Budget 2012 is finally out putting an end to all curiosities. As the IT industry is facing some turbulent times, expectations from the budget were visibly high but the outcome seems to be a dampner. Here is what Subramanya C, CTO, Hinduja Global Solutions has to say about its impact on the indsutry.
Budget 2012 has virtually bypassed the IT and ITeS sectors. There were no announcements which directly affect the industry. However, we will face increased cost pressures due to the hike in excise duty and service tax by 2 percentage points. At a time when our industry is already facing escalating input costs, this will further add to the burden. The consensus in the government circle seems to converge around the view that the 100 billion $ IT/ITeS sector in India has seen through the downturn, thereby becoming ineligible for any fiscal support.
The reality is that most Indian outsourcing providers are facing stiff competition from other emerging outsourcing destinations. Combined with the current trend of escalating protectionist measures emerging from the depressed macro-economic conditions in most of our key markets, this called for some benefit to be provided by the government. We were hopeful of the SEZ would be exempted from MAT – but that has not materialized.