Top business leaders from the IT and software industry along with founders of emerging startups share their budget expectations for fiscal 2017-18 but will the finance ministry fulfill them?
Bangalore: As India’s finance ministry gears up to present the union budget for 2017-18 on Feb 1, there are huge expectations across sections of the society including general public and large corporates along with mid and small businesses operating across verticals.
While the much awaited and highly debated GST (Good & Services Tax) continues to remain as one of the core expectation of businesses and corporates, the rapidly growing startup ecosystem in the country is expecting some big measures and incentives like ESOPs from the union government to help them grow further with simplification of old business regulations, financing and corporate laws.
However, these expectations are not just limited to tax and corporate law reforms. In fact, government’s big tech push with programmes like Digital India, Smart Cities, Make In India, and digital payments post the demonetisation reform, there’s is also a demand of a separate IT budget that would purely focus on the IT and cyber security aspect of India.
It’s interesting to know, read and understand what some to top IT business leaders and young faces of the expanding startup ecosystem are expecting from the union budget 2017-18. Will these expectations make its way into the financial minister’s budget speech or remains unheard? This will only be will be known on the budget day.
Sanjay Rohatgi, Senior Vice President, Asia Pacific and Japan, Symantec.
“As India digitalizes rapidly, holistic approach to cyber security is a prerequisite to foster and sustain trust of all the stakeholders – consumers, businesses as well as government. Widespread, persistent, and sophisticated cyber-attacks against critical infrastructure including but not limited to government organizations pose threat to national security and economy. With this background, cybersecurity ought to be part of the design architecture itself and not an afterthought.
Similar to the decision in 1998 to set aside a specific budget for IT across government projects paved the way for induction and adoption of technology throughout India, the government should consider setting aside at least 8% of its overall IT budget specifically for cyber security starting with the upcoming budget.
Alongside investment in infrastructure, we need to focus on developing a world-class and competent work force. To this effect, Symantec has partnered with NASSCOM towards building a cadre of certified cyber security skills in the country. Such endeavors will not only improve the understanding of cyber security within the country but will also enable India to emerge as a truly digital nation.”
Rajeev Jain, CFO, Intex Technologies Ltd.
“The mobile handset industry is the fast growing Industry and has become an imperative part of our everyday life. India is moving towards a digital economy and mobile banking. Smart phones will play a crucial role in supporting this vision. The recent demonetisation reform by the government has further laid the ground for setting a cashless economy. The entire country is looking forward towards mobile banking which shall create a new user base and fuel the growth in mobile industry.
As an industry, we expect a long-term and stable policy on mobile manufacturing in India. The industry has huge potential and can supplement government initiatives of ‘Make in India’ with highly technical product if focused. Incentives to create sufficient technical manpower will lay the foundation of a strong and robust manufacturing base in India.
Further, a clearly laid out research and development policy is necessary to succeed in a highly technical industry like ours and will help bring component manufacturing base in India to save precious foreign exchange. In the end, to create a truly inclusive digital economy, affordable mobile handset or consumer durable items up to certain value should be given a concessional duty treatment.”
Alok Dubey, CFO, Acer India.
“The union budget for the year 2017-18 is likely to be unique as many prime factors like demonetisation, GST, cashless economy measures, will play a key role this year. We are expecting favourable change in the income tax slabs and rates, as customer spending is still anticipated to decline for short term due to demonetisation.
We also expect the budget to focus on shaping the IT infrastructure and urge the government to provide tax deductions on purchase of PC for consumers as well providing easy short-term loans for retailers for working capital requirement. This is required to accompaniment India's emergent IT sector and further help the industry make improved technology more accessible to Indian market to fulfil government’s push for a digital economy.”
Vivekanand Venugopal, Vice President & General Manager, Hitachi Data Systems, India.
“As we advance towards an economy under the Digital India initiative, we are optimistic the upcoming budget will create opportunities keeping innovation in the heart of every policy. To efficiently drive the journey of Digital India, the focus should be to modernize infrastructure as this will boost growth across sectors, especially technology. In the wake of large scale digital transformation, data is becoming increasingly valuable.
To stay relevant it is important to institute industry friendly policies to better manage data through centralized data hubs and drive smarter decision making with help of data analytics.
The government’s efforts such as GST are a definitive step towards accelerating digitalization. The policies and measures taken by the Government should help bring in economic stability, investment-friendly policies, increase ease-of-doing-business, improve long-term tax incentives, along with timely deal-closures and project clearances. Additionally, corporates and enterprises are expecting a cut in tax rates at various levels to grow more business opportunities in India to further allow the Make in India dream come true.”
