Fintech
SANJAY SHARMA, MD AND CEO, Aye Finance
“The year ahead could well be the point of inflexion for India. As the world veers precariously on the border of a depression and China’s global growth engine takes a breather, Indian growth rate seems relatively less affected. This can indeed give us the momentum to pull ahead in the world stakes. The budget should hence focus on supporting growth and stability, instead of conservative incrementalism.
As we pull ahead and reach for the 10 trillion dollar GDP, there is no time to loose in addressing the social inequalities. Support for the 70 mn micro scale enterprises is the need of the hour and this budget could make a start on the following ideas:
- Lending to micro enterprises by NBFCs and Banks should be encouraged. Just as Bank’s have to meet a specific priority lending quota for agri, there should now be a specified quota for micro enterprises in the priority lending.
- Allocation for initiatives that help improve the quality of the produce of micro enterprises. Here Govt should allow subsidies for private sector programs that can deliver technology and product improvement by such micro enterprises at scale.
- Health and critical illness covers at affordable premiums for micro enterprise owners and their family- so that their businesses may be protected from these adverse events
- Continued Credit Guarantee suport through CGTMSE and simplification of the legal recovery requirements for very small loans below Rs 2 lacs.
These bold steps will enable improvement in flow of funds to the financially excluded micro scale enterprises. This segment provides 95 percent of non-farm employment and we can no longer turns out heads away from their needs
I believe that the Budget 2023 will bring in a period of progress and prosperity for all sectors – NBFCs and beyond – and catalyse policies and regulations that support holistic growth of the economy”
Jyoti Bhandari, Founder and CEO, Lovak Capital
Union Budget 2023 should bring out policies and incentives to boost consumption and domestic demand, capital expenditure to support credit offtake. This year should see moderate rate hikes to tame headline inflation and maintaining the projected GDP Growth at 7%. This will result into positive impact on sectors like services, trade, travel banking and financial industry and making it into attractive sectors from a long-term investment perspective said
Mohit Gupta, Co-founder & CTO, IndiaP2P.com
With the rapid digitisation post covid era, we are seeing an increased incidence of cyber incidents with approx 10% of such incidences targeting the BFSI sector.
The cyber threats and incidents are also changing with time. 2022 saw a shift of attacks towards Asia and largely India.
To deal with cyber threats, one has to understand the various stakeholders in the system, such as customers, employees, vendors, external software’s and infrastructure.
One has to plug the vulnerabilities at each level after identifying all use cases. Sometimes, even the least expected area has some unplugged vulnerability which allows an attacker to cause massive harm to an organisation.
The threat actors nowadays are not only individuals, but various groups and even governments who sponsor cyber-attacks on institutions of other countries.
The cyber security teams in the sector use the latest technology and tools to deal with the cyber incidents. However, one area that still needs to be explored is sharing cyber threat intelligence across various institutions, law enforcement agencies and regulatory bodies and coordinating the efforts to mitigate attacks.
This can help us learn from any incidents happening across the globe, the steps to control it. This intelligence can help control most, if not all, threats for the future.
Ashish Goyal, Co-Founder and CFO of Fibe
“Over the past few years, new-age technology has propelled the fast growth and expansion of the fintech industry. In the upcoming budget 2023-2024, we are expecting an accelerating financial inclusion by recognising the role of fintech in making credit and financial products easily available to the multitudes. Given that fintech is already involved in financial inclusion, creating a separate category of borrower loans that classify as a priority sector will help achieve the inclusion goal. New technologies such as AI and ML will adopt the consumers in the coming years and hence, the focus will be enhancing the digital infrastructure by investing in Open Network for Digital Commerce (ONDC). As the announcement is not so far, we also wish to see the rationalisation of taxation related to ESOPs to promote and attract the right talent further in emerging sectors.”
Additionally, the Fintech sector is frontlining the cause of Financial Inclusion in India & the sector expects initiatives that will strengthen the relationship between Fintechs & Banks. This will most certainly encourage continued innovation & help extend the reach of financial services to the unbanked population.
More expected measures that will boost the Fintech landscape are discussed below :
Tax relief for growing Fintech startups:
Fintech startups are hopeful for GST exemptions until a certain level of revenue is achieved. Liberalisation of the tax structure along with depreciation on the fixed assets used by Fintechs, can go a long way in promoting advancement. Announcement of tax benefits for research & development activities would bolster the ideation & execution of differentiating financial products & services for the masses.
