Budget expectations: IT Industry wants depreciation at 100%

Vendors and partners would like Finance Minister, Yashwant Sinha, to raise the depreciation on computers to 100 percent in his budget for 2002-03 to create immediate demand from corporate. 

Said Ajai Chowdhry, Chairman and CEO, HCL Infosystems, "The depreciation limit on PCs should be enhanced. This will boost up corporate buying."

The demand for 100 percent depreciation is not just for computers. Even in the networking field there is a strong sentiment that 100 percent depreciation will stimulate greater demand. Pointed out Manoj Chugh, President, India and SAARC, Cisco Systems, "To further drive the Indian networking market forward, we would be keen to see the Government provide for depreciation of 100 percent in the first year itself for networking and other hardware products." Chugh believed that this initiative will create the right environment for corporate in India to enhance technology absorption.

While some sections of the industry want the Finance Minister to bring down customs duties to zero, others says that if customs duties are brought to nil, then local hardware manufacturing will suffer. Thus, as already reported, Finance Minister is expected to bring down duties from 35 to 30 percent in the budget. 

The industry also wants the Finance Minister to take concrete measures to ensure that government's buying of IT goes up substantially. Chugh opined that the Finance Minister should use the budget platform to clearly define that at least three percent of the total government expenditure is spent on IT with a well-defined monitoring system.

The manufacturers lot in the IT industry has suggested the Minister to create sufficient differential between raw material and finished products to ensure industry's survival. Said Anil Gupta, CEO, Microtek, "Finance Minister has to do this for sure. Otherwise, manufacturers will be out of business."

Industry also wants the government to focus more on spending in infrastructure projects which it believes will revitalize the economy in the short as well as long term. According to Anil Valluri, Director (Systems Engineering), Sun Microsystems, investment in infrastructure impacts every other industry including IT.

Opinionated Kiran Rao, Manager (Marketing), Wipro Infotech, "Government needs to create a conducive climate for IT manufacturing." He wants the Finance Minister to create manufacturing zones, which he refers as, 'Islands of Infrastructure Excellence'.