Expert Speak

Union Budget: Top Five IT Issues Upcoming Budget Needs To Address


–Sanchit Gogia

New Delhi, July 4: The newly appointed Government in India has worked like a shot in the arm for country’s economy. A recent study by Assocham confirmed that this new wave of leadership in India is expected to double foreign investments to $60 billion. While it’s hard to miss the air of optimism in the country, longevity of this sentiment is contingent on the announcements in the Union Budget.

To gauge the market sentiment, Greyhound Research connected with over 30 senior IT Decision Makers. The outcome of these conversations was unanimous – the budget will either open a Pandora’s box or the government will take the courage to bite the silver bullet.

Here’s a list of 5 key problems Indian IT decision makers need solved from Union Budget 2014-15

Problem 1: Lack of clarity on multiple policies including the transition to GST and FDI in Retail.

This lack of clarity has paralyzed IT investments and decision making in many instances has stretched to over 4 quarters. This continues to plague orgs in BFSI, Retail, Manufacturing and multiple other verticals that have a high degree of dependence on such policies.

Problem 2: 12 percent service tax on broadband and mobile internet.

Growth plans to Tier-3 towns are contingent on broadband and mobile internet penetration. Key deterrent to higher penetration is the 12 per cent service tax which the government currently levies on internet, like other telecom services.

Problem 3: Absence of sufficient incentives for SMEs to invest in technology.

Despite the scale and the necessary volume (over 29mn orgs per latest MSME survey), orgs in this segment – particularly start-ups – do not have enough incentives from the government to invest in technology. The new government must provide support for budding entrepreneurs challenged by the lack of necessary support system, particularly IT systems.

Problem 4: Double taxation on software significantly increases TCO

The government levies multiple levels of taxes – sales tax/VAT, CVD/Excise Duty and service tax – on procurement of new software. This is a major deterrent for orgs in India to buy original software. Government must implement a simplified tax regime which clears this confusion. This is increasingly critical given the higher number of organizations now turning to Software-as-a-Service and leveraging public cloud to deliver applications.

Problem 5: Customers continue to feel scared to pay on both online and mobile platforms.

While weak cyber security laws are largely to be blamed for this lack of confidence, RBI regulations haven’t been sufficient as well. RBI must go beyond 3D-Secure and multi-factor authentication and build stricter policies to establish trust in e-commerce. Government must also work towards promoting mWallet services in India to encourage financial inclusion.

It’s clear that the industry expects the new government to take measures that will act as stimulus and not adopt populist measures that will do little to not change the status quo. Such decisions have traditionally suffered with lack of commitment from the previous government and the industry is now expecting this to change.

(The author is the Chief Analyst & CEO, Greyhound Research. The views expressed in this article are those of the author and do not represent the views of Channel Times or any of the websites managed or operated by Trivone Digital Services.)

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