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Union Budget 2020

Finance Minister, Nirmala Sitharaman presented The Union Budget of India for 2020–2021, February 1, 2020, as her second budget.

Post-budget Recommendations

“With the announcement of the Budget 2020, it is motivating to see the initiatives to further advance the technology sector. We look forward to collaborate with the Government and industry to fuel the vision for data-centric innovations. The government’s plan to enable the private sector to build data center parks across the country highlights the huge potential of data. Addressing the need for technology and stressing on the importance of AI, Analytics and IoT will enable the country to embrace the technological advancements required to succeed today. We are happy to see the Government’s efforts to drive a positive change and position India as a technology leader.”Supria Dhanda, Vice President and Country Manager, Western Digital India”

“With a thrust on talent, technology and entrepreneurship, Budget 2020-21 is a promising budget in support of making India’s $5 trillion economy dream come true. It is heartening to see initiatives that are aimed at enhancing digital penetration in the country by making Fibre to the home (FTTH) accessible to 100,000 Gram Panchayats via Bharat Net, which will go a long way in bridging the digital divide. Also, the decision to build data centre parks for the private sector is another step towards making India a data economy superpower. Furthermore, strategic initiatives aimed at leveraging new-age technologies like the Internet-of-Things, machine learning, robotics, bioinformatics, quantum computing and artificial intelligence across sectors will further help in laying the foundation of a robust, digital economy.”―CP Gurnani, MD & CEO, Tech Mahindra

“The 2020 Budget has been drafted around the key themes of talent, technology, entrepreneurship and sustainability and we applaud the Centre’s efforts at boosting the economy. The Hon’ble Finance Minister has maintained focus on tourism by announcing that iconic destinations will be connected by “corporate” trains like Tejas and with the plan to develop 5 archaeological sites into iconic sites. Five new smart cities have also been proposed and Barco looks forward to partnering with the Government in this direction.”Rajiv Bhalla, Managing Director, Barco India

“We welcome the Government’s overarching positive theme for the Budget 2020-21, that includes enabling an aspirational India, through major fundamental structural reforms targeted at fostering healthcare, education, skill development, ensuring economic development for all and further a caring, humane and compassionate society. The Hon’ble Finance Minister Smt. Nirmala Sitharaman, emphasised on country’s growth and Digital inclusion will hinge on advanced technologies such AI, Robotics, Machine Learning, analytics, among others, which essentially relies on telecom infrastructure. However, while the Union Budget laid major emphasis on boosting domestic manufacturing of network products, mobile phones, electronic equipment, semi-conductors and healthcare products and has allocated INR 27,300 crore for the development of industry and commerce by 2021, it is disappointing that there were no announcements made regarding the rationalisation of levies and taxes currently imposed on the severely distressed telecom sector and telecom infrastructure is not taken into consideration that is going to build out the country. The Budget proposed that the New India will be driven by innovations, AI and computing where data will be the new oil and other significant initiatives such as linking of 1 lakh gram panchayat to the Bharat Net program by this year and an allocation of INR 6,000 crore in this regard, none of our key recommendation appear to have been taken into consideration. A financially healthy and robust telecom sector is imperative to support all these future forward initiatives. It is also disappointing to note that telecom was not given an infrastructure status even though a slew of crucial reforms has been announced on infrastructure. The telecom sector, which is the backbone of the country’s economy, did not receive significant support.” Rajan S Mathews, DG, COAI

“At Asus, we believe that the Union Budget 2020 announcement has covered several pressing issues faced by the economy and is going to bring growth opportunities. All eyes would be on the manufacturing sector, with the FM proposing a scheme to encourage mobile phones, semiconductor packaging, and electronic equipment. The new scheme, Nirvik, is also going to offer respite for exporters, promising to settle refunds for electricity and VAT previously levied. Furthermore, the provision to bring digital connectivity to all public institutions at Gram Panchayat and allocation of INR 6,000Cr to bring fibre to home through BharatNet linking 100,000 Gram Panchayats in FY21 are also welcomed moves.

With India’s rising aspirations reaching the rural locales, internet connectivity will pave the way for connected and smart consumerism. At Asus, we shall be pursuing ways to support the government in enriching India’s economy and traversing through rural India to ensure optimum growth and development. We also look forward to the policy on private players setting up data parks and shall be offering full support with our cutting-edge products and services.”―Leon Yu, Regional Head, India & South Asia, Asus

The budget emphasised the importance of creating a robust digital infrastructure and increasing connectivity across the country will provide greater opportunities to telecom operators and drive higher data offtake—especially in rural areas. A strong optic fibre network using higher technologies is essential for building the backbone of telecom connectivity in the country. Thus, the focus continues to remain on the connectivity of the gram panchayats through fibre. Moreover, the development of new technologies like machine learning, internet of things, artificial intelligence continues to remain the focus area.

