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Union Budget 2016 | A Mixed Bag For The Tech Sector

The Union Budget 2016, presented by Finance Minister Arun Jaitley on Monday has led to mixed reactions from the IT and tech-enabled sector

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The Union Budget 2016, presented by Finance Minister Arun Jaitley on Monday (29 February) has led to mixed reactions from the IT and tech-enabled sector.

Nasscom welcomed the Union Budget 2016, while terming it as a mixed bag for the sector. The annual budget proposals set the policy direction for the country and Budget 2016 does articulate the emphasis on accountability, transparency and governance. However, in the backdrop of global economic volatility, there are unmet expectations on policy announcements that enable ease of doing business for the tech sector.

Mohan Reddy, Chairman, Nasscom said: “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 realised”

R. Chandrashekhar, President, Nasscom said: “The finance minister’s speech had a strong emphasis on leveraging technology to transform India. The initiatives announced today combined with swift implementation of Digital India will help to digitize India and provide effective citizen services. We would urge the government to move forward at a swift pace and build an effective PPP model”.

"The budget is strongly focused on bridging the divide between the ‘haves’ and ‘have not’s’, and good work by the government in identifying the right priorities for focus under the 9 pillars called out by the FM," said Dejani Ghosh, Vice President, Sales and Marketing Group Managing Director, South Asia for Intel.

"This budget, unlike any other, has not treated technology in isolation but integrated the effective use of technology across all the strategic imperatives in keeping with the intent of a Digital India. This budget has laid emphasis on governance reforms and ease of doing business, while highlighting the need for enhancing educational skills in order to make India a knowledge based economy.

Intel along with Nasscom launched the National Digital Literacy Mission in 2012. "We are very heartened to see the government’s continued commitment towards building technology relevance at the grass-roots by extending NDLM to 6 crore rural households," said Debjani Ghosh.

"We are disappointed with announcement of the R&D incentives reducing because we believe that it is critical for India to be one of the most innovative countries in the world and this move could be detrimental in building India as an innovation hub. I strongly urge the government to re-consider this move, as any restrictions on the R&D ecosystem are likely to decelerate innovation in the country and restrain the ambitious Make in India and Digital India vision."

For Bhavish Aggarwal, Co-founder and CEO, Ola, the focus on skill development was an exciting development as it will have a domino effect on employment, financial independence and GDP growth. But so was the attention given to transportation. "It was quite encouraging to see the FM also address some key road transportation issues and set aside a requisite budget for infrastructure development. Creating inroads for entrepreneurship in the public transportation space and amendments in the Motor Vehicles Act to allow for innovations will provide a strong impetus towards enabling mobility for citizens. These proposed initiatives give us immense confidence as we work towards our mission of building mobility for a billion Indians," he said.

Saurav Kumar, CEO and Co-Founder, Cube26, a technology startup, said while there was a lot that was encouraging about the Union Budget 2016, particularly the continued focus to boost startups, there were also unmet expectations.

"While, the union budget 2016 has announced lowering of the corporate tax for new manufacturing units incorporated on or after March 1, 2016 at 25 per cent with a view to promote industrial activity and generate jobs, we were expecting a robust approach to incentivize Indian device manufacturers," he said. "Overall, the Union Budget 2016 has focused on agriculture, rural and social sector in order to create macro stability. We were hoping for a more growth focused announcement.”

The Make In India initiative has been of particular interest to the mobile industry. "The budget 2016 clearly depicts that the government is in full support of startups and Make In India initiatives. The Finance Minister has proposed changes in the customs & excise duty rates to boost Make In India, however it is yet to be seen how it would affect the smartphone industry, " said Arvind Vohra, Country CEO & MD, Gionee India "In my opinion this will surely act as an impetus for the sector and will go on to make the industry more competitive. Government's initiative towards the R&D sector to Accelerate Depreciation Limit to 150 per cent from FY 2018 is also a welcome boost for the manufacturing sector."

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Budget 2016-17 nasscom it Tech Sector arun jaitley