Expectations From Union Budget By Mr. Shripal Gandhi

The Telecom sector, more so, the handset segment is going through churn. This is acutely felt by start-ups and Swipe is feeling the churn on a daily basis.

It is under this backdrop that the upcoming budget will be eagerly waited with baited breath by one and all.

My expectations are threefold:  

Growth: With Chinese economy slowing down and international financial agencies predicting India to be the fastest growing large economy, all eyes are on India and these expectations will be realized only if the Finance Minister presents a budget that is focused at maintaining the growth while addressing the government’s social obligations. As a start-up in the telecommunications sector, we are looking at the forthcoming budget with lot of expectations. We expect the Finance Minister to look into the concerns of the start-up community and allocate additional resources to address those in order to ensure healthy growth of the entrepreneurship in the country.

Tax Benefits: To support the entrepreneurial spirit of India, the government recently announced the Startup India campaign that is based on an action plan aimed at promoting bank financing for start-up ventures. We are looking forward to clarity and additional incentives for the start-up community in the forthcoming budget. A tax and regulatory friendly environment created through the Start-Up India initiative will bring in new investments in India. It will be worthwhile to watch out for these incentives becoming a part of the Act, in the coming budget.

Labor Reforms & Manufacturing Boost: India is in a sweet-spot as far as manufacturing is concerned. With rising labour costs strength of its currency, China is losing its edge as the manufacturing hub of the world. On the other hand, with competitive labour costs and weak currency, India is ideally placed to take up the role of manufacturing hub of the world. We would expect the government to announce labor reforms and the relevant policy measures for the manufacturing sector so that India can leverage its competitive advantages of low-cost labour and a weak currency.

While the Government’s intent is clear with the “Make in India” initiative, the domestic manufacturing can be further incentivized with tax breaks. More funds must be allocated in the development of infrastructure which is critical for manufacturing. Investments in connectivity infrastructure like road, railways, ports, airports, etc. will be a clear positive. Land is also a critical factor for any manufacturing activity. Hence, the process of land acquisition should be made easier for entrepreneurs so that their ideas become real quickly. Subsidies on the cost of land and lower interest on loans will help the industry to keep the cost of production low enough for consumers to purchase their products.

GST: It is costly for manufacturers to deal with multi-tiered taxation structure and a homogenous taxation structure is expected. We are expecting some announcement and clarity on Goods and Services Tax that aims at replacing the indirect taxes levied by the Central and State governments on manufacturing, sale and consumption of goods and services throughout India.

In mobility space, currently, components are manufactured outside India, in places like China, Taiwan etc. and assembled in India. Locally-made components will help Indian manufactures of telecom products improve their margins and have better control on production and delivery schedules. Incentives in terms of tax holidays and subsidies for manufacturing of telecom components in India will certainly help players like Swipe Technologies.