Continued push for Digital Payments:
The recent Budgets introduced several incentive schemes to promote digital payments & we expect the momentum to continue in this year’s Budget. The UPI has augmented India’s payments & collections infrastructure and has penetrated the unserved & underserved population in semi-urban & rural regions. New guidelines regarding the UPI transaction cost will be a major development, providing a much-needed impetus to the sector’s expansion.
Tax relief for Fintech startup employees:
A strict qualification criteria accompanied the tax benefits introduced in the previous Budget. It aimed to resolve the dual taxation issue but most startups could not reap the benefits. ESOP holders in Fintech Startups can really gain from tax being levied on the sale of shares rather than on the exercise of ESOP.
Revised regulations for Fintech players & startups:
Conscious revision of the regulations will help establish an enabling environment for Fintechs to function & evolve. We expect to see regulations regarding the digital currencies & how they will take shape in the workings of the industry.
Data security:
Digitalisation has also given rise to various security threats such as data breaches, data loss, account hacking among others. Enhancement of data security measures is imperative & we expect the upcoming Budget to facilitate the same.”
Technology sector
Priya Ranjan Panigrahy, CEO and Founder of CEPTES Software
Digital India Program is a great initiative for companies like start-ups, SaaS based and new-age companies. We are creating the SMB booster program in cloud space which enables small businesses to get into the digital transformation very quickly without much hassle, which can take care of sales, service, marketing automation and also connecting to finance operations like automatic e-invoice and automatic billing solutions can be done. We also do KYC solutions which can be so easy to adopt.
– The budget will be focusing on measures that support growth and innovation in the software and SaaS industry.
– Support for the development and adoption of new technologies such as cloud computing artificial intelligence, machine learning and the Internet of Things.
– Technology Clusters in tier 1 cities in India; while there are IT talents every corner in India they are forced to move to tier 1 cities. As a result, big cities are enduring infrastructure issues. Govt. must come-up with a special budget for booming IT infrastructure in tier 2, or Tier 3 cities as well to take-off the load from big cities.
– Measures to address the skills gap in the IT industry and support for training and upskilling of workers.
– Tax incentives for companies that invest in research and development.
– This year’s budget may also include measures to address concerns around data privacy and security, as well as efforts to increase the adoption of digital technologies in various sectors.
Raj Sivaraju, President of APAC, Arete
India’s economy is rapidly advancing and will play a significant role in boosting the global economy. The country’s technology industry will attempt to identify the cybersecurity investment necessary for the tech sector as the government is scheduled to propose its budget for FY2023–24 in a few weeks. With the rapid implementation of technology initiatives and programs, the lowering of administrative backlog, and inclusive development in 2023, the cybersecurity industry is expected to generate US$2.37 billion in revenue. Security Services is the market’s biggest category, with a US$1.19 billion market volume anticipated in 2023. By 2027, the market is projected to generate revenues with a compound annual growth rate (CAGR) of 14.61%, amounting to US$4.09 billion. The country’s IT industry will closely monitor the spending on requirements for digital public infrastructure, capability building, and incentives for enhancing cybersecurity services.
Sujit Patel, Founder and CEO, SCS Tech
With the world moving to digital products and services, cybersecurity becomes very important for individuals and companies to take care of their digital assets like sensitive data, PII (Personally Identifiable Information), PHI (Protected Health Information), intellectual property to name a few.
While speaking about cybersecurity threats as malware, spoofing, phishing or third-party data breaches one should implement the minimum cybersecurity requirement as per their scenario, corporates should pay enough attention to latest cyber security tools, security employees’ training and education, controlling physical access to their digital data, in-time updates for the software; making proper backups of the information, and securing the internet connection.
Logistics Sector
Zaiba Sarang, Co-founder, iThink Logistics
Logistics is one of the most competent industries in the world, to the point where it is regarded as the foundation upon which all other businesses are built. As a result, when discussing budget allocation, we must recognize how critical it is to not only invest in this sector but also to ensure that our investments are directed toward areas that truly matter. Logistics is one of the unorganized industries, so we should anticipate investments in activities that will make it more organized. PM Gati Shakti, for example, has focused on seamless multimodal connectivity to enable smooth operations. We can anticipate the implementation of the National Logistics Policy, which will reduce the cost of GDP from 14% to single digits. As we all know, logistics is one of the world’s largest carbon-emitting sectors; there has been discussion about investing in making this sector carbon-neutral by using less carbon-emitting fuels, electric scooters, and other similar technologies. On top of that, we can expect Rs 2 lakh crore in investments in port infrastructure to alleviate logistics inefficiencies. Overall, we can predict that 2023 will be the year when the logistics industry reaches its full potential.
