STRENGTH­EN­ING ECON­OMY BE­FORE UNION BUD­GET...

Un­like any other year, this time around in­vestors are no longer wait­ing for the union bud­get to see big bang...

DQ Channels - - Channel Pulse - ANKIT PARASHAR/( ankitp@cy­b­ver­me­dia.co.in)

Un­like any other year, this time around in­vestors are no longer wait­ing for the union bud­get to see big bang re­forms. The new govern­ment has taken many steps to stim­u­late growth since it as­sumed of­fice in May 2014. The hope is that this trend will con­tinue and that many more steps will be ini­ti­ated to strengthen the econ­omy be­fore the union bud­get of 2016.

In the month of Fe­bru­ary 29, Fi­nance Min­is­ter Arun Jait­ley will an­nounce a friendly tax regime bud­get that will en­cour­age set­ting up of star­tups in the coun­try. Ev­ery in­di­vid­ual have some ex­pec­ta­tions from the Union Bud­get hop­ing that the govern­ment would take some use­ful ini­tia­tives to ev­ery­one. Dif­fer­ent IT As­so­ci­a­tions in In­dia also have some ex­pec­ta­tions from the Union Bud­get 2016.

Some of the ini­tia­tives taken by the govern­ment in­clude la­bor re­forms, in­sur­ance leg­is­la­tion, open­ing up of For­eign Di­rect In­vest­ment (FDI) in de­fense and rail­ways, clear­ing de­fense deals and in­fra­struc­ture projects and dereg­u­la­tion of diesel prices.

Man­u­fac­tur­ers’ As­so­ci­a­tion for In­for­ma­tion Tech­nol­ogy (MAIT) has its Pre-bud­get rec­om­men­da­tions that have been sug­gested by the as­so­ci­a­tion to ease the busi­ness en­vi­ron­ment for the IT man­u­fac­tur­ing sec­tor. Amongst their top three wishes from the Union bud­get, the first is the time taken for cus­tom clear­ances should be re­duced. This could be done by ex­tend­ing the green chan­nel fa­cil­ity for free move­ment of goods per­tain­ing to R&D ship­ments; en­cour­ag­ing hand car­riage of goods with pro­vi­sion for monthly cus­toms duty pay­ment fa­cil­ity; re­lax­ation of manda­tory first check pro­cesses at the ports per­tain­ing to free of charge / ex­empted ship­ments; and avoid­ing Spe­cial Val­u­a­tion Branch (SVB) in­spec­tions for goods that are al­ready cleared un­der duty ex­emp­tion schemes.

Ac­cord­ing to MAIT, Avoid MoEF clear­ance for im­port of re­fur­bished goods for test­ing or R&D is the se­cond top wish. To avoid un­due de­lays in move­ment of goods, it may be clar­i­fied that se­cond hand/re­fur­bished goods im­ported into In­dia for gen­uine busi­ness pur­poses do not re­quire clear­ance from the MoEF (Min­istry of En­vi­ron­ment and For­est).

In­cen­tives should be taken for En­cour­age Do­mes­tic Man­u­fac­tur­ing is MAIT’s third rec­om­men­da­tion for Union Bud­get. , MAIT has called for more clar­ity with re­gard to levy of ba­sic cus­toms duty (BCD) and ex­emp­tion of goods man­u­fac­tured by SEZ units for the do­mes­tic mar­ket.

“At present there are mul­ti­ple reg­u­la­tory and op­er­a­tional is­sues plagu­ing the In­dian man­u­fac­tur­ing sec­tor, and the IT hard­ware in­dus­try in par­tic­u­lar. If the govern­ment is se­ri­ous about cam­paigns like ‘Make in In­dia’ th­ese is­sues will have to be re­solved quickly. The busi­ness en­vi­ron­ment in In­dia has to be im­proved and brought at par with other coun­tries” said, An­war Shirpur­wala, Ex­ec­u­tive Di­rec­tor, MAIT

As­so­ci­a­tion of Sys­tem In­te­gra­tors and Re­tail­ers in Tech­nol­ogy (ASIRT) also come up with their ex­pec­ta­tions from the Union Bud­get and As­so­ci­a­tion shares that Al­low com­pa­nies that have self-funded in­no­va­tions or are at WIP stage to spin-off in­no­va­tion re­lated ac­tiv­ity into an­other com­pany or sub­sidiary with self­fund­ing par­ent be­ing at par with An­gel In­vestor for all the in­vest­ments made till spin-off and the spin-off be­ing treated as startup. Many ex­ist­ing small IT com­pa­nies have built in­no­va­tions self funded from ex­ist­ing rev­enue streams, so 50% higher sops should be pro­vided to them than star­tups in form of ex­emp­tion in TDS, cap­i­tal gains and trans­ac­tional taxes such as sales tax, VAT, Ex­cise, Ser­vice Tax, etc (or GST).

