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Budget'11: Neutral play for Digital

01-March-2011
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Budget'11: Neutral play for Digital

The Union Budget announced today has a couple of interesting notes for the digital industry - concessions for mobile parts and accessories remains in force for one more year, while software including games and music will have to pay less service tax. Rural broadband also gets a mention, but overall the budget was largely neutral for telecom and IT.

Siddharth Agarwal, Founder CEO, of Mobicule, said, "There were overall expectations for telecom, but these have not come through. Mobile phone costs will go up, this affects us and others in a negative sense, but indirectly, this budget can help some players, who are working with companies in fields like commodities because the budget is good for them, and so we think this could create fresh opportunities for us."

Jeetendra Joshi, VP Marketing, Reasoning Global eApplications - an e-commerce technology solutions provider - said, "National innovation council under Sam Pitroda has been set up, with each state having a council for innovation. This seems to be perfect step towards creating a stimulus atmosphere for India grown e-commerce products to reach to masses and create village level entrepreneurs. E-commerce has enabled Indian manufacturers and retailers multiply its’ reach to global markets. With Indian online stores in the world wide web, the retail sector has experienced a second coming in India. Online retail has seen 30 per cent year on year growth in a 27,000 crore e-Commerce market in India."

He also added, "Rural telecom and broadband are included in an overall allocation of Rs. 58,000 crore that includes other rural initiatives too. The government plans to provide rural broadband connectivity to all 2 lakh panchayats in three years. With broadband penetration in rural areas there is two way benefit opportunity for rural India. Rural manufacturers can market their products and services to the world. Use of broadband will increase their market expansion without depending upon intermediaries. Better price for their products and services and better profits and revenue. Secondly, this will bring access to rural India, best trade practices, updated knowledge, quality products and profitable business offers."

Others too are keen on the focus towards rural connectivity - Kiran Gopinath, Founder and CEO, Ozone Media, one of India’s first online ad networks, said, “A look at the finer print caught my eye on one of the minor points – ‘A plan has been finalised to provide Rural Broadband Connectivity to all 2,50,000 Panchayats in the country in three years.’ The focus and allocation of funds towards rural broadband connectivity is good news for us and entails a long term impact on the internet industry. Government focus brings a lot of seriousness in the approach. Immediately, it means opportunities for telcos and internet businesses, in providing information technology solutions.”

He added, “As users login from the hinterland, advertisers will be able to tap potential consumer via the medium, which was so far a dominion of print, electronic and local advertising. We would see changes in strategy, communication and approach, because rural is a huge market for the advertising fraternity.”

Vivek Bhargava, Head, Search Marketing firm Communicate2, is also positive. He said, “In general the budget seems neutral, however once we get into the granularity a couple of things could create a game changer for our clients - example now anyone outside the country would be allowed to directly invest into Indian mutual funds, search marketing allows to reach niche global audiences who want to invest in India, thus this would really benefit our clients such as DSP BlackRock, UTI MF, Edelweiss to name a few.”

Satish Vuppalapati, MD, Prithvi Information Solutions, was less enthused by the budget and said, “This financial budget, there is nothing to add to the IT/ Telecom industry. FM also didn’t talk about the IT exemption under STPI, which most of the IT leaders expected. The increase in MAT by 0.5 per cent is very marginal. This year the prime focus of the budget seems to be controlling fiscal deficit.”
 

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