Malay Shankar, CEO, ProConnect Supply Chain Solutions Limited
In the post-pandemic reality, logistics sector has been flourishing, contributing immensely to the national economic growth. Since the Indian government focuses on accelerating economic development, strategic announcements and changes for Supply Chain and Logistics Industry will have a wide-spreading impact. Here are some of the sector’s expectations from the government to fast-track the economy’s productivity.
Firstly, the New Labour Code directly impacts the blue collar workers who are the backbone of the logistics and supply chain industry. Bringing in more straightforward means of enforcing it, while ensuring social security and economic benefit to the blue collar workers will fetch long-lasting results. Getting rid of ambiguity and having simpler ways of implementation will help industrial workers. Coupled with the supportive Digital India policies, the government can thrust on closing the digital gap that persists in the industry. With lucrative sops for players bridging this gap by skill training to their workforce, the government can boost leaders in the space to catalyse the digital evolution of the sector.
On the other hand, we really hope the government will strengthen the foundation of National Logistics Policy (NLP) and implement it to ease bottlenecks and reduce costs. Along with that, an improved road network will decongest roads, facilitate seamless transportation of goods and get better land value for the warehousing hubs. The sector is keenly looking at adopting greener practices. Offering tax benefits and incentives to the warehousing industry for deploying solar-enabled solutions and other green practices will go a long way in reducing the carbon footprint of the sector as a whole.
Energy/ Power:
Meenakshi Vashist, Founder -CEO, TekUncorked:
The Finance Minister may unveil a range of initiatives to support India’s energy transition in the Union budget. Climate change is a reality and I am glad that people are realising this. The only way forward is to deploy energy-efficient technologies!
The government may offer a 5% interest rebate on loans and a credit guarantee of 75% of the loan amount or ₹15 crores per project to small and medium enterprises operating in this sector. So, great news for new SMEs deploying energy-efficient technologies! Here’s looking forward to Budget 2023.
Startup Sector
Edtech Sector
Vinay Singh, CEO and Executive Director, Thomson Digital and Q&I.
“The Ed-tech sector got catapulted to newer heights in the past few years and the cause could be attributed to the global pandemic. Given the sectorial growth record of the past few months, the Ed-tech industry is really hopeful about the impending Union Budget.
With that said, the foremost ask of the sector is tax exemption on ed-tech services and products. That’s primarily because the sector seems to be experiencing headwinds in terms of solidifying its place in the education sector while competing with traditional institutions at the same tax rate. The tax exemption could greatly encourage Ed-tech growth and make e-learning accessible to all.
Talking of accessibility, due to infrastructure challenges, the students living in Tier 3 and Tier 4 cities struggled with online classes. Lack of good internet speed, digital devices or computer systems posed challenges for the students and the Ed-tech industry. Given that the sector expects ramping up of digital infrastructure and anticipates the government to make services accessible for both the applicants as well as the Ed-tech firms in these areas. Additionally, the ed-tech sector is looking forward to the government recognizing the potential of Artificial Intelligence, Machine Learning, and Data Science and engaging the youth in training sessions at the grass-root level to build up capacities and acumen for new-age tech domains in educational institutions. Most importantly, the industry is also hoping to enter educational institutions and make learning simpler by making Ed-tech ecosystem a bridge between the institutions and the students.”
Divya Jain, Co-founder, Seekho
Ed-tech has seen course correction over this past year but has emerged stronger. Especially in higher education and employability, it is the only solution and way forward. We look forward to a lower tax slab for education services to students in particular. Push to implement NEP which will allow the youth to learning digitally, work and still earn their degrees.
Poshak Agrawal, Co-Founder, Athena Education
The government needs to make targeted budgetary allocations and incentivize the sector through existing and new fiscal policies. The government should establish more programs like the National Educational Alliance for Technology (NEAT) initiative, which is explicitly targeted at the K–12 market and allows the tech-education regulator All India Council for Technical Education (AICTE) and dozens of edtech companies to collaborate. The government and education ecosystem may benefit from having EdTech as faithful allies, which will help boost federal spending and expedite learning outcomes.
Moreover, with an increasing pool of Indian students studying abroad, the government can consider providing financial assistance (or scholarships) to those who wish to study at the top international universities. The clause should, however, require them to return to India and contribute to its economic development to prevent brain drain.
The recently announced move to set up foreign university campuses in India calls for a rapid expansion of our higher-education infrastructure and enabling an international experiential curriculum. As we try to transform our domestic institutions into world-class institutions, we must build on our research grants, collaboration, and recruitment practices.