The revised estimate (RE) of non-tax revenues from communication services for FY2020 stood at Rs. 58,990 crore, which is 17% higher than the budget estimate (BE) of Rs. 50,520 crore and is higher than our estimates. The BE for FY2021 stands at Rs. 133,027 crore, 125% higher than the RE for FY2020. Despite deferral of spectrum payments due in FY2021 and FY2022, the higher BE for FY2021 can be attributable to some participation in 5G spectrum auctions and expectation of payments of AGR-related dues.Ankit Jain, Assistant Vice President, Corporate Ratings, ICRA Ltd.

The emphasis on Mobiles, the largest import bill in electronics and ATMP is welcome. The government needs to include IT, Datacom, Medical and other sub-sectors of electronics. While the scheme is still in the works this will result in rise in exports from India.”Nitin Kunkolienker, President-MAIT


“Government’s move on increasing the threshold for small business requiring audit from 1cr to 5cr, if cash transaction is less than 5%, is a welcome move. This will spur technology adoption by them which will further increase the demand for PCs and POS.”Manu Jain, Global VP and India MD Xiaomi and Governing council MAIT


“Union Budget 2020 is a defining moment for the Indian IT industry by bringing in proactive policy measures on emerging technologies such as AI, ML, Data Analytics and Quantum Computing. In addition to this, the policy on establishing data centers across the country will strengthen the necessary IT-grade infrastructure required for discharging services to the remotest part of the country while bridging the digital divide, revolutionize the digital economy and significantly play a catalytic role in securing data sovereignty of the nation, and eventually it will also bring enormous FDI into this sector. Further incentivizing the startups will fuel their growth and build momentum in transforming the country into a software product nation. These policy measures and reforms will holistically create humongous opportunities for startups and IT companies in providing cost-effective solutions to the masses for their betterment in all walks of life.”Dr. Omkar Rai, Director General, Software Technology Parks of India (STPI)

“The current budget proposals exhibit a determined approach of government to make India ready for new technologies. Rs.6000 crore allocation for the proliferation of technology to the lowest level of society by connecting 1 lakh gram panchayats through Fibre to Home connections for supporting basic social infrastructure is a welcome step. The vision of providing panchayat level public institutions with digital connectivity will help streamline the integrated development work and open big opportunities for several stakeholders in the country. Proposal to develop Data Center Parks throughout the country is another major step towards digitization and capitalizing data resource available with government agencies. This step will help analyze the data better and make a well informed decision regarding resource allocation for social development of a specific geography and demography. Allocation of Rs.8000 crore over 5 years for National Mission on Quantum Technology is another positive step towards taking the country to the digital era. All these efforts will promote the use of technology and digitization and play an important role in the overall development of the economy.”Takayuki Inaba, Managing Director–NEC Technologies India Pvt ltd

“The Big Infrastructure  Push in the union budget 2020 is a big step towards boosting the economy and the sector. Government announced a huge spend over 102 trillion rupees ($1.44 trillion) on roads, ports, airports, irrigation and other infrastructure over the next five years. This is definitely a demand revival step and will create an environment for sustainable growth in the sector. This budget is a big growth driver and proposes to step up the construction and MEP industry sectors in the country. I am definitely positive that this budget is going to work for the MEP sector”Prakasan, COO, Sterling & Wilson, MEP Business

Pre-budget Recommendations

“This year’s budget is crucial across businesses in India. While we have seen a steady increase in the cybersecurity budgets globally, we are expecting the same in India too this year. India in recent years has shown growth in its initiative to become a digital nation and we can see the Government increasing cybersecurity awareness in the country. As an industry, we are hoping that this is reflected by the government in their new budget as well.

Proper investment in critical infrastructure cybersecurity will only accelerate the nation’s Digital Transformation. Funds also should be focused on supporting skill development & training of aspiring students who aim to become cybersecurity professionals, as well as for the government and already existing large enterprise employees to fight the evolving cyberthreats. Cybersecurity Awareness campaigns for general consumers should also be a major focus of the budget.”Dipesh Kaura, General Manager, Kaspersky (South Asia)

PHD Chamber Of Commerce & Industry-Domestic line of credit for telcos against supplies from PMI compliant Indian vendors. Currently the telecom industry is going through a bad patch with low tariffs, AGR issues and lack of credit from bankers. The industry is doing CapEx only, if long term credit is available from vendors. Foreign vendors are able to provide their Countries export line of credit without sovereign guarantee to Indian telcos. Therefore, even if our prices and equipment are good to buy, we are not able to supply to Indian TSPs, as they are always short of funds for procurement. Initially we request a Rs. 10,000 crore domestic line of credit facility.

Export line of credit. Lines of credit extended by Government of India should ask for the inclusion of at least 75 percent PMI and PMA compliant Indian goods. If the ownership of the project is in private hands, the Exim Bank of India should have first charge on the assets of the exported project but should not insist on sovereign guarantees from the recipient countries.

