Tuesday, June 6, 2023

The Post-Budget 2018-19 Reactions from IT Industry Fraternity

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The long awaited union budget 2018-19 is here. The reactions from the industry are mixed. The budget looks positive on many fronts, but on some fronts, some experts believe, it is disappointing. Below are comments from some industry experts.

Sunil Sharma, MD-Sales for Sophos India & SAARC:

“With the rise in bitcoin’s popularity and a strong warning to act with “extreme caution” and understand the significant risks of choosing to invest in cryptocurrencies, it’s no wonder 2018-19’s budget has a special emphasis on taking measures to stop cryptocurrency circulation and explore the usage of Blockchain technology. Cryptocurrency is popular with cybercrooks and usually cryptocurrency is the end, rather than the means of the crime, for example, when crooks infect your computer with coinmining software to hijack your CPU to earn money, or scramble your data with ransomware and demand that you pay them in cryptocoins to get it back.” Sharma further added, “We welcome the reduction in corporate tax as it will be a growth enabler to the entire micro and SMEs.”

Samay Kohli, Group CEO, Grey Orange:

“We are glad to see the government’s increased focus on Digital India. With the budgets for the initiative doubled this year, it is set to be one of the key drivers of India’s economic growth. The Union Budget for 2018-19 has laid a strong emphasis on emerging technologies, such as Robotics, Artificial Intelligence, Machine Learning, Big Data and IoT, which we believe, is an important step towards fostering innovation in the country. This would also help in creating jobs, improving the quality of education and healthcare.

The announcement of a national program directed towards research and development of AI and Machine Learning, as well as efforts towards exploring Blockchain technology, are the testimony to the fact that India is taking significant steps to gain a rightful place on the global technology map.

Along with the push on technology, the new provisions for financial support, in the form of credit, financing and tax relief for MSMEs, will further boost the growth of smaller businesses in the country and help spur the Indian economy at large. With the stage set, we look forward to a great year of growth for the robotics and automation sector.”

Rajeev Jain, CFO, Intex Technologies:

“The Budget is focused towards increasing the personal disposable income in rural India and critical areas like education, health and infrastructure. This will further enhance the Make in India initiative of the Government in critical electronic industry particularly mobile, which is the key product of all the Government’s initiatives.

The Budget will spur the demand side of the economy by proposing various rural income enhancement schemes and reducing various pain areas of farmers. This will in turn rejuvenate the overall economic growth and spur demand for consumer electronics items like mobile phones and LED TVs thereby fuelling domestic businesses.

Intex has been known to cater to the developing Tier 2 and 3 cities since inception with its affordable consumer products and with the various rural personal disposable income enhancement schemes introduced in the budget, it will give a fillip to the sale and demand of electronic products.

The budget has further strengthened the Digital India initiative with the boost in increasing allocation for digital education through classrooms and continue with the further broadband penetration in the country.

I welcome government’s move to walk the talk on “Make in India” by increasing customs duty (to 20%) on the imported mobile phones and in PCBAs of accessories like batteries & chargers (15%), which will prove to be the big boost for localisation and setting up of a domestic component ecosystem. This is a big thumbs up to domestic players like Intex, which have been developing domestic capacities since long in electronics manufacturing.

The Budget has also increased duty on certain LED TV components such as LED panels (15%), which will push for developing capacities for local manufacturing of components. Such move encourage Intex that has been working on enhancing domestic capacities and has recently began its own Open Cell Manufacturing or LED Panel manufacturing to improve quality control and produce affordable quality products. It will encourage localisation in India with domestic manufacturers now implementing plans for local production capacity. Overall, the budget is development oriented fulfilling the ease of doing business and ease of living for citizens.”

Mr.Arjuun Bajaj (CEO and Founder of Daiwa)

“According to the government notification, there is an increase of 20 per cent on complete TV set and 15 per cent on sum of the led tv parts, which is good for manufacturers. The However, now for manufacturers the biggest challenge is for them is 10% i.e. custom duty on open sell which lead to bare min gap between manufacturer and importer, and TV’s made in India more expensive. Would request the government to make it back to 0 % duty on the open cell to promote Make In India and pass benefit to the manufacturers. For further GST should be reduced to from 28 % to 18 % as TV is now a necessity and not a luxury item. Overall, the budget is development oriented fulfilling the ease of doing business and ease of living for citizens.”

