After finance minister Arun Jaitley presented Union Budget 2015 just a day before yesterday, Hyderabad Inc. gave budget reactions. These include inputs from Startups, IT & Telecom Sectors, Industry Associations from Hyderabad city, arguably a Silicon Valley of India.
Mr. Y Guru
Chairman & Managing Director
“Overall it was a strong and structural budget with clear roadmaps to achieve the target of more than 8% economic growth and reduce the fiscal deficit to 3% in the next 3 years. Government has shown its intent to create a business friendly environment and boost the ‘Make in India’ initiative. The thought process of merging the Skill India initiative with Make in India is the right approach as skill development and manufacturing complement each other in the long run. The focus of the budget has been more towards boosting infrastructure, agriculture, healthcare and manufacturing and hits the right chords. Bringing the middle class under a unified pension scheme to prevent India from being a pension less society is commendable. Boosting the business environment by easing the regulations will be an impactful decision.”
“From the industry perspective, reduction of the corporate tax from 30% to 25% is appreciated. GST implementation is another welcome move which will end taxation uncertainties in a lot of aspects. High allocation for infrastructure projects such as roadways and railways will give further boost to manufacturing. Reducing the CVD on certain goods in another area the industry is looking forward to, however more clarity is needed in terms of its implementation. Having said that; the budget missed considering the challenges faced by the telecom industry.” Guru, Chariman & MD, Celkon Mobiles added.
Mr. Suman Reddy
“It looks like a mixed budget from the IT Industry perspective. While there has been a significant reduction in the Corporate Tax from 30% – 25% and of tax on Royalty from 25% to 10% that will benefit the industry; on the other hand the budget did not provide any clarity on the transfer pricing issue which the industry was awaiting. Having said that, the budget has given the right direction to the economy going forward, the 150 Cr corpus on making India world class IT hub will bring in a positive sentiment. Focus on Infrastructure, Skill development and Manufacturing will enhance economic growth in the long term. Public expenditure in terms of investment in Infrastructure has also increased. It is good to see the government taking initiatives for startups, particularly the setting aside of Rs 1000 crores to set up Self Employment and Talent Utilization SETU supporting incubation and startups. The special attention on incubators and technology led startups is welcome as these will help the industry move from a services led to products led industry. The hike in expenditure on education by setting up premier institutions in states such as J&K, AP, Punjab, Bihar Karnataka etc and strengthening the primary, secondary and higher secondary education along with the increase in specific educational scholarships for students is will further support skill development in the country.”
Mr. Ramesh Loganathan
Vice President and Managing Director Progress Software
President HYSEA – Hyderabad Software Enterprises Association
While there was nothing dramatic in the budget, it broadly seems to be a growth inducing one. The budget provided a decent balance of Social reforms and growth initiatives including Make in India. Several small items seem like they may add up to have an impetus to make in India. The corporate tax reduction to 25% from 30% is straight away making more money available to the companies for investments and growth. The technical services tax reduction and reduction of duties on raw material import both should help the manufacturing sector. Streamlining the foreign investment process as well as the increased visa on arrival facility will hopefully also simplify external investments. Simultaneously, few measures seem in place to promote startups. While the details are unclear, the 150cr world class IT hub will hopefully encourage development of new technology and products. The 1000cr startup corpus, given the wording seems like will help setup and grow incubators and startup seeding. An interesting clause is ‘mechanism for self employment to help with startups – SETU”
Mr. Debasis Chatterji
“The budget was great in terms of showing the direction for accelerating economic growth. The government has taken a long term approach by focus on improvement in existing services. The Jan Dhan Yojana, Coal Auction and Swacch Bharat program have given a very good start by dealing with the fundamentals of government fund distribution honestly, starting thermal power plants and to make India disease free. The budget showcases the fundamental change in the government’s thought process and is different from so called popular measures. The initiative to build 6 crore toilet under Swacch Bharat Yojana, will trigger growth in FMCG and ancillary industry and create lots of service jobs.”
“It was a good budget for the It industry with an initial sum of Rs 150 Cr announced to create a world class IT hub to take advantage of our competitiveness. Further the reduction of Corporate tax and support to tech Start-ups with a mechanism for techno-financial incubation corpus of Rs 1000 crore; has given tremendous boost to the IT sector and startup ecosystem. Implementation of GST has been the greatest economic reform so far that will aid India to become business friendly. From the telecom industry perspective, there were a lot of expectations from the industry however the budget failed to offer any concrete initiatives for the sector.”
Mr. Neeraj Jewalkar
Founder and CEO
The Budget in totality looks positive with enhanced focus on fast-tracking growth in Healthcare, IT, Infrastructure and Education sectors. The government has linked many initiatives to support and provide a boost to Make in India. Therefore giving additional attention to startups, the government has introduced a corpus of Rs. 1,000 Cr to support technology led startups and incubation centers. This will further enhance the startup ecosystem in India. Another significant move is the government’s emphasis on making the country more business and investment friendly. Easing of regulations and focus on increased public sector investments in infrastructure will boost the business environment in the coming year. IT Industry has received a good uplift in terms of reduction in the corporate taxation from 30% to 25% and also reduction of taxes on royalty being reduced from 25% to 10%. Moreover a 150 Cr corpus has been announced to make India a World Class IT hub; which should attract further investments in the sector. Strengthening of the education system through up gradation of primary, secondary and higher secondary education, enhanced funds allocation to the sector and introducing premier institutes in states like J&K, Punjab, AP, Karnataka etc will enable skill development across the country. The budget thus included a good pipeline of reforms which will be implemented in detail and bear fruits in the coming years.
Mr. BVR Mohan Reddy
Executive Chairman Cyient Ltd. and Vice Chairman NASSCOM.
“Budget has a positive thrust on Startup and Technology but concerns persist:
Positives: For Start-up and SMEs, the Self Employment Talent Utilization (SETU), the techno-financial incubation scheme is a big positive; Atal Innovation Mission (AIM) platform to foster R&D and Innovation is another positive. Tax on royalty / fee for technical services reduced from 25% to 10% will be helpful in reducing cost of technology and give more incentive for technology deployment. Public Procurement Dispute resolution Bill is likely to streamline the government procurement process, and also address some of the pending disputes. This will give a fillip to Industry participation in domestic markets.
Negatives/Misses: Increase in Service Tax rate, by 1.5 %, is disappointing. Further, with mounting backlog in service tax refunds, the Industry will be impacted. Angel tax continues – Fair market valuation applicable to angel investments and capital receipts taxed in start-ups. This problem is unaddressed in spite of the focus on entrepreneurship and start-ups. Duality in service tax and sales tax applicability to product companies not addressed”
Mr. Safir Adeni
President – TiE (The Indus Entrepreneurs) Hyderabad
“We have mixed reactions to the Union Budget. It is encouraging that the government has laid emphasis on job creators by promoting entrepreneurship. However, so far there were talks of Rs. 10,000 crore allocation for startups so we don’t have a clarity whether in this budget the allocation of Rs 1000 crores under Self Employment and Talent Utilization (SETU) for the startups is in addition to the same or it is Rs. 1000 crore only now. Although the corporate taxes have gone down by 5%, the increase in service tax and surcharge will have negative impact on the startup ecosystem. Due to the change in the permanent base treatment, this could be a boost in Fund Manager startup space.”