Telecom, IT industry look to budget to shift growth gear

With a renewed government focus on three of Prime Minister Narendra Modi's pet initiatives -- Make in India, Digital India and Skill India, the tech industry, including the telecom sector, is closely watching what the upcoming national budget has in store for them.

Of particular interest is what exemptions Finance Minister Arun Jaitley proposes to give the country's start-up eco-system, not just to the aspiring, first-time entrepreneurs, but also investors that fund them. Ease of doing business, however, remains the key concern across the tech spectrum.

"Tax exemption on direct and indirect taxes including (minimum alternative tax), where start-ups lose a big chunk of cashflows is the need of the hour. This will reduce compliance burden and reduce cash outflows," said B.V.R. Mohan Reddy, chairman, National Association of Software and Services Companies (Nasscom).

"The 2016-17 budget has to encourage them by waiving tax on capital gains and should also allow carrying forward of losses even if there is a change in ownership structure, if it is for capital infusion in the entity," he added.

"Government has started great initiatives like 'Make in India' and 'Startup India Initiative', the budget has to support at infrastructure and policy level to realise these dreams. Entrepreneurs should feel protected and supported on ground level to make actual difference," said Vipin Pathak, co-founder and CEO, Care24 (a healthcare services start-up).

Incentive schemes for electronic hardware manufacturing, research and development (R&D) and Intellectual Property Rights (IPR) creations remained top most concern for the stakeholders.

"R&D and IPR creation are critical factors for strengthening the manufacturing sector in the country," the Telecom Equipment Manufacturers Association of India (TEMA) said.

"In order to encourage more R&D in the sector, we propose to introduce five percent cess on user of telecom services (service providers) to create a corpus for supporting R&D for technology development in telecom sector," the association added.

"Incentive schemes to encourage manufacturing of LCD panels, FAB, and other products that make up electronic hardware eco-system. Lowering of minimum alternative tax and supportive policy measures to set up data centres, and measures to encourage digitization in small and medium enterprises," said Arun Singh, senior economist at Dun & Bradstreet India.

"IT sector has seen a tremendous growth in the last fiscal globally. The union budget 2016 must focus and encourage investment in the IT sector to make the government's plan of building smart and cities safer," Koichiro Koide, managing director, NEC India, said.