In The Union Budget for 2012-13 has received little cheer from either the IT firms or IT managers working in various companies.
According to Ganesh Natarajan, Vice Chairman and CEO, Zensar Technologies, there's nothing much in the budget for IT. IT managers, too, feel the same and term the budget as hogwash.
The booming technology sector is set to cross the $100 billion mark this year with $69 billion from exports and $32 billion from the domestic market. Archie Jackson, Sr Manager & IT Services Delivery Manager, Steria India Ltd, said, "Despite the big boom in the IT sector, the government has announced nothing cheerful whatsoever in this budget.
Additionally, the Indian technology sector is reeling under the pressure of higher wage bills, high attrition, linear growth (direct link between sales growth and headcount addition), skyrocketing real estate prices, uncertainties surrounding SEZs and the write-off of large technology contracts.
In fact, Nasscom had proposed extension of the tax holiday an incentive to boost the IT sector that expired on March 31 last year.
To continue boosting the cost-competitiveness of the technology sector, an extension of the income-tax holiday for a further period of five to ten years would have been a welcome step, said Jackson.
The telecom sector, too, felt disappointed with the Budget. Beyond the exemption of mobile phone parts from basic customs duty and the provision of viability gap funding for phone towers, there's no good news for the currently-troubled telecom operators.
Smaller IT firms are also cheerless. According to Sunil Chandna, CEO, Stellar Data Recovery, There is nothing to cheer for small and medium companies. There is no consideration of tax exemption on software exports, nor is there any change in the Corporate Income tax. Increased excise duty and service tax would inflate the infrastructure and operational costs. Instead of bringing in a stimulus, it would make Indian IT companies less competitive globally. To sum up the budget was a BIG let down!
The FM has announced no benefits for corporates. With global downturn, IT sector should have been given some benefits so as to boost the segment. The increase of service tax from 10 per cent currently to 12 per cent will cause further burden. Delay in GST implementation is merely increasing problems, said Hanuman Tripathi, Group Managing Director, Infrasoft Technologies Limited.
However, N Chandrasekaran, CEO & MD, Tata Consultancy Services, was ambivalent in his reactions and said that given the economic and political circumstances, the FM has presented a pragmatic budget with doses of good intentions for long-term growth but it lacked short-term punch to get growth going. For the IT industry, the request to exempt SEZ income from MAT has not been granted and this is disappointing. The focus on R&D is good as the weighted deduction of 200% for R&D expenditure in an in-house facility has been extended beyond March 31, 2012 for a further period of five years," he said.
The only cheer comes from the government spending on IT that is likely to cross a new high with the unique identification authority of India (UIDAI) and other technology driven projects in various arms of government getting special attention in Budget 2012-13. The FM is banking on technology-driven projects to plug leakages in the system.
Rajesh Janey, President, EMC India & SAARC, said, The decision to increase investment in Aadhar and leverage technology more in larger service delivery initiatives will also provide impetus to the domestic IT sector. The increased outlays on education with an emphasis of skilling the youth are necessary steps to leverage the demographic divided in the future and tap emerging opportunities in the areas of IT such as cloud computing and Big Data.
Besides the Rs 14,323 crore to be spent on Aadhaar, the project which aims to give each Indian a unique identification number, the government will also spend on a mobile based fertilizer management system and Aadhaar-enabled payment for government schemes in at least 50 districts.
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