Union Budget 2021-22: Expectations from ICT Industry

Union Budget 2021-22: Expectations from ICT Industry

We all are looking towards the government to make some bigger announcements in the upcoming budget. It is expected that few key announcements from the Finance Minister will boost the economy and bring new opportunities for various sectors to grow. The ICT industry is one of the key sectors that have to play a major role in reviving the economy. The key leaders have shared their expectations from the Union Budget 2021-22. Read below the opinion of tech leaders-

“The Union Budget Will Bring Out More Ways To Ease Liquidity For MSMEs”

Sameer Nigam, CEO & Co-founder, Stratbeans

“The Union Budget for FY 22 is one of the most anticipated socio-economic events for this year. As the Government and many other agencies have projected slower economic growth via the last financial year, there will be more emphasis on ‘ease of doing businesses. Needless to say, the general public and businesses are really hopeful for some major relief in the budget announcements. The Government has already taken a slew of measures to reduce the compliance burden upon businesses across industries. The Union Budget will also bring out more ways to ease liquidity for MSMEs.”

Sameer Nigam, Stratbeans further added, “The IT industry has been the backbone for Digital India and Startup India. Providing the right incentives to the industry will be the key for the country's economic revival. One such incentive is to simplify the tax-related complexities to encourage global trade of software products from and to India. Some effort in this direction will help increase revenue for the exchequer that can flow back into the country for socio-economic welfare. Another important area for improvement is to introduce measures that encourage corporates as well as individuals to pay taxes and contribute to the nation’s progress. This will also create a collaborative, nationwide effort towards building a great nation.”

“The Government Must Look At Providing Sufficient Support to New And Budding Startups”

Tarun Chugh, Founder, Shinysleep

“I am very eager and looking forward to this year's budget. While 2020 brought testing times for everyone, India's startup ecosystem has shown utmost resilience; adapting to the new normal deftly. The companies in the startup ecosystem play a significant role in transforming India's image from being a slow-moving economy to a Nation of innovative players and entrepreneurs in providing world-class technology and business services. We are optimistic that with this Union Budget 2021, the government will take steps to strengthen the regulatory & security framework for providing a secure cyberspace ecosystem and new advancing policy developments for the budding startups.  At the same time, the government must also look at providing sufficient support - financial and infrastructural to new and budding startups under the Startup India program.”

“I Urge GOI To Introduce An Entry-Level GST Slab For Consumer Technology”

Ankit Sharma, Director, Airific Systems Pvt. Ltd.

"This year, the Budget will probably be the most important one in decades. After the pandemic, the world has changed and from our perspective, the pandemic has put all focus on the importance of consumer technology. The consumer technology sector is expecting some measures from the Budget, given that it has a key role to play in the government. To increase the penetration of consumer technology in the country, I urge GOI to introduce an entry-level GST Slab for consumer technology i.e. 5%-10% and I believe this move will certainly leave an impact on the sales in India with the affordability aspect"

“We Are Hopeful That There Will Be A Relaxation On Personal/Income Tax”

Neeraj Bahl, MD & CEO, BSH Home Appliances

“The pandemic induced lockdown has resulted in flat growth for the consumer durable industry last year. In the 2021-22 budget, we are hopeful that there will be a relaxation on personal/income tax which will help boost consumer demand and drive growth for the industry. Moreover, the government should also consider reduction in GST rates for products like dishwashers, dryers, refrigerators and air conditioners, which are now evolving from being luxuries to necessities for consumers. We also hope that the government reconsiders the rebate on tax for second home owners, which will go a long way in boosting real estate and therefore the consumer durable sector. While the government stays committed to Make in India, we are hoping to see some encouraging and motivating policies towards companies who are focussing in manufacturing in India as well. Overall, we expect the 2021 budget to be a holistic one and a one that will enhance the consumer and retail purchase and also do a lot in terms of home purchase.”

“Rigid Regulatory Compliance And Tax Burdens Should Be Revised”

Amit Gupta, CEO & Founder, Rapyder

“The unprecedented Covid-19 pandemic has; without doubt; adversely impacted world economy at large. Almost every industry has borne the brunt and MSMEs are severely affected with many closing down, probably permanently. However, IT & ITeS sector has seen spike in growth across some industry verticals in the wake of the pandemic. Sectors such as EdTech, FinTech, HealthTech, HRTech, amongst others, have seen significant boosts. This will continue to fuel growth of Cloud-Tech, AI-based and other new-age technologies across business domains. Knowing well that MSMEs are the biggest growth drivers to the economy and the second largest sector after agriculture, Government should extend credit facilities for them and provide means for new-age technology adoption. Rigid regulatory compliance and tax burdens should be revised, which can provide impetus for growth and expansion. This will increase hiring and businesses can largely contribute to the GDP. Revised tax policies, less complex GST structure and relevant policies that provide thrust for digital innovation can incentivize home-grown start-ups and brands. Such a solution can help MSMEs to operate in a more level-playing field which has MNCs and other established players.”

