Industry captains on the Budget [updated, with more reax]

10 Jul,2014

By Shobhana Nair

 

Atul Hegde, CEO, Ignitee Digital 

I do not think that the service tax implication will have an adverse impact on digital advertising budgets. Investments in digital advertising were not spurred by the lack of service tax, but rather by brand marketers recognizing the reach and impact online and digital media can potentially deliver. We expect that today’s digital savvy marketers will continue investing in the medium.

 

The provisions by the government, on the other hand, reflect the exponential growth the sector has experienced over the last two years. It is a sign that online and mobile advertising are now being recognized at par with other media.

 

Tarun Katial, CEO, Reliance Broadcast Network.

With not much for the media and entertainment industry in the budget, there would be anticipation of a further announcement in line with the policy initiatives, especially for the radio sector. On the television front, the ruling on custom duties for LCD and LED televisions being completely scraped to nil, as compared to the earlier 10% will result in a significant boost in the consumption of the television sets. The decision would have an impact on converting single TV households to double TV households, resulting in an increase in the number of TV viewers, which is good for the industry.”

 

 

Sundeep Malhotra, Founder & CEO, HomeShop18

We welcome the decision of Uniform GST and tax measures that will play a crucial role to make e-commerce a success story in India. The move will certainly simplify the tax structure and make India one single common market by rationalizing the supply chain and thereby, offering better value. Also, the importance given to rural infrastructure will ease pressure and allow faster movement of goods. We hope to see a continued growth in both e-commerce and m-commerce with the government looking at launching broadband connectivity across the country.

 

 

 

Monish Ghatalia, Founder - worldoo.com

With India poised to become the second largest broadband market by 2016, the investment of Rs 100 crores on virtual classrooms and budget allocation to increase the internet connectivity across villages will surely open up more avenues for different age groups to use the internet. In addition, the drop in prices of personal computers will increase access and exposure at the grassroot level. This would also increase opportunities for start-up companies like worldoo.com to build upon creating better infrastructure necessary to provide top quality experiences for children on the internet. Parents and educators will therefore be encouraged to take more initiative in communicating with children about responsible internet usage.

 

 

Neeraj Roy, MD & CEO, Hungama Digital Media Entertainment

Whilst it is very encouraging to see the government giving more attention to the internet and support of animation and gaming, I view the initial allocations as a small step in the right direction. China has a near $ 1 trillion internet economy, India will transition from 2G to 4G and add another 400 million mobile internet users over the next three years, we need an unprecedented push toward digital for a significantly higher consumer adoption as it will spark productivity across sectors. The aspect of bringing back online advertising into the service tax ambit, whilst it is still a fledgling segment, is therefore almost a conflicting action and not a welcome move.

 

 

BD Park, President & CEO, Samsung India

The increase in investment limits in FDI ( foreign direct investment ) announced in the 2014 budget will favourably impact the economy. Significant encouragement has been provided to domestic manufacturing that will likely enhance both local production and employment, especially in the sectors of retail and e-commerce. Measures on tax reforms like advance rulings, tax settlement mechanisms and APA (advance pricing agreements ) etc. will contribute to improving investors’ confidence and removing uncertainty regarding taxation. The introduction of inter-quartile range in transfer pricing as well as the set up of a committee to evaluate retrospective taxation are positive steps. Outlays for improving infrastructure in ports, roads, airports, Smart Cities as well as education related initiatives and the funding model resonate well with the country’s growth plans.

 

Sunil Lalvani, MD, BlackBerry, India

The Budget is prudent and cautious even while it aims to address key sectoral concerns and brings in vital initiatives to spur growth especially in critical sectors like manufacturing, healthcare, education, skill development and infrastructure as well as assuring a stable tax and regulatory regime that is expected to incentivize investments. The budget also has significant focus in rolling out measures for rural development. From a consumer sentiment standpoint, the Budget brings some relief around IT exemptions and is expected to accelerate savings that may fuel economic growth and consumer spending. Further impetus to innovation, entrepreneurship and focused development of industrial corridors will drive domestic employment generation and economic upliftment. Fostering growth and reducing fiscal deficit have been the cornerstone for this year’s Budget.

