core sector communique

Post Budget Reaction from Area Vice President – India Subcontinent, Citrix Systems India Pvt Ltd, Mr. Sanjay Deshmukh

In the backdrop of challenges pervading the economy, we see that the Union Budget 2012 has announced economic and tax reforms to set the stage for sustained growth and development. As part of the 12th Five Year Plan, we welcome the government’s move to outline policies that will generate domestic demand recovery.

As a foreign corporation with an Indian subsidiary, the government’s plan to introduce tax reforms for the enactment of Direct Tax Code Bill is encouraging for us. The move to set up the GST network as a National Information Utility and operationalize it by August 2012 is also favourable for the industry. The budget has also recognised the role of technology in creating a citizen centric governance framework, reflected in the subsidy provided for Aadhaar tablet enabled payments for various government schemes in atleast 50 districts within next 6 months. This is particularly of interest to us as we at Citrix are helping customers to enable on-demand access to desktops, applications and data on tablets in their workplace which results in increased productivity.

That said, there have been no mentions of clearing the ambiguity around treating software as goods (subject to VAT) or as service (and subject to service tax). We were also hopeful of revisions around the Minimum Alternate Tax (MAT) on SEZ as last year it saw the investments in SEZs going down. Amendments towards this end would have helped the industry create a conducive environment to attract both local as well as foreign investments into the country.

Post Budget Reaction from CEO & Co-Founder, Vserv.mobi, Mr. Dippak Khurana

The Union Budget 2012 is a balanced one and has put forth many provisions to improve macroeconomic environment and strengthen domestic growth drivers. Although the budget doesn’t majorly focus on telecom and allied industries, there are a few provisions which are very crucial from a populist perspective:

The exemption of duty on mobile phone parts is surely an ecosystem enabler as it will lower the market prices of phones which are being assembled in India. This will help us achieve not only last mile connectivity but will fuel growth of ancillary sectors such as mobile content development, mobile banking, mobile advertising etc

Over all, the government realises the role that mobile devices have to play in enhancing and streamlining IT oriented citizen centric governance framework. This is reflected by two provisions in the government 1) creation of a mobile-based fertilizer management system that will provide end to-end information on movement of fertilisers and subsidies. 2) roll out Aadhaar tablet enabled payments for various government schemes in at least 50 districts within next 6 months.

However, the increase in the service tax from 10% to 12% will adversely affect the masses as mobile phone bills will become higher. Barring this negative point, the rest of the provisions in the budget are encouraging for the sector per se.