Budget 2019

Will Digital India get a big push?

Our Bureau | Updated on February 19, 2015 Published on February 19, 2015

The ICT industry is expecting announcements to encourageinvestments in local electronics manufacturing

Operators, smartphone makers, start-ups are rooting for a better ecosystem

With ‘Digital India’ and ‘Smart Cities’ becoming buzzwords for Prime Minister Narendra Modi’s government, the Information and Communications Technology (ICT) industry is expecting some big-ticket announcements to encourage investments in broadband rollout and local electronics manufacturing.

 Handset makers, telecom operators, software service providers and technology startups are hoping that February 28 will usher in incentives that create the ecosystem required to put India on the digital map.

Microsoft India Chairman Bhaskar Pramanik said: “Over the past nine months, the Centre has set the right context and articulated its vision for India’s economic development. We look forward to this vision being realised over the next year with key announcements in the Budget.”

Since the telecom sector will be the backbone of Digital India, the health of this sector is going to be crucial. Operators are hoping that the Finance Ministry will deal with issues such as retrospective tax and impact of GST on the sector. “The chief concern of the industry is that the increase in the rate of tax from current 12 per cent (service tax) to a higher rate under GST would increase the cost of telecom service for common man.  This would be in the backdrop of the increased spectrum valuation announced recently for the ensuing auctions,” said Rajan Mathews, Director General, Cellular Operators Association of India.

 Hardware makers said that they expect proposals to encourage domestic manufacturing under the ‘Make in India’. Industry association MAIT has suggested that the benefit of Special Additional Duty exemption may be extended to all goods (including inputs, components and accessories as well as their parts and sub-parts) imported for making IT goods. This suggestion, if implemented, should provide the necessary impetus to domestic hardware manufacturers by eliminating additional tax costs incurred on account of an inverted duty structure.

Sanjay Kapoor, Chairman, Micromax Informatics Pvt Ltd said: “I hope the Centre will adopt a carrot rather than a stick approach for India’s smart devices market through supportive rules and regulations to expedite the eco-system creation in India which is quintessential for manufacturing. Failing to do this will make it difficult for smartphone-makers to provide the latest technology at competitive prices, which is pivotal for Digital India’s success.”

Another problem is the lack of support for the start-up ecosystem. If cities like Bengaluru and Kochi have to become India’s Silicon Valley then the startup companies and innovation-generating entities need funding, investment and support. “The Indian IT sector can rightfully expect fiscal incentives around R&D, acquisition of expertise and skills, such as favourable TDS for technical services and deductions for skill development and employment,” said Sanjoy Sen, Researcher, Aston Business School.

(With inputs from Ronendra Singh in Delhi, Sangeetha Chengappa in Bengaluru)

Published on February 19, 2015
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