Shrenik Bhayani, GM, Kaspersky Lab (South Asia):

“The union budget of 2018, very evidently pictures a positive growth that the government has shown towards digitalization in India. Their push towards the research efforts in Artificial Intelligence is a smart step taken by Mr. Arun Jaitley.

The aim to setup 5 lakh hotspots is a great step, which also calls the need for being alert on the cybersecurity front. People need to be educated about antivirus solutions and be made aware about not falling for phishing attacks.

The blockchain can be an effective technology and I feel that exploring Block Chain Technology for payments is a brave step taken by the government. I am excited for the development of this remarkable and useful technology in our country, as it is in fact increasingly being implemented by a vast number of industries. At the same time, it can be an attractive target for cybercriminals. Some cyberthreats have been inherited from e-payments, such as changing the address of the destination wallet address during transactions and stealing an electronic wallet, among other things. Therefore, we should remain vigilant to stay secure.”

V Ramakrishnan, CFO, TCS:

“This is a forward looking, growth-oriented budget with a focus on the rural economy, healthcare for the poor, investments in infrastructure, Digital skilling, education and jobs creation. Several programs announced in the budget represent big strides in building a Digital India: the outlay for the smart cities program; the plans to explore blockchain technology; the national program for adoption of artificial intelligence and for research, training and skilling in  cyber-physical systems; the innovative use of technology to digitally reimagine agricultural markets to empower small and marginal farmers; and the extending of broadband access to 5 crore rural citizens to bridge the digital divide. Lastly, having partnered the State Bank of India in their highly successful and seamless merger with six associate banks, we are excited about the planned merger of the three public sector insurance companies. I would rate this budget a score of 8 out of 10.”

On outlawing crypto currency by the GOI in budget, Mr. Aniketh Jain, CEO & Co-Founder of Solutions Infini Pvt. Ltd:

“Cryptocurrency is not a legal proposition and the usage of the same is discontinued by the government. However, the usage and need of block chain technologies is not discouraged and will be looked upon case by case, which is a positive sign. cryptocurrency which is powered by Bitcoin is the digital currency that has raised quite a buzz in the investment market. According to reports, several banks posses frozen account cryptocurrencies in India while ROC (Registrar of Companies) has stopped companies to act in such exchanges. The underlying assets of cryptocurrencies have been volatile with heavy price fluctuations. The roots of the cryptocurrencies and the related transactions are not extravagantly transparent making them more questionable. Hackers are gaining most out of this scenario as the difficulty of tracing the roots of accounts and transactions are very high. There have been several instances where the accounts of the investors have been prone to hacker attacks and there’s no established mechanism to revive the accounts from the hackers. The vulnerabilities of losing the money invested in these accounts is extremely high as there are no pre conceived notions to revive the hacker’s attack, paving them ways to swag the wealth.”

Thiru Vengadam, Regional VP India, Epicor Software Corporation:

We welcome the government’s proposals in the Union Budget 2018-19 that incentivize MSMEs. The budget proposes bringing down the corporate tax for firms that reported turnover up to Rs 250 crore, thereby reducing tax burden on MSMEs. Further the government has allocated funds for 2018-19 for credit support to MSMEs.

For MSMEs technology is an enabler for business growth and technology adoption is seen as  a top priority. However, MSMEs are often unable to utilize the opportunities available through technology due to lack of working capital finance. The budget proposals of access to credit  and tax breaks to MSMEs will help reduce capital constraints  and encourage investment in IT solutions such as enterprise resource planning (ERP) to help them work smarter, operate more efficiently and be innovative. The Budget announcements will further encourage technology vendors such as Epicor to continue adding value to medium sized businesses through technology offerings that help them grow now and positions them for success in the future.

Arun Gupta, CEO and Founder of MoMagic Technologies:

“This budget has recognized the importance of artificial intelligence, machine learning and robotics as tools to further growth at national level. Niti Aayog’s plan to establish a national program to direct efforts in artificial intelligence is a welcome move which will push investments and research in this space and will put India on the right path tech for innovation,” Mr. Arun Gupta, Founder & CEO, MoMagic Technologies”.

