Union Budget 2023: The wish list from the technology sector
The technology sector in India has been growing rapidly over the last few years, driven by a number of factors such as increasing digital adoption, the growth of e-commerce, launch of 5G services and the rising demand for cloud services. Ahead of Union Budget 2023, here’s what the technology sector expects:
“Despite recent global headwinds, we have seen consistent growth in the technology sector. With the rapid technology adoption across sectors, we are well poised to becoming a USD 5 trillion economy soon. With cloud and data technologies becoming the de-facto standard for businesses to operate, Gartner estimates that public cloud spending in India will grow 27% YoY in 2023. Amidst this, there is a need for the government to focus on incentivising the use of cloud services and deep tech like AI, blockchain etc., across industries.
In 2023 and beyond, upskilling of talent in an environment driven by technology will be mission critical. The government has made great strides towards this, through the Skill India program. In this year’s Union Budget, it would be good to see more investments and programs in upskilling, as this is an important factor towards achieving the collective Digital India dream of our nation.” – Puneet Gupta, vice president & managing director, NetApp India/SAARC
With the rise of new-age technologies such as artificial intelligence and the proliferation of internet access all across India, it is an opportune time for India to invest in new-age digital technology. The best companies are leveraging technology to scale and grow. The budget must focus on investing in Tech R&D, product innovation, and technology solutions and services and ensuring 5G services all over the country. The budget must consider investments in state-of-the-art incubation centers which can digitally transform ideas from all over India into sustainable businesses of today and giant corporations of tomorrow. A simultaneous investment in skilling human capital to use these technologies is paramount. The budget must include measures that can help better industry-academia connect to make ‘India’ a hotbed of technology innovation and digital transformation services for the world.” – Kunal Nagarkatti, Chief Executive Officer, Clover Infotech
“At a recent event organized by FICCI, Union Minister Nitin Gadkari stated that India is the world’s fastest-growing major economy and is set to achieve its $5 trillion GDP goal by 2024–25. The IT sector will play a pivotal role in helping the country achieve this objective; given the rapid digital and emerging technology adoption we are seeing across sectors. Special Economic Zones (SEZs) have played an important part in the country’s rapid economic development over the last two decades. However, there are some changes to SEZ rules that could be looked at to ensure technology businesses can reap these benefits – including smoother processes for the movement of goods between two SEZ units, scrapping of old computers and laptops after paying the residual duties in the open market, and simplifying the permissions process to facilitate remote working. From a CSR standpoint, it would be welcome if the government relaxed the mandatory spend on CSR activities for companies with 5 crore net profit by increasing the threshold to companies with 50 crore net profit. Additionally, while calculating net profits, the remuneration paid to professional employees should not be added back. This would ease some of the burden on MSMEs. In terms of the personal income tax threshold, it would be beneficial for businesses if the ministry revised the existing limits. In order to do away with the numerous tax exemptions, an alternate method of income tax computation without exemptions could be looked at, but with lower rates and higher basic exemption limits.”– S. Mukundhan, Group CFO, Fulcrum Digital.
“The IT/ITeS industry is a significant driver of India’s economy, emerging as one of the few sectors that remained resilient during the 2020 pandemic despite many other industries struggling. Over the past decade, India has made incredible progress in digital infrastructure, and we eagerly await this year’s budget to continue its solid digital growth. In this decade of network creation, where we are going to create the next leg of the digital economy for India, in regard to the same, one of the factors that warrants review is corporate taxes and the simplification of the overall tax structure. The corporate tax rate is as low as 15% in several countries, whereas domestic companies are charged 30% in India. The current tax structure and lack of digital literacy in India make it very complicated to conduct business, which hinders the economy’s growth. Tax exemptions, reductions and simplification will encourage investment, R&D, and innovation in the technology sector.
To help young entrepreneurs grow and build successful businesses, the government should provide seed money or support in securing venture capital funding. Promoting digital literacy is also very important nowadays. The government must focus on providing resources and training to citizens so that they understand how they can utilize technology for their benefit. This would ensure that everyone can benefit from technology and help reduce India’s digital divide. Increasing the limits for CGTMSE loans while lowering their interest rates and reducing the credit term to 30 days for all MSME businesses will create a conducive environment for the youth to bring their business ideas to life. Now is the right time to revisit the tax structure as well as transfer pricing laws to make it easier to conduct business.” – Srividya Kannan, Founder & Director, Avaali Solutions
- India’s domestic consumption story is faltering because of high inflation. I expect tax breaks in terms of higher rebates to stimulate domestic consumption.
- Asset monetization is going to be key. The 5G auction is going to be key to raise cash. The 3700-4200 MHz and 4700-4800 MHz spectrums are available for auction.
- Energy autonomy will mostly be an important theme. India has reduced import duties on heavy-scale batteries and I’m predicting 25000 crores allocated to strengthening the energy grid.
- The PLI (Productivity Linked Incentive) Scheme which promotes manufacturing within India will be extended to MSMEs. Currently it’s for large firms only.
–Suman Bannerjee, CIO, Hedonova