Impact of Union Budget 2014 on Tech India

Last updated on August 18th, 2017

On the 10th of July 2014,  Arun Jaitley, the finance minister of India, presented the Union Budget in Parliament.

According to the Budget document, the education cess for all taxpayers will be 3 per cent in the 2014-15 fiscal year.

Reacting to the proposal, IDC South Asia VP and General Manager Jaideep Mehta told PTI: “The education cess on imported electronics, including PCs and smartphones, will challenge consumption growth as it will increase street prices.”

Greyhound CEO Sanchit Vir Gogia said manufacturing is still in nascent stages in India.

“There is hardly any manufacturing that is done in the country. Considering that most handsets are imported and add to that the education cess, we could see prices going up as much as 7-8 per cent,” he added.

Finance Minister Arun Jaitley said the demand for electronics is growing very fast.

He said that the government will “exempt all inputs/components used in the manufacture of personal computers from 4 per cent special additional duty (SAD) and impose education cess on imported electronic products to provide parity between domestically produced goods and imported goods”.

So now lets see how budget 2014 affects the prices of various technological devices and gadgets:

  • Its good news for people planning to buy a new computer. Desktops are now going to be cheaper. Notebooks,tablets and eBook readers are going to cost less too.
  • Since smartphones are mostly imported, handset costs may push up to 8% due to the education cess on imported electronic products.
  • As customs duty was removed on import of LCD, LED Panels, television sets, LCD and LED below 19 inch will be cheaper.
  • Certain inputs used in solar power equipment were fully exempted from basic customs duty.
  • Portable X-ray machines will cost more.
  • Water purifiers which use reverse osmosis technology will cost less.
  • Service tax has been widened on sale of space/time for advertisements in broadcast media due to which online and mobile advertising will become expensive.

Various other proposals:

  • ₹ 500 crore under the “national rural internet and technology mission”, intended to promote local manufacturing of hardware and software products, with a special focus on “supporting software products startups”.
  • Development of smart cities initiative announced by the minister, who set aside ₹ 7,060 crore to develop 100 smart cities in the country.
  • ₹ 100 crore have been allocated to set up a Technology Development Fund aimed at providing resources to public and private sector companies “to support research and development of defence systems”.
  • In line with the government’s digital strategy, all government departments and ministries would be integrated through an e-platform by Dec. 31 this year, in addition to a nationwide incubation and accelerator programme, as well as an online platform for bill payments.
  • The government would also take steps to revive special economic zones (SEZs), and introduce e-visas at nine airports.

Here’s a video of Mint’s technology editor, Leslie D’Monte, discussing the 2014 budget’s impact on India’s digital infrastructure:



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