 

With technology as a key component for delivery of government services, mobile will be a key enabler. M2M technologies will be vital to realize the governments vision of 100 smart cities, as well enhancing the delivery of healthcare and education services. We believe these are positive signs that will transform the standard of healthcare, education and urban living, as IoT becomes a reality.

 

Further, domestic manufacturing will receive likely boost as the government enhances focus on this sector. Overall a progressive budget that aims to instill investor confidence and propel economic growth.

 

Shashank Mehrotra, General Manager and Business Head at BigRock.com

We believe that the Union Budget for 2014-15 is a step in the right direction for micro, small and medium enterprises (MSMEs) across the country. From the Rs. 200cr provision to set up a Technology Centre Network for MSMEs to the impetus for budding entrepreneurs and widening broadband penetration, these moves are set to give the MSME sector more government support than they have ever had before. These developments will benefit web services companies like BigRock as more and more entrepreneurs harness the power of the internet to expand their business.

 

 

Sharad Venkta, MD & CEO, Toonz Retail India Pvt. Ltd.

The Budget is more of directional in nature and has focus on fiscal prudence and administrative improvements. The FM stayed away from any big bang announcements and remained focused on basics. There was a clear cut focus on manufacturing and infrastructure sector. Personal income tax exemptions is a welcome move in this inflationary scenario for middle class population.

 

The move by the government to allow manufacturing units to sell their products through retail including e-commerce platforms is welcome and among other will give a boost to employment in both urban and rural India.

 

FM has promised to give introduction of GST a thrust which is a welcome move and industry look forward for a clear cut road map.”

 

Avani Davda, CEO, Tata Starbucks Limited

I am pleased to see the government’s focus on employability and skills development. Educating and vocational training for the youth to help their employability is crucial to harness the resource pool and will encourage their participation in the country’s growth. The introduction of the Young Leaders Programme and the proposed national skill programme – ‘Skill India’, are important steps to empower today’s youth with skills, improve employability and create jobs. This will indeed provide a boost to the retail and service sector which is so heavily dependent on people.  The hike in exemption limits will provide respite to consumers and in turn, boost their spending power. This is encouraging for the sector as it will help increase consumption and demand. I also welcome the government’s move to introduce Goods and Services Tax (GST) later this year.”

 

Ashish Pherwani, Partner & Radio Segment Champion, EY:

The proposal to grow community radio is an excellent initiative to enable social good, particularly for niche and specific sections of society.  The amount can be used for set-up of the stations and their on-going operations, and this will help bridge the gap between the number of licenses issued and the far fewer number of community radio stations that have become operational.  Since community radio will be airing news in some form or the other, monitoring the content of these stations will be important.”

 

 

 

Zafar Rais, CEO, MindShift Interactive

The Budget looks hopeful but also taxing, with the government investing in start-up funds (with Rs.10,000 crore set aside for VC funding), and investing in a centralized payment model for ease of use and elimination of third parties. With mobile phones becoming cheaper, the smartphone usage shall witness an increase as well. Though, with service tax being added to the Online & Mobile Ads, Digital/ Web/ Social Media Agencies will surely face a negative impact.”

 

 

 

Dippak Khurana, CEO and Co-founder, Vserv.mobi

The new government’s maiden Budget proposes to levy service tax for online and mobile advertising which we believe will adversely affect the industry’s growth. It reflects differentiated treatment as traditional print media remains unaffected with respect to the tax purview but new digital media that is actually driving innovation will have to unfortunately bear the brunt. Currently, India’s exponential mobile penetration and app consumption patterns are driving the growth of the mobile advertising industry and this development could hamper innovation efforts of the entire ecosystem comprising of mobile development start-ups, advertisers and publishers. While the Budget is in favour of small scale set-ups and entrepreneurs, the provision for taxation is contrary in nature for budding developers and publishers.

