National budget evokes instant responses from IT world

By SiliconIndia   |   Friday, 29 February 2008, 14:09 Hrs
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Bangalore: Announcement of the national budget for the year 2008-09 by the Government of India has evoked plethora of reactions from IT biggies and several IT related organization accross the country. Some of them are,

NASSCOM on Union Budget 2008-09:

NASSCOM and the IT-BPO industry welcome the fact that the Union Budget is inclusive and has a strong focus on the social sector. NASSCOM is however disappointed with the absence of any discussion on the extension of the STPI scheme. This is extremely critical for small enterprises and the BPO industry, as well as for expansion in tier 2 and tier 3 cities as they are unable to avail the benefits of the SEZ scheme. The STPI benefits are available till March 31 2009 and we are hopeful that through continued dialogue we will be able to convince the Government to consider our proposal and help India garner the large opportunity in this sector.

We have seen the advantage of IT deployment in the country. However the imposition of service tax of 12 percent on customized software and higher excise duty on packaged software could lead to increased cost of IT and could slow down the IT usage in the domestic sector. This impacts in particular, small and medium enterprises who have just started deploying IT.

The IT-BPO industry is skill intensive and in this light, we particularly welcome the thrust on primary and higher education and skill building initiatives. The Sarva Shiksha Abhiyan, increased allocations for higher education and the creation of the Skill Development Mission with the announcement of 1,000 crore as Government's equity in this proposed non-profit corporation will ensure constant supply of employable workforce to this sector. Interconnecting the knowledge institutions through broadband would also establish synergies across educational institutions.

We are happy with the new initiatives on setting up rural service centers and state data centers as they would help take the benefit of IT to the masses.

Srinivas, CFO, Perot Systems:

"There is a lot of attention being given to the education vertical in this budget which could result in more skilled workforce. FM wants to develop India as a Knowledge Society. 100 crores to be given to IT Ministry for linking knowledge centers, new IITs, Navodaya Vidyalaya's, large allocation to the Sarva Siksha Abhiyan, Bharat Nirman schemes is the way to go. Education budget going up from 28k crores to 34k croes will invest in the long term sustained potential of the country in addressing resource availability and some of the current challenges of the country"

"Agriculture also clearly seems like the big focus area in the years to come. A huge amount for credit to the agricultural segment is allocated along with a big write-off of about 60k crores in terms of farmers? debt to help distressed farmers. Though it is being viewed as a populist measure by the stock markets and the industry, this should inject a renewed energy into the agricultural segment who seemed to have been behind in the growth."

"Corporate taxes remaining unchanged would not be a relief to the export industry especially the IT and ITES segment that's been hit by the rupee appreciation and the imminent lapse of tax holiday in the year 2009. This will continue to challenge the IT and ITES industry which has been a major export earner and the driver for the country's growth."

Ramesh A Vaswani, Executive Vice-Chairman, Intex Technologies (India):

"As expected, the budget is focused on election year issues. Write-off of farmer loans to the extent of 60,000 crore satisfies a pressing demand but, continuing to exempt agricultural income from tax, places the entire burden on the small tax payer base. Increasing shortage of employable educated and trained manpower has been addressed by increase of 20 percent for education and setting up of a non-profit corporation to initiate world-class programs for development of workforce skills in mission mode. In IT hardware, it is disappointing that exemption from customs duty has been restricted to very few items. Whereas, additional funds have been allocated for broadband Common Service Centers, Data Centers and SWAN?s to take benefits of Internet to the rural areas, a coordinated approach to bridge the digital divide is still missing. A special program to take Internet to every Panchayat and school and make the basic PC more affordable is the need of the hour."

Manoj Chugh, President, India and SAARC, EMC Corporation:

"Overall, the budget seems to be focussing on enhancing long term economic growth through stronger investments in social infrastructure. In this direction, investment in education for not only spread but also improvement of quality is encouraging. The setting up of additional IIT?s and a fund for improving employability of our workforce are positive initiatives from the Finance Minister to address the manpower needs of the technology sector. Investments in excess of 800 crores in the area of building a knowledge infrastructure including broadband, SWAN and data centers will definitely enhance our capabilities and support our belief that information sharing across the country will lead to a more inclusive economic growth. We are also encouraged by the reduction in custom duties for IT hardware components, as it will lead to lower prices and higher consumption in the domestic sector."

Naresh Wadhwa, President & Country Manger, India and SAARC, Cisco:

"The Government has delivered a progressive budget by focusing equally on infrastructure and rural development, education, healthcare and employment generation, with proposals to help create a climate for balanced growth. The vision to drive inclusiveness through technology gets a definite impetus with the proposals to set up 100,000 broadband-enabled common service centers in villages, connecting knowledge bodies and providing major universities with broadband services. Allocation of funds to accelerate power reforms and construction of roads will boost infrastructure development. The approval and fund allocation towards the state data center scheme will help take the benefits of IT to the grass-root level. Encouraged by the 5-year tax holiday, I expect increased investments in non-urban areas in healthcare from both Indian and international players. The allocation towards Education is also encouraging.
On the taxation front, the reduced tax burden will be a relief to individual tax payers. It would have been a boon for Indian industry had the same been applied to corporate taxes. However the exemption of customs duty on specified parts of set top boxes and certain raw materials used in the IT/ electronic hardware, as well as reduction in excise duty on wireless hardware cards and customs duty on convergence products are a welcome measure for the ICT industry."

V Sundararajan, CFO, Aztecsoft:

"This budget is a positive and balanced one with focus on development and agriculture sector. Investments of 1 billion rupees for IT Ministry to set up knowledge bank will accelerate the growth of IT Industry in India. Clarification that Software Testing Service provided remotely through Internet or any electronic network will be considered as Export of Service is a great relief to the industry. Sec 10 A exemption to STP Units was expected be continued for a few more years and it was a dampener. With a high proportion of women employees, the increase in the threshold limit for taxation for women to 1,80,000 will be highly appreciated by the IT sector. Increase of the basic exemption from 1,10,00 to 1,50,000 is a great measure for the common man."

Rostow Ravanan, CFO, MindTree Consulting:

"This is a populist budget, as can be expected since elections are coming up. However, it has nothing to cheer about for the IT industry. The introduction of service tax on customized software, in particular, is a big dampener for our domestic business. Besides, the STPI scheme has not been extended, despite it being a widespread demand. On the positive side, we are happy with the changes to the personal tax rates, since that will increase the disposable income in the hands of individuals. We are also happy to see the focus on improving the educational infrastructure at all levels, which is a crying need of the moment."

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