What telecoms want from today’s Budget 2016

Finance minister Arun Jaitely will present the Union Budget for 2016 today. India’s telecom industry that can boost enterprise IT is looking for lifeline from the annual budget.

TelecomLead.com is presenting the comments shared by several ICT industry captains.

Vishal Malhotra, tax partner, telecom practice, EY  

We hope 2016 heralds a new dawn in the telecoms tax landscape. Clarity on the significant issue of spectrum is critical as it forms a significant part of telecom network operator investments.

Transparency on treatment of spectrum as an intangible asset eligible for tax depreciation is needed ahead of a big ticket multi-band telecoms auction this year. With spectrum sharing and trading norms unleashing a wave of consolidation in the sector, clarity on the indirect tax treatment of spectrum trading – whether it be liable for service tax or VAT or both, as levying the VAT alone would put immense pressure on debt laden telecom sector.

Rajesh Janey, president- India and SAARC, EMC

The government has brought with it a renewed focus on utilizing technology for better governance, better citizen services and smarter cities through initiatives like Digital India and Smart Cities.  PM’s JAM (Jan Dhan Yojana, Aadhar, Mobile numbers) vision coupled with new payment banks will drive a different level of financial inclusion in the country. It is important that the government procurement policy motivates and encourages Indian IT Service providers to participate and play a role in government’s Digital India initiative. Under Make in India initiative, it is important that budget stimulates a build-up of design ecosystem on the technology side. It should help support technology products which are ‘designed in India for India’ and are thus a feeder to ‘ make in India’


COAI (Cellular Operators Association of India), which represents Bharti Airtel, Idea Cellular, Vodafone India, among others, has submitted its budget recommendations for mobile network operators in India.

The key budget recommendations on both direct and indirect taxes, include suggestions on rate of interest, CENVAT Credit, deductibility of spectrum fees paid and tax withholding on distributors margin on sale of SIM cards and prepaid vouchers, etc.

Main recommendations from COAI on direct taxes are withholding tax on spectrum trading, characterization of telecom services as royalty, tax withholding on distributors’ margin on SIM cards and deductibility of spectrum fees.

Key budget recommendations on indirect taxes are levy of Swachh Bharat Cess (SBC), manner of CENVAT credit utilization, rate of interest and balance of CENVAT Credit of cess as on 31 May 2015.

Keshav Bansal, director at Intex Technologies  

Being a domestic mobile handset manufacturer, Intex expects the telecom budget to encourage and felicitate an environment for the creation of a mobile ecosystem that will give impetus to domestic manufacturing. An imperative concern of this sector is the existing Cenvat credit scheme wherein suitable steps are required to justify input credit scheme to make home-grown facilities viable against imports.

Sudhin Mathur, director – Smartphone Business, Mobile Business Group

2015 witnessed pioneering schemes to attract investments in the country for increasing domestic manufacturing. The policy on duty differential has been effective in attracting significant manufacturing of smartphones. We saw good growth for mobile phones as nearly 100 million devices were locally produced according to the Indian Cellular Association. However, this number has to further go up if India is to become the global innovation and manufacturing hub. This would require focus on addressing factors that would make manufacturing globally competitive. Manufacturing companies in emerging and high growth sectors need to be given a shot in the arm in the form of simplified tax structure, better infrastructure and robust component ecosystem. Appropriate budgetary allocations need to be made for this. The Budget should also focus on electronic R&D including innovation and design.

Ashok Chandak, Sr. Director Global Sales and Marketing, NXP semiconductors

Due to the rising interest of businesses in the Internet of Things, Connected Cars, Security and wearable computing, the electronics and semiconductor industry is growing rapidly. With initiatives like Make in India and Digital India, the country has observed an accelerated interest in localising the designs and manufacturing in ESDM space over the last 12 months along with other sectors. Several Indian and global companies are showing a good amount of interest to setup the operations in India as Import still constitutes over 65 percent of the total electronic goods demand in India. With the trend of major reduction in exports from India, the initiatives to reduce import duty burden on electronics will help the foreign exchange reserves and also currency stability.

Manish Sharma, president CEAMA and managing director Panasonic India

We request the government to provide the requisite impetus to entrepreneurship, agriculture, and infrastructure and position India is a great investment hub. We urge the government to adopt a pragmatic approach to strengthen the Indian economy and take India to glorious heights of progress, On behalf of the entire industry, we extend our unfettered support and commitment to the nation and the government and make India a global super power.

Rajesh Doshi, director of Zebronics India

The government should bring down the customs duty on components used for manufacturing of IT and electronics industry, as this is must to compete with the Chinese manufacturing giants and for the ‘Make in India’ vision to catch the speed.

Jay Chen, chief executive officer of Huawei India

The government needs to pursue the momentum by creating pan India broadband infrastructure connectivity for ambitious national projects like Digital India and Smart Cities. Government should consider announcing incentives and tax  benefits to promote broadband connectivity in rural and far flung areas and reduce taxation on ICT products and services to promote the larger goal of a better connected India.