Real Estate
Mustafa Johar, Co-Founder, and CEO of Makemyhouse.com
The real estate industry has not only made a significant contribution to the GDP as a whole, but it has also helped to support industries like manufacturing, telecom, construction, architecture, infra, and engineering by creating jobs in those fields. Every favor extended to the housing industry ultimately benefits other sectors as well.
During the pandemic, this industry got badly hit naturally, and relief measures are the need of the hour to bring this industry back on track. Some of the following steps can be taken for the industry:
- People should get some deduction in the interest component of their home loan from their total income. Also, Government must take initiatives to make this segment more affordable for the common man.
- The tax rebate of Rs 2 lakh on housing loan interest under Section 24B of the Income Tax Act should be increased to Rs 5 lakh, this will surely result in rising demand in this industry.
- There is a dire need to revise the tax rates as well, either by lowering the rates or readjusting them, as the last increase in deduction limit was seen in 2014 under Section 80C (to INR 1.5 lakh per year).
- Real estate is greatly impacted by infrastructure growth. The government has done very commendable work on new infrastructure such as roads, bridges, and airports. These not just open up new areas for construction but also end up positively impacting the value of existing properties around them.
Agritech Sector
Dr. Deepak Birewar, Chairman & MD, Inventys Research Company
The approaching Budget 2023 marks the arrival of the last full-year budget from the union government, which is expected to usher in favourable legislative policies to help grow the sixth-largest chemical producing country in the world. This year, we expect positive momentum towards formulation of the PLI scheme for the chemical sector to encourage domestic manufacturing. With exports of chemical and petroleum products to more than 175 countries standing at a staggering $8.24 billion, we expect the government to implement export benefits for specialty chemicals to aid the overall economy. Manufacturing business tax exemptions provided by DSIR, under section 35 (2AB) of the IT Act 1961, stands at 100%, compared to the 150% prior to March, 2020. A revision in this tax structure could empower firms to increase R&D expenditure, helping them produce new products and technologies. Additionally, the government can create a Models Specialty Chemical Manufacturing Region in Vidarbha, which could give rise to 3000 MSMEs in the region, with a petrochemical complex acting as a catalyst for industrial growth. Further, the chemical sector is highly capital intensive with long pay back periods. Capital expansion of the chemical sector could be enabled if the government provides subsidies of 10%-20% for investment projects beyond Rs. 100 crore. In the past months, the shift of global supply from China has increased outsourcing opportunities and domestic demand. It has given India more expansion opportunities. By 2025, the Indian chemical industry is expected to reach $300 billion, and focused assistance in export benefits, tax advantages, and capital subsidies will further add thrust to the ongoing growth.
Dhruv Sawhney, COO & Business Head, nurture.farm
More than 50% of the population in India depends on agriculture for their livelihoods. Agriculture is also the 3rd most significant contributor to our GDP and will always attract attention in the union budget. However, unlike previous years, we are moving into 2023-24 with a cautious & uncertain outlook owing to challenges like a looming recession, the Russia-Ukraine war, threats of climate change, falling export numbers, global inflation in crude, edible oil, and wheat prices. A separate budget allocation to improve crop production efficiency and enhancement of the supply chain can improve benefits to the farmers.
Policies to support Technology Adoption & Digitisation of Agriculture at Scale
Technology interventions, mechanisation, GIS, IoT, AI/ML, Big Data, Blockchain, Drones etc., can act as critical drivers to propel growth, farm efficiency, and improve production efficiency at scale. The government can expand the existing measures like Digital Agriculture Mission (2021-2025) to include these technological interventions that help deliver market & mandi prices, supply chain visibility, food security etc.
Furthermore, the government should support the creation of an open ag ecosystem that acts as a public data library wherein all parties can share & access information & insights around soil wellness, pests & diseases etc to help fasttrack the change. The government can look to promote & open opportunities for PPP (Public Private Partnerships) to improve accessibility and truly bring in digitisation at grassroots level.
Benefits, Incentives & Investments to solve Climate Change
A clear definition of the climate change sector needs to be drafted. Incentives and tax benefits for domestic companies that focus on solving climate change can be offered. Creating a well-regulated voluntary carbon markets framework with policies and incentives that help India meet its Net Zero goals. Policies that encourage farmers to implement sustainable & precision farming practices can be drafted and implemented. Financial benefits & subsidies for the farmers set aside by the government can be routed via agritech companies & organisations promoting sustainability cultivation practices at a grassroot level to propel a shift towards climate smart farming practices at scale.
