Budget 2014: The missed telecom growth story

Updated: Jul 15 2014, 00:06am hrs
The Finance Minister has presented a very directional and pragmatic budget 2014. Broad based initiatives like EVisas, smart cities, rural broadband mission, and the 10K Cr funding for startups and entrepreneurs will bring back the focus to IT and sustainable development in the coming years.

Mr. Modi's pet project of building 100 smart cities, implemented in the right way, will increase employment opportunities in the IT sector besides providing a fillip to IT hardware and telecom. The mega 7K Cr Smart City project will provide just the right kind of incentive needed to revitalize the start-up ecosystem putting it at par with similar start-up movements in China and elsewhere in the developing world.

To show that the government is willing to walk the talk budget 2014 has made a provision of 1OK Cr for early stage companies - next only to Sequoias mega 12 K corpus. The government has also announced an entrepreneur friendly legal bankruptcy framework that will allow failed start-ups to pull down the shutters.

However, there is a persistent feeling that the Finance Minister could have done more by clearing the present governments stand on burning telecom issues of the day like retrospective tax, excises and customs on telephony hardware and equipment and TRAI rules and regulations.

Indian SMBs, with whom we work closely, rely on the telecom sector - whether through voice or SMS - to maintain their communication with their customers. Every Indian can afford a phone, which is why telephony can reach the segments of the population that computers, smart phones and tablets cannot. It is no surprise that the area in which Knowlarity operates - cloud telephony - has been identified as having incredible potential both in India and abroad.

Budget 2014's proposed customs duty hike on telecom equipment imports could increase network costs, leading to higher tariff rates. Also the budget's 1 % hike on mobile phones comes as a damper just when the mobile story was growing strong.

Arguably, this does not just affect the telecom sector but every single product company in India with aspirations to growth. It just so happens that telecom has been a raging success in reaching the average Indian and provides a stellar case study for leadership in affordable technology. When there are tax cuts and deferrals for service companies, why not for technology product companies

The government also has to re-examine telecom rules and regulations especially those stalling growth by unfairly penalizing companies that are innovating in telecom and telephony. For example, the telecom regulation authority of India (TRAI) enacted certain rules and regulations for curbing the menace of unsolicited commercial communication (UCC) through emails and voice calls. While these laws are widely seen as progressive and customer-centric, some feel the need for its further refinement. These laws included compulsory registration of telemarketers, one-time fee of Rs 10,000, the option to block registered marketers from sending promotional content, and a provision to make deductions from the security deposit in case of a default.

Could a WhatsApp been created in India under such a set of regulations While we reflect on this question, it should be clarified that we don't argue for the wholesale rollback of these regulations. We just request regulators and financiers not to throw the baby out with the bathwater.

Successive governments have played a very proactive role in the growth of the Indian Telecom industry and the Indian Telecom success story is not complete without mentioning the role of the regulator in furthering this growth. We hope the government helps in creating the right business regulatory framework, which will help innovators in telecom - such as cloud telephony companies - flourish in India and become standard-bearers the world over.

By Jyotsna Pattabiraman (Senior Vice President- Product Marketing at Knowlarity)

NOTE: The views expressed are those of the author.