KK Mookhey, Founder & CEO, Network Intelligence:

Speaking about the highlights related to Information Technology sector of the 2018 Union Budget, KK Mookhey, CEO & Founder of Network Intelligence, a global cybersecurity firm, said “The move to make cryptocurrencies illegal is a major announcement; it is likely to create a negative impact on the price of these currencies, especially Bitcoin. A better idea may have been to come out with some sort of a regulatory framework around cryptocurrencies. On the other hand, the point raised by the Finance Minister about exploring the usage of blockchain technology for payments is a very good initiative. It will support homegrown technologies who have already invested in the technology and will attract new investments in this technology. It is a positive sign to see that 5 lakh wifi-hotspots will be set up covering 5 crore rural citizens. This falls in place with the country’s Digital vision. We would have liked to see more substantial movement on setting up the CERT-Fin for the financial sector.”

Manoj Bhan, Executive VP–Corporate Affairs, Vihaan Network Ltd:

“The FY19 budget is a well thought out roadmap to attain 8% plus growth rate even as it addresses a number of social issues, particularly in the health sector. The launch of comprehensive National Health Protection Scheme is a crucial step towards ensuring the well-being of a large section of our fellow citizens. The budget has also taken a number of steps to support its theme of “ease of living.” As a member of domestic telecom fraternity, we applaud the government’s decision. While the budget has several announcements to boost digital India, it is disappointing to note there are no steps to support and boost domestic telecom equipment manufacturing that forms the backbone of telecom infrastructure going ahead we look forward for governments intervention on encouraging domestic manufacturing to be a part of network connectivity across India, thereby a leap towards a making ‘make in India’ mission successful in real terms.”

Ajey Mehta, VP India, HMD Global:

“HMD Global continues its strong emphasis on PM Modi’s Make in India campaign. While the import duties for mobile phones increased to 20%, along with a 15% duty on key components, this will have a minimum impact on our business, as all our current portfolio of Nokia phones are manufactured in India.”

Rohit Kulkarni, Country Manager, Payoneer India:

“It was heartening to see our Finance Minister recognizing India’s MSME enterprises as a major element for growth and the fastest growing sector post demonetization and GST. The FM in the 2018 budget has reduced the tax for MSME’s by 5%. The deduction of tax has come down to 25% from 30%. This gives MSME’s and other traders an opportunity to expand their services globally and venture their businesses into various global marketplaces.

Another major highlight of the budget is, government encouraging fintech companies on the usage of blockchain technology in India which has the potential to positively impact the payment sector, leading towards a more digital India. Adoption of these newer technologies can help to improve real-time data analytics, and have a positive impact on risk identification and fraud analysis, which can be an important tool in securing   India’s dream of becoming a digital economy.”

Rajesh Rege, MD, Red Hat, India and SAARC:

“It was a well-rounded budget. Emphasis on education, entrepreneurship & healthcare was much needed & is welcome. FM’s comments on AI & Blockchain are a step in the right direction & we look to an early implementation of these initiatives.”

Anil Valluri, President, NetApp India & SAARC:

“India’s Budget FY18: A Continued thrust on transformation. The last few years have seen large initiatives designed to bring about substantive change. The FY18 budget marks time, with its particular focus on agriculture, healthcare and infrastructure and the continued thrust on the MSME segment. The focus on wide scale broadband access, on Machine learning, AI and robotics, on R&D as well as skilling, and on Smart Cities will keep pushing India’s Digital agenda, well supported by the additional fund allocation. It is a quietly progressive budget, and timed well to focus on readying all cross sections of Indian society to reap the benefits of the future.”

Limesh Parekh, Enjay IT Solutions:

“Apart from other regular things, there are few steps which actually show the intent and vision of the government. Few Examples: 1. Progress towards Universal Health System nationwide; 2. MSME reforms and PM Mudra Yojana will enhance effectiveness of small enterprises; 3. Strengthening of railways and powerful agricultural policies will enhance and   strengthen agricultural backbone of Indian economy; and 4. Programs for preventing brain drain and B.Ed. programs for technical teachers is a   good step. I think these steps prove that current government is concerned about building great Nation.”