“We Expect The Government To Broaden The MSME Umbrella”

Pronam Chatterjee CEO, BluePi Consulting Pvt. Ltd.

"Retail industry came to a virtual standstill during the pandemic and was one of the worst-hit sectors. The cascading effects impacted the entire value chain that serves the industry. The festive season has shown signs of recovery with major retailers recuperating to around 90% of pre-covid sales. But the recovery is still nascent and not strong enough to carry on without support. A few things that we expect from the budget are measures to improve the disposable income in the short term, by reducing the tax burden and thereby spurring demand. The supply side of the value chain also needs to be supported by easing retailers' access to capital. Ease of doing business and access to capital should be the focus area for the retail sector in this budget. MSME does not cover the retail trading that constitutes a bulk of retailers; if they are not manufacturing. On the other hand, the garment manufacturers are considered MSME, but without a special package that assists them with working capital, they would also be left high and dry. So we expect the government to broaden the MSME umbrella and announce special packaged for retailers under MSME so that they can tide over these challenging times."

“Reforms Are Expected To Support Start-Ups”

Gaurav Shinh, Founder and CEO, DAAS Labs

“The government has started realizing the importance of new technologies like Artificial Intelligence and Machine Learning and has even called Data as the new oil in the previous Budget 2020. According to a recent NASSCOM report, Deep-tech and new start-up hubs will continue to grow at 40-45% CAGR.  It also stated that investments are expected to return to 2019 levels,after seeing a dip in 2020 (if not exceed in 2021). The pandemic has been a huge boost to Edtech, AgriTech, FinTech, HRtech and HealthTech startups. So, we expect to see decisions to fuel the growth of cloud data storage, big data and AI technologies in several domains. The work from home trend due to the pandemic has seen a lot of investment being made in Tier II and Tier III cities and the trend is supposed to continue. Reforms are expected to support and enable these start-ups as they can have a huge long term impact.”

“This Budget Should Have Enough Measures To Infuse Liquidity, Benefiting SMEs”

Ketan Doshi, MD, PayPoint India

“For the Payments industry, the honorable Finance Minister should reconsider the complete elimination of merchant discount rate (MDR) on Rupay and UPI transactions which will support a sustainable growth in digital payments. To further the Financial Inclusion in the country, I feel all transactions happening under PMJDY should be exempted from the GST levy. Bank accounts opened under PMJDY are basically of low ticket size. However, the operating cost to service this under-served community is very high till it reaches a substantial base hence the exemption. This Budget should have enough measures to infuse liquidity, benefiting small and medium enterprises, especially those in the hinterlands. PSU banks must lead this mandates in partnership with FinTech’s - either through co-lending or lead-generation model.”

“Budget 21-22 Can Set The Path For Accessible Education For The Youth”

Dr. Prem Das Maheshwari, Business Director South Asia, D2L

“The National Education Policy 2020 envisioned a better quality of education, more use of technology, and to drive deeper understanding. However, the budget allocation within institutions may not be enough to see the revolutionary change we talked about. At D2L, we are looking forward to the announcement of Budget 21-22 to be the last piece of the puzzle to drive exponential change, by giving the EdTech sector the fiscal nudge it needs. There needs to be a high focus on high-quality resources to bridge the gap for students who need other methods of learning to suit their learning styles, to learn flexibly and efficiently. Budget 21-22 can set the path for accessible education for the youth, all of whom make up the adults of tomorrow’s India.”

“Budget 2021 Should Focus On Enhancing Productivity By Incentivizing The Use Of Technology”

Anuj Kapuria, Founder & CEO, The Hi-Tech Robotics Systemz Ltd.

“After a roller-coaster 2020, we expect 2021 to be the year of economic recovery, upbeat sentiments and demand revival, riding on newer technology and innovations. Going forward, industry across sectors need to be more self-reliant, efficient and attuned to technology to survive future adversities. Newer technologies like robotic and automation will be critical in driving the economy to pre-Covid levels and beyond. Budget 2021 should focus on enhancing productivity by incentivizing the use of technology to make India self-reliant and future-ready. India has, so far, seen very low robot adoption compared to its regional and global peers. Timely policy interventions can accelerate robotic adoption in manufacturing and warehousing. Special focus should be on warehouse automation where we have seen an increase in customer traction. Interventions are required on multiple fronts – boosting demand, accelerating technology development and building a conducive ecosystem. Reduction of customs duty/IGST and providing tax breaks/incentives to robotics adopters can boost demand. For accelerating technology and R&D, setting up of robotics centres of excellence/incubation centres, continued research grants for robotics R&D and continuation of income tax deduction will be the key drivers. This will boost the confidence of technology-driven industry players and strengthen the government’s Make in India for Global & Atmanirbhar Bharat vision, besides making a remarkable contribution to employment generation and will make Indian industry more efficient and surpass the global standard.”

