For every action there is an equal and opposite reaction, states Newton’s Third Law of Motion. The finance minister, P. C. Chidambaram, announces 4 percent CVD on all imports; the channel is gearing up to see a hike in prices of certain components. The finance minister announces an 8 percent excise duty on packaged software; the channel fears that piracy will run rampant. The finance minister pulls CDs, DVDs, combo drives and pens drives out of the tax net; the channel says that this will not affect prices as the components are too insignificant. The finance minister makes investment in hardware more attractive; the channel shrugs it off saying that the plan is too far away on the horizon to have any immediate impact.
For every budgetary proposal made in this year’s Budget the channel has a reaction. It might not always be the right reaction, but in true channel-style it is vocal and loud. However, few have stopped to read between the lines. When Chidambaram announced the re-imposition of excise duty, he was reacting to the advice given by branded manufacturers. Yes, the Budget has not been very kind to the assembler, but then is the finance minister to blame. For years now, the assemblers have not been able to form a body that will give them a national voice.
Chidambaram was expected to lower the price of notebooks, but that didn’t happen. He didn’t give IT the special attention it has been getting over the years, but then it was not expected either. The channel was expecting zero duty to be implemented across the board, but he did that last year. If it’s not being implemented, shouldn’t partners ask manufacturers for the reason? He was expected to boost growth, which he has done. By boosting e-commerce initiatives, fast-peddling the computerization process of government and financial institutions, by making India a preferred destination for manufacturers, the finance minister has set in a long-term growth path for the IT industry.
Yes, the proposals are not kind, neither is it rash. It will not undo the work gone into making IT the most lucrative sunrise industry of the country. As we get older, with each birthday, we receive less presents, but the value of the present increases. I think that’s what Chidambaram tried to do this year too.