It is that time of the year again and all eyes of corporate honchos are turned towards Finance Minister Nirmala Sitharaman who will present her second Union Budget on February 1. Apart from the usual calls for duty rationalization, tax rebates and the industry, this time round, is watching carefully on how the government’s policy document is looking at the slowing economy.
Despite these challenges, there is a lot of expectation that India Inc has placed upon the Union Budget 2020 with all eyes on the Government to figure out where they are expecting deserving allocation in the budget. Here’s a look at what tech executives have to say about Budget 2020.
According to Tech Mahindra CEO CP Gurnani, realizing the dream of India becoming a 5 Trillion Dollar economy by 2025 truly outlines the ‘art of possible’ and depends largely on the choices that the country makes. He believes, digital continues to be the cornerstone of India’s strategy, therefore, sharpening focus on enhancing skills in new age technologies like 5G, improving the quality of education, and nurturing the startup ecosystem are some key measures that will accelerate India’s IT exports and will help sustain its global competitiveness.
“As part of the Union Budget 2020, we hope to see focused initiatives by the government that will help India fortify its digital growth momentum and contribute to the global growth story. With 1.3 billion consumers and a large talent base including over 400 million millennials, India can play a key role in scripting a unique success story amidst the global economic slowdown,” said Gurnani.
Despite government dismissive view of state of economy, business leaders see drop in GDP, liquidity crunch, rising inflation and low tax revenue as a struggling sign. “Indian economy is dealing with several issues including a drop in GDP, liquidity crunch, rising inflation and low tax revenue. While the Centre took multiple measures to boost the slowing economy, some of which have borne fruit, we believe that more steps are needed, especially in promoting growth in rural consumption and labor-intensive segments,” said Barco India managing director Rajiv Bhalla.
He remains positive on the India growth opportunity and look forward to favorable measures from the Centre, predominantly in the technology-enabled sectors and the domains it cater to – medical imaging, smart cities, technological innovation in tourism, among others.
Suganthi Shivkumar, Managing Director, ASEAN, India & Korea at Qlik hopes that the upcoming budget has provisions that can strengthen progressive initiatives such as ‘Make in India’, ‘Digital India’, and the ‘Smart Cities Mission’. Given how data and analytics are enabling organizations to bolster productivity through smarter, more effective work, the government must also look to incentivize data analytics and AI projects as well as introduce technology-friendly policies and better tax structures for the industry, he believes.
“We are expecting that the government will initiate some remarkable steps to foster the growth of the Information and Communications Technology industry. A key area where ICT industry is expecting reform is ensuring predictability, consistency and rationalization of levies and taxes including a reduction in the License fee to promote innovation and investments in the sector to achieve PM Modi’s Digital India vision. We hope that the government is considering rationalization of levies and taxes for ICT sector including a reduction of the license fee, which is currently at 8%,” added Priya Mahajan Head of ASPAC Public Policy & Regulatory Counsel, Verizon.
According to Saurabh Saxena, Country Director – India, Micro Focus, “Innovation is increasingly becoming an important driver of business and economic growth. India has a large pool of talent and we see tremendous potential in the R&D space, especially when we talk about the IT industry – 30% of our product engineering is based out of India. Our country has 1600 deep tech start-ups that are building innovative solutions. To increase India’s R&D expenditure, there is a need for greater government support and policies that would incentivize R&D. We look forward to continue investing in R&D and collaborating with the government to help our nation with the digital transformation journey.”
Going forward, Sudhindra Holla, Director, Axis Communications, India and SAARC mentioned, “The various initiatives like research, education and outreach projects help in addressing the challenges of urbanization and sustainability. We expect that the budget will have opportunities to provide safety to the citizens, especially the women and children and also focus on border security.”
“The two important sectors that should be an area of focus in the coming Union Budget should ideally be – technology and startups. We would like the government to bring in measures to ease the compliance and filings guidelines for startups and eradicate the current penal provisions,” remarked Bhavin Turakhia, Founder & CEO, Flock.
He added, “With technological disruption being a catalyst for the growth of startups today, we expect the government to make significant investments in technology hubs that will help strengthen emerging technologies such as artificial intelligence, machine learning, internet of things etc.” Like technology, the other key sectors such as education, real state, fintech, startups and MSMEs too are expecting relief and policy measures that can drive growth.
Read more: How India Can Gain from Its New eB2B Sector
India’s financial sector has been revolutionized with the coming of the fintech sector that has made capital accessible for the underserved small businesses. However, Alok Mittal, CEO & Co-founder, Indifi noted that there are challenges with the cost and availability of capital to meet the addressable demand in the market. “To ensure availability, we expect the authorities to make PSBs more inclusive and ease the rating mechanism to drive greater influx of capital in the market to further meet the demand of SMEs. Also, the cost of capital currently is very high. A supportive policy that enables transmission of rates to NBFCs would help in more credit to SMEs at reasonable rates,” he said.
The edtech sector too has changed drastically over the last 4-5 years, but players in this segment demand a lot more support from the government. Akhand Swaroop Pandit, CEO & Founder, Catalyst Group said, “With the upcoming budget the government should reduce the taxes over online educational courses so that the edtech sector can boost up and can reach to broader region. The budget should look at subsidizing education loans. Also, online courses are not well recognized yet. With high unemployability, it is these online short term courses, which will fill in the skill gap. The government needs to boost them,” he said.
Shobhit Bhatnagar, CEO & Co-Founder, Gradeup added, “The government should offer tax benefits to EdTech startups in the form of exemptions. The issue of angel tax has still not been properly resolved. As a result investors are reluctant to invest heavily in promising startups because if they do decide to invest heavily then they end up paying a significant tax on it. Therefore, investors require clarity on this front so they can start to invest freely.”
“Fundamentally, an overhaul in the education system is required. At the moment, many of our graduates are ill-equipped for the job market. Investing in higher education will be a priority for this budget, particularly since the presiding economic conditions will make potential students hesitant to study further, as they’d prefer to secure jobs instead. Efforts need to be made to help students in the up-skilling and reskilling efforts.” Zishaan Hayath, CEO & Co-Founder, Toppr.
Finally, with cyber-attacks becoming increasingly more sophisticated in nature, it is the need of the hour to invest in security measures that ensure the cyber threat posture of organizations, believe experts. As Pavan Kushwaha, CEO & Co-founder, Kratikal, “Considering the significance of cyber security in view, allotting a part of the budget can be considered as the stepping stone to a secure and stronger cyber-infrastructure. With the influx of funds, more advanced and improvised cyber security solutions will be employed which will help in further strengthening the cyber security posture of organizations.”
The technology industry is one of the biggest drivers of Indian economy since the last decade. The expectation is nothing less than a cut in personal income tax rates and implementing sustainable policies that will boost spend and positivity in the industry, believe experts.