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Interim Budget 2014-15: Impact on IT Industry

ChidambaramBudget 2014 was an interim budget and hence no significant policy announcements were expected. From the perspective of the IT-BPM sector in India, it helped to communicate the key messages of fiscal consolidation, focus on tax reforms, inclusive growth and thrust of skill development.

Key announcements which will have a positive impact include – continued support to NSDC and other skill building initiatives and steps to ensure MSME’s participation in public procurement. Similarly, additional Rs. 100 crore to India Inclusive Innovation fund is a welcome step. Reduction in excise duty as applicable to electrical and electronics equipment and other machinery would help to support the hardware sector.

For technology driven sector like Engineering and R&D, funding is always difficult as technology is yet to be recognized as collateral to offset risks. Therefore the proposal to set up a Research funding organization is indeed welcome. We will work with the Government on how best to scope the objective and research areas for funding to build India’s leadership in technology.

Some of the policy issues related to encouraging and supporting start-ups, entrepreneurship and simplification of procedures will require a full-fledged Finance bill, and we will continue to work with the government on these issues.

On the issues related to implementation like service tax refunds, TDS refunds, Transfer pricing assessments, we continue to engage with the relevant departments for clarifications and are hopeful that they will be addressed soon as they do not necessarily require a Finance Bill / Budget amendment.

While we appreciate government’s focus on reviving manufacturing, there needs to be continued thrust on promoting the services sector.

We hope the final budget will acknowledge the contribution of the technology driven IT sector and make adequate provisions for support of the sector given the large innovation driven SME constituents, and its ability to create jobs across demographics.

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