1. Budget 2017: IT sector should get incentives on R&D, says Pradipto Chakrabarty, Regional Director, CompTIA

Budget 2017: IT sector should get incentives on R&D, says Pradipto Chakrabarty, Regional Director, CompTIA

Since IT is a majorly a supporting sectors to others, we might experience a cut on IT budgets by consuming industries.

New Delhi | Published: January 30, 2017 2:23 PM
 Since IT is a majorly a supporting sectors to others, we might experience a cut on IT budgets by consuming industries. (Reuters image) Since IT is a majorly a supporting sectors to others, we might experience a cut on IT budgets by consuming industries. (Reuters image)

While demonetization has been positively accepted by a large section of the society on the basis of projected benefits of the drive, it might have some short term economic downturn due to liquidity crunch, especially on cash dependent sectors such as FMCG and automobiles among others.  Since IT is a majorly a supporting sectors to others, we might experience a cut on IT budgets by consuming industries. This will in turn lead to IT organizations reducing overheads including salaries and benefits of employees. In such times, Government should step up and support this industry with the following suggestions: A reduction of tax rates as well as increment in tax exceptions slabs will benefit individual tax payers including the IT workforce, especially at the entry level. The IT sector has never been recipient of incentives on R&D expenditure unlike the life sciences industry.

An extension of such incentive to IT sector will be highly motivating for companies to invest in technology R&D. The global IT Industry is going through a rapid transition towards automation which leads to reduction of workforce and investment in automation. This is a key threat to the Indian IT sector which earns a major chunk of revenue through manpower heavy services to international clients. It is high time that we focus on research and development related to creating patented and saleable IT products. The future performance of India’s IT sector will lie in its ability to transition from a purely service oriented business model to product oriented revenue opportunities.

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Further, Demonetization has seen a huge surge in cashless electronic transactions. With this, we might foresee cyber security threats. The Government should think about dedicated budget provisions for developing a stronger cyber security framework and infrastructure of the country, which should include skill development in this domain. We see a widening skill gap in the IT industry. With technology growing in complexity this gap will keep increasing.

Increment in allocations for IT skill development through educational institutes will be appreciated by the industry. In order to promote a cashless economy and encourage digital payments, The budget should have some incentives. The challenge of mass implementation of a truly cashless economy is to reach out to the small vendors, in semi-urban and rural settlements. There should be clear financial incentive in shape of cash rewards for small vendors for moving from away from cash based transactions to digital methods. There should be some incentives for the consumers as well, especially to attract first time users of digital payment methods such as senior citizens and marginalized segments. Some of these were visible during the early phase of demonetization, but they need to be structured through the budget process.

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Along with this there should be budget provision for strengthening pan India high speed network connectivity making digital transactions easier to operate.

(The article has been written by Pradipto Chakrabarty, Regional Director, CompTIA . All the views expressed are personal)

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