Vinu Cheriyan, CFO and director Operations at Sennheiser Electronics India

There is a need to demonstrate tangible actions to address issues of simplifying tax regulations, improve ease of doing business, generate employability and accelerate the speed of big-ticket tax reforms. There should not be any further increase in Indirect Tax rates till GST is implemented since increase in tax rates without GST credit facility will increase the operating cost considerably. Simplification of Special Valuation Branch (SVB) procedures especially with regard to renewal of existing orders would be welcome. As far as the microphone industry is concerned, we hope for a global alignment in Microphone Tariff heading since globally there is only one tariff heading (8518000) for all types of Microphones, where as in India there is a separate  Tariff for wireless Microphones (85255050) this is creating lot of confusion and litigation.

Pankaj Mohindroo, national president, Indian Cellular Association (ICA)

While the mobile handset manufacturing industry has witnessed more than 100 percent in the current financial year in value terms, we still have a long way to go before catching up with countries like Vietnam and finally with China.

The Fast Track Task Force (FTTF) established by the GoI to achieve manufacturing target of 500 million handsets and generation of 15 lakh jobs by 2019 is working overtime with support from the Union Government and various states to achieve this daunting nation building task set out before the FTTF.

India needs to adopt game changing and transformational regulatory measures with a special focus to develop component manufacturing industry, enhance ease of doing business, support local innovation and R&D, to meet skill requirements for the industry and for attracting investments into this critical sector.

Pramod Saxena, chairman and MD, Oxigen Services

FM should consider incentives for digital payments like direct subsidy credits similar to carbon credits since 95 percent of payments in the country are still in cash. FM should also focus more on according infrastructure status to digital payments network in rural areas for financial inclusion and payments. FM should also consider allocation of budget for promotion of financial literacy in rural areas.  PPI’s should be allowed to offer cash out services to expand the reach of financial inclusion.

Sanjay Krishna Goel, founder & MD, ACL Mobile

With substantial focus on startup and digital India, there still exist obstacles like costs, procedural complexities and delays at large. To empower the digital savvy mission for the Tier 2/3 and beyond cities, we look forward to policies and budget allocations including subsidies for channelizing the infrastructural development and internet penetration. As a part of the telecom sector, it is essential to rightly comprehend the Digital India vision by the goverment and contribute towards achieving the same in line with the Budget.

Abhesh Verma, COO of nexGTV

The $1.5 billion start-up fund announced in Startup India 2016 reflects the Government’s faith in digital and startup ventures. It’ll be interesting to see the budget address critical infrastructural bottlenecks to improve the fund’s channelization and accessibility in order to foster increased Internet penetration in Tier 2 cities and beyond, which will bring forth the next wave of digital entrepreneurs as well as consumers and help meet the Government’s vision for Startup Indian and Digital India.

P Venkatesh, director – Product Division, Maveric Systems

The Indian IT sector is facing a critical period and needs to step up by moving towards platforms and products. It is therefore necessary to provide incentives for such development, and also for re-training and skill-building; this should include subsidies, tax credits as well as easy financing. It is time that MAT exemption is granted to units in SEZs; also that the dividend distributed tax is exempted for such units.

IT products are eligible for research and development tax credit under Sec 35(2AB). IT services are incurring expenditure when compared to products, in making platforms and process improvements. A similar benefit should be endowed for such expenditure too for the IT services sector.

Samir Dhir, chief delivery officer and head – India operations, Virtusa 

Appreciating the government’s thrust on IT, digitisation and technology-driven initiatives, Virtusa hopes that there would be concrete incentives for start-ups and tax-sops to propel the sector to greater heights. India should create research and development (R&D) base and assist companies investing in R&D by way of fiscal and financial incentives.

Budget should focus on expanding the digital literacy base, improved connectivity and access to technologies. The government’s programs such as Start-up India, Smart Cities and Skill Development will have to rely heavily on IT services as never before and it would be in the fitness of things that IT services becomes an enabler.

Koichiro Koide, MD of NEC India

Indian government has taken significant steps in the last one year to promote Smart Cities and the country’s 100 Smart Cities Mission which would be an encouraging boost to companies such as NEC. The budget 2016 must focus and encourage investment in the IT sector to make the Government’s plan of building smart and cities safer.

Anwar Shirpurwala, executive director, MAIT 

We need to develop a complete ecosystem with a robust infrastructure, integrated supply chain and a regulatory framework that encourages people to invest in manufacturing. There is a need to simplify and reduce the cost of doing business in India to help domestic IT manufacturers compete with their global counterparts.

Shibu Paul, regional sales director – India, ME and SEA, Array Networks  

There is an urgent need to develop infrastructure that can support the implementation of projects such as Smart Cities, Digital India, Make in India, E-governance etc. on a large scale, particularly in rural areas. The programs announced for rural development have to be backed by tangible benefits.