The growth focused Union Budget 2016-2017 is announced in the light of stressed global slowdown, yet it is heartening to see how the growth has accelerated to 7.6% and the CPI inflation has come down to 5.4%. Finance Minister Arun Jaitley had a herculean task cut out to meet the raising expectation from industry leaders and the aam aadmi as he presents his third general budget. The Budget 2016 outlines the government’s commitment to reinvigorate the economy, kick-start investment cycle and also maintain fiscal prudence, but it remains to be seen on how quickly would we see the impact in execution.
The FM’s effort to build the rural economy is going to empower the end consumer and we expect that through this Prime Minister Modi’s dream of Digital India as well as providing a smartphone to all the Indians will come true. Moreover, the government has emphasized on schemes for digital literacy for rural India to cover 6 crore households in the next three years which executed well will kick start a next revolution in the PC and smartphone adoption in the country. (Also Read-Union Budget 2016: Rs.1.2 lakh crore electronics manufacturing proposals got says Ravi Shankar Prasad)
FM’s concerted effort to focus on multi skill development is a laudable effort. Focusing on education and job creation through skill development, his measures to bring in quality education and commitment to empower higher educational institutions will reap benefits in the skill development of the government. Providing an impetus for startups, the 100% tax deductions for new startups for first 3 years will truly boost the burgeoning start up ecosystem in the country.
Make in India continues to be an important agenda for the government as the new manufacturing companies are going to reap benefits in the segment. We have been one of the first companies in India to stress in local manufacturing, and it is great to see increase emphasis by the government yet again. The proposal on reduction in excise duty on inputs, parts and components, subparts for manufacture of charger/adapter, battery and wired headsets/speakers of mobile phone, being exempted from 12.5% to nil is a welcome move and will eventually promote the manufacturing of these components domestically. (Also Read- Union Budget 2016: Mutual Funds say lower deficit target will bring down cost of funds)
However, the exemption from basic customs duty, CV duty, SAD on charger/adapter, battery and wired headsets/speakers for mobile phone being withdrawn will increase the cost of the mobile phones till the time the companies manufacture these product domestically.
In terms of the electronic manufacturing industry we expected a lot to be announced but there was not much reference in the budget for the same. There are a lot of steps the government needs to take to bring in a next wave of growth in the electronic segment of the country. On behalf of the entire handset makers of India, we expected the government to introduce regulatory restrictions for ETA (Equipment Type Approval) and licensing requirements from DOT to import low powered wireless equipment which are very critical for success of the Digital India and Make in India vision; but there was no mention of the same in the budget. (Also Read- Budget 2016: Auto sector wants excise on large cars to be reduced to 20 percent)
We wanted the government to also focus on having a quicker and predictable time frame to complete CRS (compulsory registration scheme) formalities to comply nation’s product safety standards. Additionally, as the electronics and mobile handset manufacturing is touted to be the next growth engine for India, there was a dire need for income tax holiday to make it viable and attractive for the industry and investors just the way it is in countries like Vietnam. Overall, I would want to wish a good luck to our finance minister to execute the budget to bring our economy back on track and globally competitive.