Tag: Internet And Mobile Association of India

By A Correspondent

 

To implement the Prime Minister’s twin vision of ‘Stand-up India’ and ‘Digital India’, the industry body Internet and Mobile Association of India (IAMAI) has come up with specific fiscal and non-fiscal measures required by the internet industry. According to the association, the digital start-up ecosystem in India should be systematically encouraged by focussing on specific fiscal interventions.

 

On the fiscal incentives, the association has suggested the following:

1.   Improve Investment Environment:

India’s entrepreneurs need early stage venture capital – but the domestic venture capital sector needs to develop further. In the US, the VC industry took off when their government allowed the large pension funds to put 5-10 per cent of their assets into VC firms.

1.1 Angel Tax: Angel Tax under Sec 56 (2) of the Income Tax Act has not been actually tailored to restrict start-ups funding but it has put start-ups under the Income tax scanner, questioning the valuation by domestic individual investors. The criteria to qualify as an angel fund are stringent and need to be eased to support the start-up ecosystem in the country.

 

The association suggests that there should be tax breaks and incentives for individuals supporting start-ups with capital.

 

2. Incentivize Internet Services Start-ups:

These are the largest chunk of internet companies in India. This sector, which comprises of aggregators, digital advertisers, online classifieds, bring in a lot of efficiency, and are the largest employment generators. They are either enabling businesses, or they are creating lot of employment in the country, resulting in many people are earning a lot of money than they should otherwise have.

2.1 Service Tax: Unfortunately, Start-ups have to pay huge amount over the first three years in way of service tax. It is not that they don’t want to pay, but they have survival issues and this takes a back seat and penalties just make a struggling start-up’s life harder.

 

The association recommends that for the first three years, the service tax could be waived off or incentivizes the start-ups, if they pay their service taxes on time.

 

3. Streamline taxation for e-Commerce marketplace Start-ups:

Online market places are changing the way businesses are done in India. Small players are setting up niche businesses in India and are attracting lot of investments in India. Online marketplaces bring in a lot of efficiency in the entire retail value chain from customer experience to payments and delivery.

 

3.1 Taxes on e-commerce Transactions: The e-commerce marketplace industry is being subjected to onerous VAT demands from several states. They should be recognized as marketplaces and exempt from VAT demands in states. As market places they provide a service to online sellers and pay the service tax on that account. The State of Rajasthan for example treats e-commerce players as market places.

 

4. Boost FinTech Start-ups:

FinTech plays a significant role in serving those underserved or not served by formal institutional mechanisms. They are also likely to play a significant role in various financial inclusion programmes of the government. Various forms of FInTech services such as pre-paid instruments, wallets and others create efficiency, transparency and wider reach in financial transaction.

 

4.1  P2P lending and crowd-funding need an impetus and clarity from Government: While some early inroads have been made in the P2P lending segment in the country, individual efforts have not translated into a policy from the government. The lack of clarity of rules and regulations has meant the industry is shooting in the dark. In the absence of dictated policy or scriptures, it is quite plausible that misguided individuals may fall prey to unscrupulous operators that may look to make a quick buck.

 

4.2 Easy KYC through aadhar will allow innovators build new services which in turn will help bring more people under the ambit of financial services: Various forms of digital payments such as pre-paid instruments, wallets and others create efficiency, transparency and wider reach in financial transaction.

 

 

By A Correspondent

 

The Internet and Mobile Association of India [IAMAI] believes that the year 2014 was the year of internet and is of the firm view that internet has reached an inflection point. The consolidated numbers taken out by IAMAI for FY 2014 affirms the fact that internet in India has now becoming inclusive, which augurs well for the industry and society at large.

 

The number of Internet users in India reached 302 million by December 2014, registering a Y-o-Y growth of 32% over FY 2013. The Internet in India took more than a decade to move from 10 million to 100 million and 3 years from 100 to 200 million. However, it took only a year to move from 200 to 300 million users. Clearly, Internet is mainstream in India today, an IAMAI communiqué adds.

 

The Mobile Internet in India also witnessed significant growth rate. If the following chart is anything to go by, the future of Mobile Internet in India is set to growth at an exponential rate. India had 159 million mobile Internet users as on October 2014. Out of this, 119 million users were from Urban India and the rest 40 million were from Rural India. There has been a growth of 45% from October 2013. Mobile Internet users reached 213 million by June 2015.