Anil Valluri, President - NetApp India & SAARC.
“The previous two budgets have systematically gone about creating frameworks and processes to give wings to the dreams of multiple sections of the society like Startup India, Standup India and shrink wrapped with a larger vision of Digital India. With the recent move of demonetisation trying to shift our cash driven economy of 1.2 billion people and getting them to leap frog to the digital world is unprecedented in history.
This is a significant leap towards becoming a digital economy and the budget now needs to focus on how digital can become entrenched and become a way of life, while continuing to focus on growth and providing adequate support to the various pillars of each program so that the economy is on a sustained growth path.”
Ravi Goyal, Chairman and Managing Director, AGS Transact Technologies Limited.
“Last quarter has seen some progressive banking reforms with demonetisation being a landmark development ushering positive change for the FinTech and Banking Payments Services industry. For the first time, it brought to the fore the importance of ATM infrastructure and its critical role in a cash intensive economy like ours. With the introduction of Aadhaar Enabled Payment System (AEPS), we anticipate infrastructural changes in the ATM sector enabling safer and faster transactions to meet the growing demand in Rural and Semi-urban (RUSU) areas. While the Government’s efforts have been laudable, as an aftermath of this ambitious drive, all ATM providers look forward to appropriate measures which will give some relief.
As a leading end-to-end payment solutions provider, we completely support the government’s drive for encouraging alternate mode of payments through digital means and platforms. For the upcoming Union Budget 2017, we are hopeful for pro-growth policies and incentives which give impetus to cash and digital payments alike. Additionally, measures like increasing free transactions on cash withdrawals post liquidity in the economy and subsidies on interest rates for the ATM industry will go a long way boosting this segment, after all it is a far more cost-efficient method for banks than having the brick-and-mortar branches.”
Chandan Kumar, Director – Marketing & Integrated Solutions, Huawei India.
“Today India is at the center of world’s attention and thanks to the vision and initiatives undertaken by the present government. Key national initiatives like Digital India, Make-In-India, Smart Cities, Skill India has given an impetus to the Indian economy and has brought lot of confidence to both domestic and foreign investors.
To further bolster the digital eco-system of the country, the government should announce dedicated spending on ICT just like some other sectors like education, health and other infrastructure. A fixed percentage of the government budget spend on digital infrastructure will give multi fold returns to India’s GDP and help bridge the digital divide by bringing more and more Indians to the digital main stream.
Last year, the government led the way by conducting the mega spectrum auction and also introducing progressive policies like RoW rule 2016, M&A, Spectrum sharing and trading VNO regulations among others. The move will indefinitely help faster network roll outs, immensely benefiting the industry as well as consumers. In the same light, we hope this year’s Budget will give the essential infrastructure status to the telecom sector and identify the sector as a strategic area. This will help in easy access of capital at reduced financing costs thus making it easier to roll out digital infrastructure.”
Rajeev Sharma, Head-Corporate Services & Strategic Planning, Mitsubishi Electric India Pvt. Ltd.
“The economy has positive potential with a decent GDP growth rate since the last couple of years. We expect this budget being the 3rd of the existing government should be about execution and implementation of the schemes announced in the past. Simplified tax norms, increased spending on social infrastructure, policy to boost “Make in India” are the key things we expect.”
Gautam Seth, Joint Managing Director, HPL Electric & Power Ltd.
“We are expecting the Government to ensure proper and timely implementation of positive initiatives like the UDAY, IDPS Scheme and Deen Dayal Upadhyaya Gram Jyoti Scheme for the power sector. A boost to these schemes in terms of funds and finances from the Government will be helpful to ensure best execution of these initiatives. We are also looking at a clearly defined roadmap for GST from the Government as this will help our sector, especially the trade, by clearing procedural delays.
The market for LED products is growing exponentially and a check in custom duties on these products - raising the duties on finished goods and reducing it on raw materials - will give impetus to Make-in-India initiatives while also keeping a check on the influx of cheap products from other countries. Also a boost for R&D is required for development and updation of various technologies. Overall, a growth oriented budget which helps provide the required boost to the economy by investments in infrastructure and housing is what we are expecting from the government.”
Dr. Rishi Bhatnagar, Chairman, IET-IoT India Panel and President, Aeris Communications, India.
