economy further. The budget could have spelt out more steps to accelerate Digital India,” he added.

Srikripa Srinivasan, senior director (finance), EMC India CoE, said that, even though the government has aimed at job creation and education through measures such as Digital Literacy Mission Scheme, it still hasn’t addressed other issues.

“India needs radical transformation in all spheres of life and businesses, with initiatives like ‘Make in India’ and ‘Clean India’ surging ahead at a quick pace. I would have liked to see more bold steps to upgrade infrastructure,” he added.

Suman Reddy, MD, Pegasystems India, said that he expected MAT to be abolished, which did not happen. “We also expected clarity on transfer pricing with regards to the high interest rates on safe harbor margin. The draft guidelines for effective management was another area that required some elaboration and that didn’t happen,” he said.

The passing of the Goods and Service Tax bill was also something that leaders wished for. “We hope that government’s ongoing reform program will also result in the passing of the GST bill soon, which in turn will contribute to the ease of doing business in India,” said Koichiro Koide, MD, NEC India.