 

 

Prasoon Joshi, Chairman CEO McCann Erickson Indi

“It’s a growth-oriented and sensitive budget. It is a statement of intent that has realistically touched upon many important sectors and segments.The thrust on infrastructure and agriculture and manufacturing and rationalization of duties on input  costs is welcome. From focus on rural electrification , Defence   or  aspects  like Swachh Bharat ,protection of women, Beti bacaho Beti Padaho or allocations for the sports  university and the artisans and the simple measures  like Braille on the notes for the visually impaired reflect that the Govt has economic and social vision  and credible intention even at a micro level. Of course there will always be more to ask for in terms of corporate or personal income tax  and  requirements for our specific  industries but we need to see whether holistically the economy is being put on track and we moving  responsibly and progressively in the direction of economic revival”

 

Nagesh G. Alai, Group Chairman, FCBUlka

In my view, considering the constraints of falling GDP growth, huge fiscal and revenue deficits and the huge expectations of the electorate, it is a fair budget. The increases in tax exemption limits, increase in S.80 C exemptions and the interest on self occupied housing loans, each of these by Rs. 50 K annually, will lead to significant saving in taxes and shore up savings/demand. It’s a dampener that the one-year levy of 10% surcharge has not been done away with.

 

Similarly, reduction in excise duty in some specific cases will benefit the consumers . The benefits of tax holiday for investment upto Rs. 25 crores will push up investment in the manufacturing sector. The focus on infrastructure and opening up of FDI in defense, etc. will lead to welcome investments and increase jobs. The opening up of new AIIMS, IITs and IIMs, is a welcome step to make quality education available to the people.

 

As for the media and entertainment industry, nothing much to write home about. The extension of service tax to all media, beyond broadcasting and excluding the holy cow in print, was anticipated and not a shocker. The reduction in excise duty on less than 19” tv panels will lead to increase off take of tvs, which is good for the industry in a circuitous way.

 

What is woefully lacking is a clear vision statement and where does he see the country in 5 years’ time.

 

Rohit Ohri, Executive Chairman, Dentsu India and CEO, Dentsu Asia Paific

It’s a positive budget which will stimulate investment and growth. The government has done a good balancing job. It’s a great start.

 

The whole infrastructure has been given a special focus and it is a pro-investment budget. Bringing in FDI will strongly develop the infrastructure and boost the economy and development.

 

There haven’t been incentives for the M&E industry. That’s something we are looking into the fine print. Broadly, there doesn’t seem much for M&E.

 

Ashish Bhasin, Chairman & CEO South Asia Dentsu Aegis Network, Chairman Posterscope and psLive – Asia Pacific

Overall, the budget seems to be good but there are a couple of areas of concern as well. The positive side is that there’s emphasis on digital connectivity going much deeper down in the village. This is good for the industry. There’s emphasis on TV channels for rural areas like the North East. Also, the sector of community radio has been developed.

 

However, the removal of mobile and digital advertisements from the negative list of service tax means that they will now fall under the service tax. I find that a bit strange. On one hand, there’s need for thrust for digitization and e-governance while on the other hand to put digital and mobile under service tax is a bit of a dichotomy. Overall it should be fine.

 

Mallikarjun Das CR, CEO, Starcom MediaVest Group India

The budget is looking to infuse new blood into the economy and create new demands. This is a good thing for the media & advertising sector as we are a demand generating sector. Specific initiatives are made for infrastructure, inflation is being tried to control so on and so forth to create demand. But for me there are two specific things which I would have expected from the budget:

1, We can all see there’s a slow down across all sectors including FMCG. Service tax on TV still remains and it is a dampener.

2, Service tax has been extended on mobile and digital. The medium is only 5% of the overall advertising expense in India where we are still looking at creating more spends into the digital. This is a little disappointing.

 

Ashit Kukian, President & COO, Radio City 91.1 FM

“We would have liked the government to take steps to increase the FDI limit to 49% from the current 26%. With Phase III auctions awaited, the increase in FDI limit would have opened the doors for fresh investment giving that much required boost to the radio industry.”

 


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