"Almost 20 billion IoT-enabled devices will go online over the next half a decade and this represents an amazing opportunity for us. So many devices will have to have a IoT-skilled workforce to manage them and we need to invest in training and upskilling our workforce to ensure we capitalize on this opportunity. Adequate skilling capacity needs to be created for this by attracting investments from within the country and outside. I hope that our government takes a step in this direction through this budget."
Shekar Sanyal, Director and Country Head, the IET.
“The union budget 2016 focused more on skill development and improving our infrastructural capabilities. As India advances on its path to gain technological supremacy, Internet of Things, artificial intelligence and big data will be the key drivers to economic growth. It is now an opportune time to up skill our brain pool with the right skill sets to ensure they are increasingly kept relevant to the growing needs of the industry. The country is now looking towards a more connected tomorrow. With a projection of estimated 20 billion connected devices by 2020. It is necessary that India channelizes all its resources to ensure we are ready for this rapid technological sprint. The 2017 budget should continue to focus on ‘ease of doing business’ and its thrust on the development of the technological infrastructure.
Over the past two decades, higher education system has undergone a rapid expansion. The 2017 Budget needs to emphasize on improving the quality of higher education infrastructure and focus on providing more practical learning opportunities to the students in order to make them industry ready. This would help in identifying and bridging the existing skill gap. Thrust on better research facilities will improve advanced research opportunities in India. The government also needs to roll out initiatives to boost e-learning. With a vision to build a strong engineering ecosystem in India that contributes to the society in resolving critical societal challenges, we are excited to see how the government will lay emphasis on making India an education hub.”
Tamaal Roy, CEO, Biomatiques Identification Solutions Pvt. Ltd.
“With the increased awareness of digital transactions, this union budget presents a unique opportunity to catapult initiatives like Digital India and Cashless India. The most important part of the larger ingress of these initiatives is to provide a highly secure environment and technology that is failsafe in authenticating every e-transaction. The government must make an allocation towards mandatory adoption of iris recognition in the UID program as it offers the most accurate form of biometric identification currently available with extremely low FAR (False Acceptance Rates) and FRR (False Rejection Rates).
Additionally the BFSI sector should also universally use the iris recognition technology for authenticating digital transactions and payments which in-turn will help make it completely secure. Security should not be considered as a luxury. In fact it should be prioritized as a necessity for everyone across all layers of society.”
Kuldeep Malik, Country Head - Corporate Sales International, MediaTek India.
“We believe that the ‘Make in India’ initiative will see a great positive impact if the government decides to increase the scope of existing localization clause of import duties on mobiles and tablets. Further, due to this the current manufacturing ecosystem will see a shift in adoption from SKD (Semi Knock-down) to CKD (Complete Knock-down). This will in turn lead to an increased focus towards the development of local components ecosystem.
Similarly, the development of industrial & mechanical design activities will be involved with an increase in design activities taking place within India. Software and hardware localization will bring in key developments towards local R&D activities and we do foresee the jobs market to experience a boost. Big Chinese players like Oppo, Vivo, Gionee, and iTel, who have already entered the India market, will gradually shift their R&D focus to India in order to tap into the huge pool of resources available within the country.
Key local brands who continue to be dependent on ODM (Original Design Manufacturer) capabilities, may need to ramp up their efforts in R&D in order to keep up with the change in the landscape. Therefore, an initiative to increase localization will be a key factor in this budget to help boost local R&D activities in India along with establishing sizable amount of key component ecosystem.”
Rahul Garg, CEO & Founder, Moglix.
"Budget 2017 is to bring with it the policies that shall change the economy for the better. Among these is the GST that should be implemented by the government on priority basis. A unified indirect tax system has the potential to bring about transformative change in B2B commerce, logistics and financing.
Another proposed reform, in line with GST, is the implementation of Make In India. If we need to make India a manufacturing hub we need to compete with China aggressively by creating access to capital at much lower interest rates for export oriented units and export duty-drawbacks in an easy manner.
Lastly there is a need to make government procurement more startup-friendly and digital-savvy. Today it is impossible for startups to engage with government due to norms such as 3 years existence, turnover limitations combined with a complex procurement process. The government needs to move towards 100% digital procurement process where startups can compete effectively and efficiently.
Overall, the initiatives indicate that any future moves by the government, including the budget, shall be in view of creating a nurturing environment for the startups in India to flourish."