“Com­pa­nies should be re­warded for be­ing be­fore-time, be­fore-sops - for hav­ing set up not for hog­ging govern­ment ben­e­fits to con­tinue in­no­va­tion and prod­uct de­vel­op­ment and in­vest­ment re­turns in th­ese en­ti­ties should be tax free or taxed only marginally. In ad­di­tion, banks must come for­ward to fund th­ese com­pa­nies for equity and not as loan as th­ese com­pa­nies have al­ready demon­strated their gen­uine in­tent by in­vest­ing their own funds till date. Govern­ment should re­move loop holes that al­low E-com­merce gi­ants to set up sub­sidiaries or fund dis­count­ing and bring tra­di­tional re­tail­ers on par with on­line por­tals said, Kshi­tij Ko­tak, Chair­man, ASIRT.

All Delhi Com­put­ers Traders As­so­ci­a­tion is mov­ing for­ward day by day and also de­ter­mined to make the tra­di­tional mar­ket grow with re­li­able so­lu­tion. ADCTA also writ­ten to Prime Min­is­ter Modi sev­eral times and re­quested him to break his si­lence over trader’s na­tion­wide ag­i­ta­tion against e-tail­ers un­eth­i­cal busi­ness prac­tice (dis­count­ing sales) which is tar­nish­ing the whole es­tab­lished busi­ness chan­nel and due to that sus­tain­abil­ity of lacs of traders at stake now.

ADCTA also ex­pect­ing, there should be some norms against the un­eth­i­cal busi­ness prac­tices in the union bud­get.

“We are re­peat­edly say­ing that we are not against e-com­merce, we are against the un-eth­i­cal busi­ness prac­tice opted by few e-tail­ers, in other words back­door en­try of FDI in retail. There is a partly so­lu­tion in this mat­ter and e-com­merce com­pa­nies should con­sider this in right way. This time we want some good points in the union bud­get against un­eth­i­cal busi­ness prac­tices. ” added Swarn Singh, Sec­re­tary of ADCTA (Delhi).

Most of the IT as­so­ci­a­tions have the same ex­pec­ta­tion on GST im­ple­men­ta­tion. Ac­cord­ing to PCAIT, GST should be im­ple­mented and The main func­tion of the GST is to trans­form In­dia into a uni­form mar­ket by break­ing the cur­rent fis­cal bar­rier be­tween states. Thus the GST will fa­cil­i­tate a uni­form tax levied on goods and ser­vices across the coun­try.

Alok Gupta, Pres­i­dent, PCAIT said, “Hon­estly our top 3 wish list for Union Bud­get is GST im­ple­men­ta­tion. Also, Mar­ket is go­ing into neg­a­tive di­rec­tion and we ex­pect from the govern­ment that there should be some norms in Union bud­get cater neg­a­tive billing by on­line mar­ket.

Many e-com­merce com­pa­nies had net sales less than losses in 2014 and even to­day top 3 are said to dis­count up to 30-50%. Most lamp-post­ing prod­ucts be­ing IT con­sumer prod­ucts such as lap­tops, hard­disks, pen drives and other ac­ces­sories, th­ese are the prod­ucts that get sub­si­dized and be­come loss lead­ers wip­ing out sales at phys­i­cal stores. Charge taxes on on­line por­tals at full rates and build rev­enue for sops to small re­tail­ers who are largest em­ployer base in In­dia.

The Union Bud­get for 2016 is sure to have pos­i­tive rub-offs on the IT in­dus­try be­cause the FM has fo­cused on spend­ing on in­fras­truc­tural projects, mod­ern­iza­tion of ports. If the Cen­tral Govern­ment can en­er­gize all its min­istries to spend the bud­getary al­lo­ca­tions that have been made to them, then de­mand for IT prod­ucts is bound to in­crease.

“At present there are mul­ti­ple reg­u­la­tory and op­er­a­tional is­sues plagu­ing the In­dian man­u­fac­tur­ing sec­tor, and the IT hard­ware in­dus­try in par­tic­u­lar. If the govern­ment is se­ri­ous about cam­paigns like ‘Make in In­dia’ th­ese is­sues will have to be re­solved quickly”

AN­WAR SHIRPUR­WALA, Ex­ec­u­tive Di­rec­tor, MAIT

“We are re­peat­edly say­ing that we are not against e-com­merce, we are against the un-eth­i­cal busi­ness prac­tice opted by few e-tail­ers, in other words back­door en­try of FDI in retail. There is a partly so­lu­tion in this mat­ter and e-com­merce com­pa­nies should con­sider this in right way”

SWARN SINGH, Sec­re­tary of ADCTA

“Com­pa­nies should be re­warded for be­ing be­fore-time, be­for­e­sops- for hav­ing set up not for hog­ging govern­ment ben­e­fits to con­tinue in­no­va­tion and prod­uct de­vel­op­ment and in­vest­ment re­turns in th­ese en­ti­ties should be tax free or taxed only marginally”

KSHI­TIJ KO­TAK, Chair­man, ASIRT

“Hon­estly our top 3 wish list for Union Bud­get is GST im­ple­men­ta­tion. Also, Mar­ket is go­ing into neg­a­tive di­rec­tion and we ex­pect from the govern­ment that there should be some norms in Union bud­get cater neg­a­tive billing by on­line mar­ket”

ALOK GUPTA, Pres­i­dent, PCAIT

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