Moving in line with Prime Minister Narendra Modi’s stated agenda of giving technology a high priority, Finance Minister Arun Jaitley announced several initiatives to boost the technology space in his maiden Union Budget. In reactions, Jaitley’s Budget has managed to garner support from industry leaders as well as experts, but some still believe the Budget could have done more for the tech industry.
But on the contrary, Sanchit Vir Gogia, CEO & Chief Analyst at Greyhound Research, explained, “Last year, excise duty on foreign mobile handsets was raised to 6 percent, which is hurting end consumers. There is hardly any manufacturing that is done in the country. Considering that most handsets and electronics goods are imported and now added to is the education cess, we could see prices going up for both mobile phones as well as PCs.”
“Despite the tax hike on imported mobile phones costing above Rs 2,000 last year, even home grown local brands like Micromax still import their products from China. So through this, what exactly does the government wants to do. Do they want global players like Apple and Samsung to come and open their manufacturing units in the country?” asked Gogia.
The government also increased FDI in defense to 49 percent, which means not only more equity investments coming into India, but also hopefully technology transfer that will accompany such investments. Gogia though threw cold water on this premise, “Most foreign defence companies do not agree to technology transfer if they do not hold majority stakeholding. So, whether this will work is still a question.”
However, Gogia thinks otherwise. According to him, the E-biz initiative could be great news for the vendor community, but not for consumers. “The government should not just think about spending more money, instead they should focus on what they already have and how to utilise that.” He further added, “E-biz platform does need a little bit of prodding.”
But, Gogia called for more clarity on this project, as to what exactly would be a Smart City and what all will go into the making of these cities.
While talking about the FDI in retail and insurance, Gogia felt that while FDI in retail is still unclear, but said that FDI in insurance would open up new opportunities for the tech sector.
When India Inc. was waiting for the speedy implementation of GST, Jaitley said he hoped to bring solution to the Goods and Services Tax (GST) issue this year. On this, Gogia said, “Sometimes commitment is not enough, and thus an action plan is needed to boost the sentiments of industry.”
Gogia summed it up by saying, “The budget was not enough to meet the appetite of the IT industry.”
“The ‘Minimum government, maximum governance’ tagline didn’t really reflect in Modi government’s maiden Budget,” he added.
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