Dr. Apoorv Ranjan Sharma, Co-Founder, Venture Catalysts
“I hope that the budget continues on the path of fiscal consolidation. India is standing out as a beacon of growth and stability in an otherwise troubled global outlook. We expect the budget to invest significantly in strengthening the digital infrastructure of the country and supporting startup ecosystem to make this campaign successful. Government should bring in number of laws like No capital gains tax for first time entrepreneurs & esop holders, lower interest rates for business loans and easy long term repayments of turnaround companies.
Capital gains tax regime for unlisted companies should be aligned with that for the publicly listed companies at least for investments made by SEBI registered AIFs. RBI and Govt have been very pro-active in facilitating innovations in electronic payments. Indian consumers have often surprised the conventional wisdom when it comes to adopting new ways of doing things.
In the union budget we wish to see exempting these startups from few direct and indirect taxes with MAT (Minimum Alternate Tax) being the key one as it will help entrepreneurs reduce burden and cash outflows. While tax holiday certainly brings a sigh of relief, it may not be beneficial for many technology startups that do not make profits in initial years of their commencement. Therefore, such startups should be able to claim benefits of tax holiday of 5 years within a period of minimum 7 years from inception.”
Madhur Deora, CFO, Paytm.
‘The union budget 2017 is widely expected to encourage digital payments and universal access to financial services. It’s important for our country to create a robust infrastructure to offer high-speed, reliable Internet access to one and all. Improving access to digital services with tax rebates on the production of affordable smartphones and offering subsidized data will also go a long way in democratizing India’s payments sector. We need to focus on digital money to stay digital, by strongly encouraging digital payments of all forms, as compared to ATM machines. Waiving off transaction fees for low-ticket purchases and increased access to credit would also help bring millions of unbanked and under-banked individuals into the folds of the mainstream economy.”
Sandeep Aggarwal, Founder, Shopclues.com & Droom.in
“When it comes to the current economic scenario at a micro economic level, the government should assist the growth of the startup industry by creating an autonomous business landscape for entrepreneurs. Entrepreneurism, by itself, is a very demanding career for an individual, and minimizing government intervention can help them to achieve success. In the coming years, internet can become a $3 trillion industry as it was designed to be autonomous and free by nature. We should be restricting rules, policies, and definition that restrict the natural growth of industry. Here are 5 major points of what we expect:
1. India must enhance various policies to ensure that capital in easily accessible to entrepreneurs. Having said, that government should not intervene when it comes to funds or bank loans, rather, entrepreneurs should be provided easy access to seed funding, VC funding and angel funding.
2. Money shall be coming to India and can be repatriated easier.
3. No capital gain for any kind of start-up sale or exit.
4. Make foreign listing for any Indian company straightforward rather than the company having to incorporate itself in every country individually.
5. Give R&D credit if someone is making innovative tech product.
India accounted for 35% of global GDP until 1615 AD, and currently only occupies 3.5 to 4% share. I strongly believe that start-ups and digital economy have the potential to take back India to 20% by 2025. The focus therefore should be on helping startups and fuelling the industry with good policies, whether it is incentivising investors or making favourable cost of capital laws, or having institutions teach entrepreneurship or celebrating failure.”
Alok Mittal, CEO & Co-founder, Indifi Technologies.
"Based on the recent announcements by government supporting MSME sector such as extension of credit guarantee limit and focus on incentivised digital transaction movement will help the sector to get more access to credit and more digital existence. We hope that the budget will announce concrete measures to create momentum behind digital payments, and hence help MSMEs create a transaction trail that starts to improve their creditworthiness.”
Mayank Bhangadia, Co-founder and CEO, Roposo.com
"Taxing start-ups at early stages of investments has put a limitation to their performance and morale. Startups are a very risky proposition wherein only less than 1% actually manage to become successful. Angel funding is the very first resource, the very first encouragement for a start-up, and tax levied on the same acts like a major deterrent to the growth of many novel ideas. With the new budget, early stage investors should definitely be protected against archaic policy measures like the angel tax - which should be completely done away with.
Also, the government should help startups in reducing their cost in the early years rather than offering tax holidays for the first three years because most startups don't make profits in their early years. For example, , lowering income tax slabs for startup employees should immensely help startups reduce their cost. This year, we look forward to some significant tax exemptions that would give a great boost to all existing and upcoming Indian startups."
Satya Prabhakar – Founder & CEO, Sulekha.com
“To further the cause of digitization and boosting the digital ecosystem, the government should abolish service tax on Internet-related services such as broadband services, internet advertising, food delivery, so on. This will encourage the adoption of the same and also allow for payments to be become digital.”
