India is riding high on anticipation as the nation gears up for what the finance minister Arun Jaitley would reveal in the Union Budget 2017 in the Parliament on February 1, 2017. Given that Prime Minister Narendra Modi’s demonetisation scheme proved to be an unforgettable fiasco, the finance minister is likely to go soft in introducing drastic changes in the existing system. And with the GST kicking in July, major changes in the taxation scheme are also likely to be avoided. Apart from relaxation in the income tax slabs, consumer electronics and IT sectors are expecting some good news from the Union Budget 2017.
India is a smartphone economy wherein citizens are increasingly accessing the Internet via smartphones. One way of cashing in this steady growth is by offering more incentives to the existing users. Another way is by adding more number of users by facilitating sales of the smartphones and providing cheaper Internet facilities. With the Union Budget 2017, the government is expected to lower the tax on the lower-end smartphone segment, which would not only help in generating more revenue but also provide a boost to the Digital India dream.
In an effort to promote its ‘Make in India’ initiative, the government is also likely to re-wire its policy on manufacturing smartphones, that would allow smartphone giants like Apple to set up their manufacturing units in the country, thereby reducing the cost of the smartphones and creating more job opportunies.
Apart from the reducing the cost of affordable or lower-end smartphones, the government is also likely to limit additional tax in the telecom sector. Currently, the consumers have to pay a service tax of 15 percent on services availed from the telecom operators. Given that GST would be implemented this year, any changes in this taxation scheme would increase the cost for the subscribers and the entire telecom industry. And at a time when the government is promoting its ‘digital India’ vision, any tax increase that might increase the cost for the subscribers, is likely to be avoided by the government.
The consumer electronics industry also remains highly optimistic about the union budget 2017, especially in the post-demonetisation period. Within days of its implementation, demonetisation had created a chaos in the market by limiting the buying power of the consumers. This had also affected the consumer electronics industry, which is now looking forward to interesting incentives by the government to stabilise the market and realign the growth cycle. Additionally, the government is also likely to provide relaxation in the indirect tax so as to ease the after effects of demonetisation.
Furthermore, it is expected that the IT industry will get more rebates on telecommunication equipment. The government is also likely to make provisions to boost the startup sector and create jobs by facilitating growth in the software industry.