 

 

The impact of internet penetration has seen a huge spurt in Digital Commerce. The digital commerce market was valued at INR 81,525 crores by the end of December 2014, and registered a growth of 53% over 2013. According to IAMAI-IMRB estimates, the industry is estimated to grow further at a rate of 33% and cross INR one lakh crores by the end of 2015.

 

 

Digital Advertising has also been witnessing a steady growth. The online advertising market in India was projected to reach INR 3,575 Crore by March 2015 with a Y-o-Y growth rate of 30%. The online advertising market was pegged at INR 2,750 Crore in March 2014. Search and Display are the top two contributors to the total Digital Advertisement Spends in India. Of the INR 2,750 Crore Digital Advertisement Market, Search ads constitute 38% of the overall ad spends followed by Display ads which contribute 29% and Social Media contributing 13% of overall Digital Advertisement spends.

 

 

IAMAI has also said that increase in local language content on the Internet will lead to a growth of 39% in the current Internet user base. Rural India will be the primary driver of this growth (75%) while in Urban India, the growth will be 16%. The local language user base is growing at 47% Y-o-Y to reach 127 million in June 2015. IAMAI believes that the next set of internet users will come from rural India and the availability of local language content on internet will be the key for the growth of Internet industry in India.

 

 

Data on social media users also reflect that the usage of Social Media in Rural India has grown by an impressive 100 percent during the last one year with 25 million users in Rural India. On the other hand, Urban India registered a relatively lower growth of 35% with the total number of users at 118 million as on April 2015. According to IAMAI and IMRB estimates, there are 143 million social media users in India as on April 2015. The report also finds that the top 4 Metros continue to account for almost half of the Social Media users in Urban India.

 

 

The digital industry is also buoyed by the fact that the digital payments industry is maturing at a fast clip. The digital payments industry grew at a rate of 40% to reach INR 120,120 crore by December 2014. The digital payment industry was pegged at INR 85,800 crore in December 2013. The report finds that the top 4 metros which include Delhi, Mumbai, Kolkata and Chennai are approximately 60% of the total Digital payment gateway market size. Next 4 metros – Bangalore, Hyderabad, Ahmedabad, Pune together contributes only 25% to the total market size.

 

 

By A Correspondent

 

In its recent response to the DoT paper on Net Neutrality, the Internet and Mobile Association of India [IAMAI] has clearly and unambiguously opposed zero-rated plans of any type. In its submission made last week IAMAI has held that “these plans will ultimately harm Internet content and service providers by limiting competition among them, and, by extension, limit consumer choice”. Such plans will also “allow the operators, if given control of which apps/services to push to consumers, to discriminate and privilege certain web services over others, and throttle innovation”. The association has also reiterated that it does not support any plans that violate principles of net neutrality “especially paid or unpaid prioritization or other discriminatory practices”.

 

IAMAI has also reacted strongly against the proposal to license domestic and national VoIP, as suggested by the DoT paper. The association contends that such a regime will be directly against consumer interest and against future innovations. The association contends that licensing any domestic and national Internet based voice communications services would be impractical especially since such services in many instances are offered as bundled services. The association also feared that licensing one type of internet service may be the beginning of a “slippery slope” and may lead to a clamour for so called “same service same rules” for other internet services.

 

The association has also cautioned that while traffic management is a technical right vested with telecom operators, this right should not be misused to charge customers differentially for different types of data. Technical requirements of traffic management should also not be used to promote operators own services at the cost of other services, the association cautioned.

 

By A Correspondent

 

Internet and Mobile Association of India [IAMAI], in a press statement has said that the latest Government notice dated August 4, 2015, to the Intermediaries (ISPs) is vague and has led to a chilling effect.

 

The notice states that the intermediaries (ISPs) are free not to disable any of the 857 URLs, as provided in the list earlier, which do not have child pornographic content. However, the problem is with the caveat in the notice mentioning “which do not have child pornographic content.”

 

The problem is that the said notice is not accompanied by any specific list of sites or links and the Intermediaries (ISPs) are expected to find out the links or sites containing child pornography themselves. This is not how it works under the law. The correct procedure should have been to provide the Intermediaries (ISPs) with a specific list along with the notification, as was done in the earlier notice dated July 31, 2015.

 

The ISPs have rightly asked the Government to withdraw the notification. The ISPAI letter states: “We urge you to withdraw the said vague directive as it is not only confusing, but also putting responsibility on ISPs of the website on which ISPs does not have any control.” However, they are wrong in saying “But till further directives, the said 857 sites will continue to be blocked.”