“I Am Hopeful That The Government Would Bring Benefits To The Startups”

Rajat Singhania, Founder of HyLyt, SocioRAC

"Last year Covid has impacted most of the startups who are struggling with revenue & cash flow and the government has provided much needed initiatives for their growth. I am hopeful that the government would bring benefits to the startups this year too. We also welcome the Startup India Action plan announced by PM Modi recently. The initiatives such as tax reliefs, self-certification compliance, rebate on filing a patent and simplifying patent regime are welcome steps."  

Additionally, in the budget 2021 this year, we would expect the following –

  • Last year startups have seen a decrease in lending by banks, so it would be great if the government relaxed norms in this regard.  
  • Reduction in GST rate would encourage the start-up sector to leverage professional services for business growth and get back on track with their operations. 
  • Policy towards data protection and privacy which is the need of the hour. The government is already working on it and early action would be an encouraging step.
  • Priority clearances for Startups in case of regulatory requirements
  • Specific initiatives to encourage Govt and non Govt entities to use the products and services of registered startups.

“We Request The Government To Review The Policy For The Manufacturing Sector”

Umda, UPS association in Southern India; UPS manufacturer association north member: Mr. RK Bansal, Mr. Sumath Kumar, UMDA member Rajesh Kumar

"With the present government focus on manufacturing with special Atma Nirbhar Bharat & make in India campaign, but still the sector needs more incentives to grow. As per McKinsey report Modi government’s initiatives to boost manufacturing in India, the sectoral growth fell to 7.4 percent per year over the last six years, compared to 9.5 percent per year growth during FY2006 and FY2012. Also, India’s manufacturing sector share of employment increased by just one percentage point. More favorable incentives and schemes are needed for manufacturing to grow in India. Therefore, we request the government to review the policy for the manufacturing sector. The government should encourage domestic manufacturers & promote innovation in the sector so that newer technologies are introduced in the sector. With regard to GST, We request the government to declare UPS with the battery as a composite supply, and UPS GST of 18% should apply to all components. Further, to remove confusion, GST on all types of batteries being used in capital investments, in offices, homes, etc. should not be treated as luxury items. It should have a uniform rate of 18% GST only.”

“One Expects Reconsideration Of GST Slab On Supplementary Education In The Upcoming Budget”

Bharat Goyal, Founder & Director, Bhartiyam International School

“In our country, the core services provided by schools, colleges and universities remain outside the umbrella of GST. Having said this, there are out-of-school education like hobby classes, sports training that are taxed 18 per cent and when they are passed on to the parents, they feel the pinch. One expects reconsideration of GST slab on supplementary education in the upcoming budget. There needs to be an increase in facilities that aim to build capacity of the teachers, and the support extended to the anganwadi workers should be bolstered. The expense for the same is huge which is why budgetary allocation for the education sector has to be stepped up from the existing levels. It needs to be mentioned here that as things stand right now, the current level of around is only around three percent of GDP.”

“We Hope The Government Increases The Funds Allocated To The Education Sector”

Surabhi Goel, CEO, Aditya Birla World Academy, Aditya Birla Education Academy, The Aditya Birla Integrated School

“We believe one of the sectors that requires some focus in the upcoming Union Budget 2021 is education. With the pandemic and ensuing lockdown having disrupted the sector to a great extent, students and teachers were not prepared for the sudden shift to online forms of teaching and learning. This new normal in education calls for a renewed focus and investments in order for our educational institutions to be at par with their global counterparts. There is an increased need for investing in virtual forms of education and training through digital tools, upskilling and digital training for teachers through interactive mentoring sessions, leadership training and more. Further, the government can also bring to light the importance of easing the challenges faced by students with learning disabilities in order to build a conducive learning atmosphere that fuels their growth. We hope the government increases the funds allocated to the education sector especially when it comes to resources such as the internet as this will open up countless new opportunities for the sector to grow and thrive.”

“We Are Hopeful Of Enhanced Measures That Will Increase India's Ranking In Ease Of Doing Business”

Sharad Malhotra, President, Nippon Paint India – Automotive Refinishes & Wood Coatings

“As the economy recovers post Covid, pent-up demand has pushed up consumption within the country. For Union Budget 2021, measures that will boost demand further and aid consumer sentiment remain the most important aspect for our industry. We are also looking forward to the government incentivizing consumers through tax breaks and other measures. We are hopeful of enhanced measures that will increase India's ranking in Ease of Doing Business and meet Government's target to scale up manufacturing to 25 per cent of the GDP. Going into the next decade, smaller cities and towns are expected to be key consumption drivers and we have realigned our business strategy to outperform in the new normal. As further growth opportunities get unlocked, we are confident that our sector will be able to add to the economic growth of the nation.” 

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