Ramki Gaddipati, CTO & Co-founder, Zeta
“As digital payments take off, we'd like this year's budget to focus on financial inclusion. We hope the government of India reduces indirect taxes and charges levied on digital transactions. Further, income tax incentives should be provided to people who use digital payment options. It's also time that digital payment and documents be treated legally on par with physical instruments.
We also hope that the Government increases the ceilings on employee tax benefits as they're now quite overdue. To aid merchants, the merchant discount rate on card payments should be abolished. The industry can also benefit from tax incentives provided to organisations operating in the digital payments space.”
Rubeena Singh, CEO, iProspect India.
“The recent efforts of the government indicate making future transactions significantly digital to reduce dependence on cash. I’m looking forward to more incentives on the digital front that will give an impetus to the cashless economy, initiatives such as cashback on transactions made by card or mobile wallets. Moreover, from an industry perspective, I’m expecting the advertising sector to leverage the unique opportunities demonetisation has paved for specific industries such as BFSI, in terms of ad spends. Also, this budget will hopefully leave more money in the hands of the consumer. This is required to spur demand that appears to have slowed down post demonetization.”
Aloke Bajpai, CEO & Co-Founder, ixigo.com
“India is on a high growth path and with tourism friendly policies of the government; we hope to see more and more developments in the coming year as well. Among other things, we believe that post demonetisation, it is necessary for the government to come up with measures that will help boost cashless transactions, in turn facilitating seamless and easy online travel bookings for the masses.
This year the railway budget will be presented alongside the union budget and we are hoping for the government to announce developments in terms of security and modernization to eliminate incidences of derailment and other accidents! We still look forward to the introduction of more high speed trains on popular routes in order to reduce travel time. The development of more airports in tier 1 & 2 cities will also benefit both the aviation industry and travelers at the same time. We also anticipate a lowered GST on travel related services and the government investing heavily in the development of travel infrastructure.”
Piyush Sharma, CEO, GORB
“Owing to the recent demonetisation policy, this is probably the most awaited Union Budget. Lately, the food-tech sector has seen many ups and downs; however, the sector has immense potential to grow. 2017 can see a new wave in the sector if policy regulations like ease of compliance are implemented.
While the Start-up India programme launched by Prime Minister Narendra Modi is welcome moves that will make investors take notice of start-ups, the need of the hour is to increase budget allocation for investment in better infrastructure and Internet penetration. The budget should include special allotments for experimentation with innovations and technology.
The government needs to make technology more affordable and introduce initiatives to increase adoption of technology to encourage digitization. Though, the government has taken some key steps to promote cashless or digital transactions to take India towards a cashless economy, lowering the Transaction Discount Rate (TDR) on card payments will benefit consumers and boost digital transactions.
Additionally, the government’s move to waive service tax on debit and credit card transactions of up to Rs 2,000 and other such initiatives will benefit the sector. Furthermore, support schemes, easy access to funding better options on loans and other banking policies for small home entrepreneurs and digital adoption initiatives by the government will lend a further impetus to the sector.
Moreover, tax exemptions for start-ups will allow entrepreneurs to devote their time, energy and resources to build upon their innovative ideas. We are looking forward to the move to extend the tax holiday from 3 to 5 years. Likewise, we look forward to clarity and closure on GST implementation. This budget can be an engine to propel the growth in the startup ecosystem.”
Atul Rai, CEO and Co-founder, Staqu
“I am expecting a stronger push towards the entrepreneurial ecosystem from the budget this year. While last year, the Government of India supported our cause with the Startup India, Standup India initiative, amongst Make in India and Digital India, we need to now tread on the uncovered grounds.
Startups continue to invest their time and effort into sorting several tax-related and regulatory issues, which makes the operations further cumbersome and challenging. By extending the tax-free regiment to 5 years and taxing ESOP (Employee Stock Ownership) at the times of sale, would really give a boost to the startup environment today. Since R&D happens to be a crucial part of our operations I expect government should also consider tax relaxation to those startups which are collaborating with academic institutions for R&D related purposes as it will not only improve the country’s ranking in “global innovation index” but will also produce world-class researchers and companies in India.
OEMs further make up for a crucial leg of our operations. Hence, I expect a reduction in the bureaucratic formalities and tedious procedures for manufacturers. The government should consider streamlining the current processes, in order to let OEMs focus on further disrupting the status quo and bringing newer innovation in the mainstream foray!"