Solving market linkage challenges
The key objective of introducing the Farmers Produce Trade and Commerce Act 2020 was to facilitate agricultural produce trade outside APMCs. However, measures are yet to be taken to allow trade based on the PAN card outside APMCs. Furthermore, despite the government allocating funds to improve the infrastructure at APMCs for installing testing & drying machines, the availability of these machines could be much higher.
Similarly, increasing the number of APMCs, introducing digital platforms to help farmers sell produce at a fair price, delivering market price information, and regularly offering advisory, financial assistance, and best practices. Setting up marketplaces focused on FPOs can also help drive demand and improve farmers’ price realisations.”
Vicky Dodani, founder of Agrizy
“The agriculture industry contributes significantly to the Indian economy; the Indian government is aggressively encouraging as many people as possible involved in this area to incorporate digitalization. The approach to lessen farming’s impact on the environment and the impending economic recession in some areas is to digitize the agricultural sector. Because of this, we anticipate businesses and governments all over the world to increase their technology investments in agriculture, leveraging developments in cloud computing, earth observation, remote sensing, data, and AI/ML models, to help the industry unlock new possibilities and address current agricultural issues. This can greatly increase the production of food, increase profitability, and lower operating expenses, all of which are essential for sustainability. In September 2021, the government launched the Digital Agriculture Mission 2021–2025. As part of this mission, five memorandums of understanding (MoUs) were established, all of which intended to advance digital agriculture initiatives in the nation.
In India, there is a major gap between what the market wants and what farmers produce. This gap needs to be solved to achieve the Government’s declared target of doubling farmer profitability. The agrifood processing industry plays a major role in filling this gap by increasing the shelf life and thereby reducing the wastage. India has a long way to go in this regard. For e.g. only 3% of the total F&V output is actually processed in the country which is much lesser than some of the developed economies. Recent market research assessments predict that the worldwide agritech market will expand between 2020 and 27 at a compound annual growth rate (CAGR) of 12%. Along with the US and China, India is a competitor in this market.”
Healthtech
In order to leapfrog several developed economies in terms of healthcare access and affordability, the India Budget 2023 should focus on the following priorities:
• Introduce tax incentives for digital healthcare platforms: Digital healthcare platforms are building the technology which will multiply access and affordability of healthcare. While traditional providers of healthcare are exempt from GST, digital healthcare platforms are not. The Budget should consider providing such tax incentives to digital healthcare platforms. Close the “missing middle” gap of health insurance: While PMJAY covers the poorest 50% of households and the richest 10% of households are well covered, the middle 40% of households are conspicuously under-covered. Launching a comprehensive (in-patient + out-patient + preventive) and partially financed insurance program for the missing middle is the need of the hour. Primary healthcare for farmers, traders, and other self-employed : Most of India is self-employed. While several corporate employees have access to health insurance and preventive healthcare programs, the self-employed do not. The Budget should consider funding (even if partially) preventive healthcare programs which are driven by the Centre / States. These could be executed in partnership with digital healthcare platforms to ensure wide access and utilization. Data as consent-based utility: The Government has introduced the ABHA ID (Ayushman Bharat Health Account) a few months back. The Budget should take steps toward making healthcare and health insurance data a part of the consent-based utility framework which already exists in the financial sector. This will create a common ground between established traditional organizations and innovative and technology-focused start-ups.
The global pandemic underscored India’s need for a more robust and resilient healthcare system. The segment still needs to be served and could flourish with more private and public investments, partnerships, and technology development. We are hopeful that the 2023 budget will have significant allocations for building better preventive care facilities and give due recognition to this often-overlooked segment within healthcare. Preventive care is a vital link that can significantly help reduce medical costs, lower the stress on the healthcare system and enable early detection of life-threatening health conditions like cardiac disease. Measures like lowering the GST for preventive healthcare will help companies rationalize their costs and pass on these benefits to their patients.
The industry would also benefit greatly from government intervention through funding and grants and the development of maker spaces within engineering and medical colleges to encourage innovative technology development in healthcare. Digitization has had a profoundly positive impact on healthcare, lowering costs and burdens and improving access. For instance, we have observed that digital therapeutics in preventive care can reduce the overall load by more than half, especially in the chronic care segment. Government intervention in bringing digital therapeutics under the gamut of insurers would be highly beneficial to the industry.
We hope the 2023 budget will enable a more inclusive healthcare ecosystem with improved access to quality preventive, primary, and tertiary healthcare across urban and rural India
