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IT industry has little to cheer and complain about

02 February, 2017

The Union budget for 2017-18 largely had a neutral impact on the Indian IT industry, which has been jolted by the Trump administration’s move in the US to raise the bar for H1B visas.

The industry leaders, however, welcomed the budget for its focus on technology solutions, cyber security and encouraging a digital economy. They expect the increased technology spend will generate business for them. They also lauded higher allocation for the BharatNet project under which optical fibre cable has been laid in 155,000 kilometres.

Finance minister Arun Jaitley allocated Rs 10,000 crore for BharatNet for the coming fiscal year to ensure high-speed broadband connectivity in 150,000 village panchayats with WiFi hotspots and access to digital services at low tariffs. He also announced a ‘DigiGaon’ initiative to provide tele-medicine, education and skills through digital technology.

Rajesh Gopinathan, CEO-designate at Tata Consultancy Services, said the budget gives a big push to the digital economy. “It encourages a shift to digital platforms with incentives to payers as well as merchants driving convenience, efficiency and transparency,” he said.

Jatin Dalal, chief financial officer at Wipro Ltd said the thrust on digital economy, deployment of analytics in tax administration and initiatives on cyber security highlight the government’s priorities.

But he was disappointed that the government didn’t announce any cut in corporate tax for large companies, instead limiting reductions only to small firms. “While the proposals on corporate tax are welcome, progressive steps towards achieving competitive tax rates could have attracted global investors,” he said.

Rostow Ravanan, CEO and MD at Mindtree, welcomed the initiative to enhance cyber security in the financial services sector. “The Computer Emergency Response Scheme will smoothen coordination between finance regulators,” he said.

Ravanan also said that the push to drive adoption of mobile and an Aadhaar-enabled payment system will help bring in greater financial inclusion amongst citizens.

Anant Maheshwari, head of Microsoft India, called the budget a “balanced” one. “The focus on extending market-relevant training for the youth and setting up 100 international skill centers across the country are positive moves. The emphasis on science and technology for students and launch of SWAYAM will empower India’s youth,” he said.

Overall, while there were a few technology-related initiatives, the government has not announced any policy decision specific to the IT industry in the budget.

“The IT industry has become mature and does not need sops to continue its growth trend”, other factors like Trump notwithstanding, said Partha Iyengar, vice president and Gartner Fellow, India. “There were no overt steps for the industry, and none were expected. There is no hue and cry about it. It is a no-news-is-good-news story for the sector.”

The industry body Nasscom said the IT sector’s expectations on facilitative proposals remained largely unmet in the budget. But it welcomed the government’s focus on digital payments the announcement to set up the payments regulation board.

The decision to reduce tax deducted at source from 10% to 2% brought some cheers for the IT and business process management industry. “However, this is possibly the only IT sector-focussed announcement in the budget,” Nasscom said.

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IT industry has little to cheer and complain about

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