GB Kumar, Vice President – India and APAC, Prysm Inc:

“The one key takeaway from Union Budget 2018 is clearly the envisioned rise of India as a connected and technology-driven nation. There is a clear focus on creating a digital economy through sizeable strategic investments in developing the requisite infrastructure. With the government’s enhanced commit to the Digital India scheme – an allocation of INR 3,073 crore, and the successful selection of 99 cities (out of 100)  for the Smart Cities initiative – we believe we will see expedited implementation of Connected Cities. Another commendable announcement was the allocation of INR 10,000 crore to the Bharatnet project and establishment of 5 lakh Wifi hotspots in rural geographies. The government’s announcements that promote digitization through greater connectivity, will fuel uptake for collaboration and remote working solutions resulting in a more productive and connected India. We hope Government will actively encourage emerging technologies such as block chain. This is important for Indian tech industries and start up ecosystems to flourish. Overall, it is a progressive budget, something that puts the onus on the Indian Information Technology industry and also benefit from.”

Adhil Shetty, CEO & Co-founder, BankBazaar:

“Views on Insurance: Rs5Lac is a great mediclaim amount and 50 Cr individuals is a great target. This will create tremendous awareness for medical insurance in the same way as Jan Dhan which ensured every Indian to have a bank account. This will push for every Indian to have medical insurance. On life insurance the PM Jeevan Jyoti Bima Yogana including Rs 2Lac Life cover is being pushed across a larger base which is a great sign. Rs 2 Lac critical cover is also being extended to a larger base.

Views on Taxes: “Reduction of corporate income tax for companies with revenue up to INR 250Cr is a big announcement and will benefit more than 99% of the companies in India. The framework is still to be analyzed to qualify the benefits. Another announcement on standard deduction of INR. 40,000 for salaried class is a great step to simplify the taxation process. Though the effect would not be much as the 40k deduction in lieu of medical and travel allowance effectively only means INR 40k- (15k+9.6k existing ) which is only INR 15.4K extra non-taxable income. At 20% tax slab, it is approximately INR 3080 in hand for full year. This will further get reduced because of the increase in health and education cess of 1% on tax (existing 3%) which means only approx. INR 2000 in hand per year increase.

Fintech perspective: The budget overall is positive. There is visible support for Fintech industry as the FM specifically mentioned that Fintech is playing an important role in countries growth and hence announced setting up a working group for its growth. The biggest announcement was about insurance and Rs5Lac is a great mediclaim amount and 50 Cr individuals is a great target. This will create tremendous awareness for medical insurance. Also, reduced corporate income tax for companies with revenue up to Rs250Cr is a big one. There are couple of points which will raise questions. The 3.5% fiscal deficit in FY18 and 3.3% fiscal deficit target in FY19 is slightly higher than expected which will impact the borrowing cost for Private sector. Second, introduction of tax on LTCG exceeding Rs. 1Lac after 14 years.

On Investment: The announcement of the LTCG on equity investments and 10% DDT saw the Sensex plunge 1% within minutes. However, the markets seem to have recovered immediately signalling that equity investors — including mutual fund investors — would absorb these blows and keep investing as per their financial objectives. After all, equity remains one of the best-performing asset classes.”

Avneet Singh Marwah, Director and CEO of Super Plastronics Pvt Ltd (Kodak HD LED TV India):

“Last year the consumer electronics industry saw a decline by 10-15% due to 2 major reforms (GST & Demonetization). However, despite the initial decline, we welcome the reforms introduced by the government. But televisions have been put under 28% GST, therefore we saw a larger decline in sales in Q3. As a result offline trade has taken the maximum hit and we expect GST on television should come down to 18%.If the government does not consider a reduction, we may see jobs cut down by 35%. Many companies have already started laying off their workforce. If India wishes to maintain its ‘fastest growing economy’ tag, then we must increase consumerism, which can’t be achieved by placing a 28%  tax bracket on a consumer electronics like smart televisions. In contrast, some of the biggest markets in the world have a tax structure below 12% on television and their market size is growing substantially. In India, the average screen size which was predicted to be at 38” in year 2017-18, still remains at 33”, in comparison. The expectations from this budget for the consumer electronics industry is high and we hope that the Government is able to balance the reformed taxes with the income-expenditure of the layman.”

