What’s there for e-commerce in Union Budget 2011

The Union Budget 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.

National Innovation Council under Sam Pitroda has been set up, with each state having a council for innovation. This will surely create a favourable atmosphere micro entrepreneurship. A strong stimulus 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 on internet, the retail sector is looking very promising. Online retail has seen 30 per cent year on year growth in a 27,000 crore e-Commerce market in India."
Another positive for e commerce is overall allocation of Rs. 58,000 crore for Rural telecom and broadband services. This will trigger better reach of internet to rural India. The government plans to provide rural broadband connectivity to all 2.5 lakh Panchayats in three years. With broadband penetration in rural areas there is two way benefit opportunity for rural India.
·         Rural manufacturers will get bigger reach to the market.
·         Reduction of Intermediaries- which ultimately increase margins for rural manufacturers and farmers.
·         This will bring access to rural India, best trade practices, updated knowledge, quality products and profitable business offers."
Retail pundits were discussing and debating on Multi Brand FDI in Retail since long. But Finance Minister did not take any interest in it. MNCs in e retail such as ebay, ibibo.com & HS18 are waiting to open up FDI so that they can shift stock n sell model from vendor based model of e retail.
Rise in service tax will make things stiff for e-commerce.

Overall budget is neutral for IT, telecom and internet industry. There are few positives like broadband service for rural India. Hopes from Mr Sam Pitroda now. Expecting innovative steps from his National Innovation Council.