Budget: A Mixed Bag

Finance Minister Pranab Mukherjee might have totally disappointed the
opposition, but he has succeeded in winning the accolades of his fellow party
and countrymen. Sensex even cheered the budget by shooting up 300 points. But it
elicited a mixed feeling among the SP community. Many felt that the budget has
failed to understand the demands of the IT industry. The industry has regretted
the hike in MAT. While most of them are of the opinion that the government
should have implemented the GST to bring clarity in business, and majority of
them complained that the two-three percent excise duty hike will lead to hike in
prices.

According to Saket Kapur, CEO, Green Vision, "Increase in the personal income
tax slabs will be a gain for the SPs. There will be more liquidity in the market
and when there is more money in the market, the spending power of the customers
automatically increases." According to Kapur, solution providing involves a lot
of hardware products and with people spending more, it could only be good for
the SPs. "Apart from this, I feel that there should have been more clarity if
GST would have been implemented. Announcing the date is fine, but the government
also needs to guide us, as how we need to prepare ourselves before its
implementation in 2011," he added.

Saket Kapur

Talking about the same, Vineet Patayeet, CEO of Pune-based Vintech Electronic
Systems felt, "The budget has been quite positive but at entry-level it hardly
matters. The fact that the excise duty has been increased is not good from the
industry perspective, as the prices will go higher by about two percent or so.
However, being an HP partner and since HP is in a duty-free zone (in location),
we will not be affected as much as compared to our competitors like Dell for
instance. I hope to get better customer conversion as a result of this." But on
the downside however, Patayeet was hoping for GST to get implemented as it would
make a difference to the resellers, especially in a state like Maharashtra where
Octroi is applicable. "With GST, we were hoping Octroi will be abolished and
that would mean savings of five percent in terms of Octroi rollback which is at
three percent and another one-two percent on expenses related to payment of
Octroi," he added.

Pradeep Jhawar, Director, Bard Roy Infotech opined, "The budget is status quo
in nature. There has not been much of an impact on business whatsoever. There
has been a marginal rise in excise duty by two percent but this will not have
much of an impact when the dollar fluctuation scenario is considered. However,
petrol prices have increased and that may lead to higher prices, but till now,
the MRP or MOP has not been raised. Holding the GST back has been a negative
side of the budget. Implemen-ting it would have made the pricing structure
uniform and would have helped in dealing with various taxes. However, the
government has assured that in April, 2011, GST will be implemented."

Pradeep Jhawar

MS Rajesh-Sales Head, South Region, Blue Ocean Technologies expressed, "The
prices of products have neither increased nor decreased. Already with the
economy rising a bit, the stability of prices was very important. Since the fuel
prices are up, lot of corporates and normal people who frequently travel will
now look for alternate solutions. As such the budget does not have any negative
impact on our business." Arun Gupta, CEO, Darts IT echoed similar views, "This
budget is neutral for our networking industry. However, for some software
developers, there seems to be some benefit. As far as demand for networking is
concerned, there is likely to be neutral impact of the budget. I don't really
see a positive side for SPs like me, however the increase in MAT rate to 18
percent would have a negative effect on all IT and non-IT businesses."

But Devendra Taneja, CEO of Delhi-based PC Solutions mentioned, "One thing is
very clear after the budget, that our economy is on the growing path which is a
good news for the IT industry as well. It is also likely to bring stability in
the industry. Other good part is the maintenance of 10 percent service tax all
across the board." Taneja felt a big negative aspect for SPs, is the further
delay in the implemen-tation of GST and that the VAT rates, the TDS deductions
are beyond the profitability of businesses.

Devendra Taneja

Paramjit Singh Puri, CEO of Airlink Wireless, stated, "The budget was a
fairly progressive one from the common man's angle. As far as IT is concerned I
would term it as neutral. Nothing much to take out of it except for certain
hardware benefits with respect to mobiles. As far as we are concerned no
positive or negative impact is there."

R Sridhar, CEO of Triangle Technologies also felt that the budget was neutral
but was disappointed because there were not many things to look forward to with
respect to IT. "The market is still reeling under recession, so the government
could have announced some rebates for us. I can't term it as negative but
application of service tax is debatable. It has both positive and negative
points to it. Most of my dealer community have mixed opinions regarding the tax.
The best mantra is to wait and watch now," he elucidated.

Hemant Chabria, CEO of Kolkata-based Chabria Infotech commented, "The budget
seems to have been drawn on a negative mood. Although significant business
impact will not be there, yet business will be affected. Selling genuine
software is itself challenging with piracy on a steep rise. Also, the field of
software is plagued by double taxation issues and VAT. Now, with excise duty
rising by two percent, promoting the cause of genuine software would become more
challenging and may deter business growth. We were looking forward to GST as the
savior in this field so that uniform prices can be secured. With GST postponed
till April next year, the scenario has become very discouraging."

Hemant Chabria

"There has not been anything significant in the budget for the IT space.
Excise duty has been increased by two percent and the MRP may go up. Also, the
prices of petrol have increased, but I think this will have little impact on MRP.
The only positive side I have noticed in the budget is its tax structure where
the income tax slab has been revised," noted Manoj Rathi, Director, Diamond
Infotech.

Naveen Gupta, Director, Krishna Agency is of the opinion that, "The budget is
good, except the hike in petrol prices. The two percent rise in excise is
nominal and the dollar fluctuation may make up for this rise. However, with the
price of petrol increasing the logistical and transportation cost will go up
pulling up the MRP. However, I expect that there will not be much effects on the
MOP and it may rise up marginally."

Atul Gosar, CEO of Network Techlab also mentioned that there has been no
noticeable impact from the budget announcement on the business, except for the
fact that the 2-3 percent excise duty hike will hike prices. This would not make
much of a difference in an industry where prices keep getting revised.

Expressing his views, Shaishav Singh, CEO of DotCAD said, "There is nothing
spectacular about the budget but if you ask me the plan to withdraw the stimulus
package is not a good idea at this point of time when the economy is just on the
road to recovery. The delay in GST implementation is also not a positive step.
However, the implementation is only going to help reduce arbitrage that exists
today due to differential tax rates in various geographies but it will also not
lead to any significant boost either. No doubt it will be an enabler for the IT
sector so the delay is not a great move."

Shaishav Singh

Gaurav Mehta, CEO of Venus Data Products thought that the negative impact on
business will be as a result of the 4-5 percent increase in prices because of
the hike in excise duty. He also echoed the views of other SPs that GST should
be implemented.

Nikesh Sakaria, CEO, CDP India commented, "There is not much to talk about as
far as the budget is concerned. The downside is the two percent hike in excise
duty which will reflect across the board. Another disappoint-ment is the delay
in GST implemen-tation. This just shows that there is no clarity in the planning
and it remains to be seen if they will really implement it even in 2011. It will
be a boon for our business if it gets implemented but we have to wait and see to
what extent it gets implemented in terms of the types of taxes that will be
removed."

Team DQC