Declaring sales of telecom equipment as deemed export (as more than 90 percent of telecom equipment is currently being imported). We request that while declaring PMI Compliant domestic sales as deemed exports, customs on imports should be increased to the highest possible slab. We also know that 4G/5G equipment were nowhere in picture when ITA -1 was proposed and USA and China clearly do not adhere to ITA agreements for new technologies. Therefore, ITA I should not be a bottleneck while deciding custom duties on 4G/5G telecom equipment.

Extending Sabka Vishwas Scheme to telcos AGRs issue. This 2019 scheme is for settling pending disputes of service tax and central excise. Scheme waives up to 70 percent of tax dues and 100 percent of interest and penalty. This may be partially or wholly extended to the AGR related dues. In return, the Telcos could be asked to buy only PMI complaint electronics in All the network used by them (even if the services are outsourced to other vendors) to the extent of at least 75 percent of the value of the Telecom equipment being used in their network.

5G auctions. The current state of International technology is with 4G core and small improvements in applications being treated as Sort of 5G. The 5G auctions should be taken up after 3 years from now so that the Govt gets proper valuations of 5G spectrum. If 5G spectrum is auctioned now, the license fees would be frozen for the next 20 years and the Govt will lose money, also the operators will also lose since they can fully use the bandwidth only after 3-5 years. Please appreciate the real 5G standards would be available by Release 17, for which no date has yet been announced. The current standards are known a Release 15, which is only for trial and demonstration purposes. The commercial deployment would be based on Release 16, which is yet to be announced. Release 15 and 16 are for Non standalone basis and will use 4G core with enhanced features. Many new users apart from telcos may wish to buy 5G waves once the technologies are firmed up.

PMI and PMA. As per the National Infrastructure Pipeline plan by the Hon’ble Finance Minister Smt. Nirmala Sitharaman Ji, the share of investment in Digital India (Telecom) is approx. Rs. 3.2 lakh crore, out of which the approximate funding by State and Central Government is about 78 percent viz. Rs.2.5 lakh crore. We request that provisions be made in the budget to ensure that wherever central, quasi or state government funds are used, preference to Make in India (PMI policy) and Preferential Market Access (PMA policy) of Department of Telecom, may be implemented in the right earnest to get the maximum impact of this expenditure on GDP growth and GST generation.

MSME. At 20 percent of Government expenditure, MSME’s should get business worth Rs.50,000 crore, as per the Government of India Policy. The Hon’ble FM should put in conditions and this may be checked and ensured.

Buy technology and not products. India is investing in 4G and going for a 5G push and we request Hon’ble FM to come out with the solutions to ensure that we Buy Technology and Not Products. This shall ensure that low foreign exchange outgo and increase in domestic capabilities for high-tech products. C-DOT can be used to hold the technology which could be licensed to at least two or three Indian manufacturers who would then meet the PMI and PMA condition. India, in next 10 years, can save USD 500 billion in Foreign exchange, only in the telecom sector, if we shift from products import to technology imports.

Dig once policy. We request the government to have a common duct policy under all its investments in National Infrastructure Pipeline (NIP) so that roads and infrastructure is not dug up every time water, air, power or optical fiber cable are laid. Thus, every infrastructure project should be asked to lay a common duct for all service and utilities with road crossovers at regular intervals.

Declared broadband a utility.  Government should fix the charges for the right of way (RoW) and require all central, states, municipal and other authorities to provide FTTH broadband connections to all households in as per a fix-time schedule. All new buildings should be asked to take a broadband connection like water and electricity connections before declaring them fit for occupation.

FAB in India. In this regard, India should immediately put up a FAB for making silicon chips in ITI or any suitable PSU under the Government of India. Government in future should insist for use of domestically manufactured silicon chips in all bulk and/or critical electronics such as 4G,5G phones, telecom core network equipment, defense electronics etc.

Involvement of private industry – Private industry should also be utilized in this by farming out the non-core work to Indian companies, since India has good experience in software development and designing of silicon chips.

BSNL. Due to the efforts of the Group of Ministers, government has offered a package for revival to BSNL (a Govt. PSU). We request the Hon’ble FM to make available the desired funds in time so that asset creation in BSNL and its benefits happens ASAP.

Payments to industry. We request the Hon’ble FM to make available funds and instruct various government departments to ensure payments to MSME within 15 days and to all vendors within maximum of 45 days from the date of supply of material. This will boost the business and thereby boost the GDP growth with the resultant increase in GST collection for the Government of India.

Payment of interest against delayed payments. Many companies including MSME’s have gone into losses and declared NPA by banks due to delayed payments by Government Departments and PSUs. We request the Hon’ble FM should look into the payment of interest as per the provisions of MSME Act 2006 for the delayed payments to MSME’s, especially in the telecom sector.

―CT Bureau


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