Sashank Rishyasringa, Co-founder of Capital Float:

“Fintech perspective: The Finance ministry has demonstrated incredible foresight. We appreciate that the Finance Ministry acknowledged the importance of digital lenders like Capital Float in aiding the growth of the MSME sector. As founding members of The Digital Lenders Association of India (DLAI), we met with the Finance Ministry, along with other leading Fintech lenders, last year and presented a whitepaper with recommendations to foster Fintech lending. We’re delighted to see those suggestions being incorporated in spirit and in letter. These include increased capital injection into the MUDRA Yojna up to Rs 3 lakh crores & doubling the allocation to the Digital India initiative. In addition, our request to access funds from MUDRA is also being considered by the Ministry, as they are reviewing the refinancing policy and eligibility criteria for NBFCs. We also welcome Mr Jaitley’s forward-looking approach towards adopting blockchain, which will play a crucial role in shaping digital payments in the country.”

Gaurav Hinduja, Co-founder of Capital Float:

“MSME perspective: The Government and the Finance Ministry continues to identify the MSME sector as being critical towards increasing GDP & employment. The recapitalization of the PSU banks up to Rs 5 lakh crores and allocation of Rs 3 lakh crores in MUDRA loans ensures a higher availability of formal finance for credit-starved MSME segments. Another huge step towards boosting the growth prospects of MSMEs is the reduction of corporate tax to 25% for enterprises with a turnover of up to Rs 250 crores. The development of unique identities along the lines of AADHAAR for individual enterprises will enable us to further our efforts towards financial inclusion, as we can extend digital credit services to MSMEs with little to no documentation. The extension of Kisan Credit card to fisheries & animal husbandry farmers and the allocation of Rs. 10,000 crore for fisheries & aquaculture, animal husbandry funds further adds to the Government’s efforts towards absorbing more segments into the formal financial ecosystem.”

Rajan Navani, Vice Chairman and MD of Jetsynthesys (Jetline Group): 

“Budget 2018 demonstrated the commitment of the government on Digital India by doubling allocation, developing an increased focus on new technologies including artificial Intelligence and blockchain. The contribution of new age businesses and technologies over the next decade to GDP will be significant as will be the ability of Indian companies to be part of global supply chains through value added technologies. All of this will result in more entrepreneurs and additional jobs that will drive the future of a New India. The incentive provided to 5G, increased Wi-Fi hotspots and smart cities will drive greater data consumption which will particularly benefit the online and mobile gaming companies in India. ModiCare, different from ObamaCare, is something that should have been done in India long ago. The one item a common man doesn’t budget for is unexpected healthcare costs for family members and many a times it completely messes up his finances. Providing a cover of Rs 5 lacs to 10Cr families is indeed the highlight of this budget 2018 and will be a game changer for India if implemented smartly and efficiently. Further, in our land of frugal innovation in healthcare, the same can happen at a fraction of the cost in western countries.”

Sanjay Jalona, CEO & MD, LTI (L&T Infotech):

“The Budget gave major emphasis on healthcare, agriculture, education and research, which was great.  Use of technology in delivering education and focused research in technologies like Blockchain, AI, Big Data, IoT & Robotic are great initiatives and will create opportunities for IT sector to contribute in making of tomorrow’s India. While reduction of Corporate Tax to 25% for a vast majority of companies is a welcome move, increase in cess from 3% to 4% will increase tax rate for larger corporates by 0.34%. The return of long term capital gains was well anticipated and the budget has brought it in a very calibrated manner which should not affect the investment sentiments. Overall a good budget, the execution remains key and to be watched for.”

Harshvardhan Lunia, CEO & Co-Founder, Lendingkart Group:

“The Union Budget for the year 2018 is in line with our expectations and requirements of the economy. The country is still reaping the benefits from forward-looking initiatives proposed over the previous financial year such as demonetization, the GST rollout and the increased focus towards digitization. The programs that have been announced for the rural, agriculture, healthcare and manufacturing sectors will drive essential growth. The continued focus on MSME’s with the allocation of over 3000 crores for credit support along with backing the efforts of FinTech companies’ will help in creating more avenues of financial inclusion for the underserved segment. Bank recapitalization will also sustain these efforts by adding much-needed credit in the market. The emphasis on complementing existing digitization efforts by connecting villages through high speed optic fiber networks and building Wi-Fi spots will give an impetus to upcoming digital sectors that rely heavily on connectivity like FinTech and Edtech. We are happy with the current focus of the Government, as the country continues on the path of ‘ease of doing business’ it is great to see strong emphasis being put on ‘ease of living’ for the masses.”

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