What the Budget’21 Means for the IT - Industry Leaders Speak

Budget’21 was expected to bring major policies for the IT sector in the aftermath of the lockdown, but a near-complete absence of the IT industry in the Budget surprised many. Now that the frenzy has subsided, a more sanguine look shows some oblique impacts of this budget on the IT industry.

When the budget unfolded in Parliament this year, this question was floating across the IT industry; why no mention of the IT industry? The expectations of major policies for the IT sector were dashed to the ground. However, after the initial shockwaves, the IT leaders took a closer look at the budget and felt that this budget will have some significant impacts on the IT sector.

Why no Mention of IT?

A look at the budget shows that this budget was largely about levying customs duties on imported goods. It appears that this government wants to propel the businesses to move away from excessive dependence upon creating a market for and selling imported products in India and to turn manufacturers of products in India and find markets for Made in India products in India and abroad.

If the government has this approach, then no mention to IT products is very significant. Majority of IT products are imported in India. It seems that while the government wants the Indian businesses to focus on manufacturing and exporting rather than importing in other sectors, it has left the IT sector untouched and wants to maintain the status quo in this industry. The import of IT products shall continue and they will continue to fin market in India as before, without any changes.

 Other Impact Areas for the IT Sector

The IT leaders have pointed out to DQ Channels certain policies outlined in the budget which will have impact on the IT industry. Prakash Mallya, VP & MD, Sales, Marketing & Communications, Intel India observed, “It is evident that the government is banking on India’s digital technology foundation to power its revival journey. It is encouraging to see the government’s sharpened focus on adoption of cutting edge technologies like AI & ML. We look forward to continuing to partner with the government to develop innovative technology solutions that can support the nation’s growth objectives, generate employment and strengthen India’s digital innovation capabilities.”

Praveen Aggarwal, Co-Head, India, OakNorth Bank reiterated the sentiments expressed above. He said, “From a technology perspective, FM Nirmala Sitharaman made several announcements that will help boost India’s start-up ecosystem, such as the launch of data analytics, AI, ML and MCA-21 version 3.0, that will have additional modules for E-adjudication, consultation, compliance management and monitoring, as well ensuring faster resolution of cases with E-courts. This, along with the proposed extension of tax holiday for start-ups by one more year, will no doubt have a profound effect on the sector.”

“It is evident that the government is banking on India’s digital technology foundation to power its revival journey.”

-- Prakash Mallya, VP & MD, Sales, Marketing & Communications, Intel India

“The proposed extension of tax holiday for start-ups by one more year, will no doubt have a profound effect on the sector.”

-- Praveen Aggarwal, Co-Head, India, OakNorth Bank

Diwakar Nigam, MD, Newgen Software expressed similar ideas, “The proposal to build a fintech hub, digitisation of railways and first-ever digital census, reconfirms the government’s emphasis on creating a digital economy. Furthermore, the emphasis on technology, such as data analytics, artificial intelligence and machine learning-driven platform to enable E-courts and compliance management will go a long way in accelerating the nation’s digital initiatives.” Gaurang Sinha, Director, Go-to-Market, Flock also said, “The government’s move towards boosting emerging technologies such as the IoT, ML, AI and data analytics, will accelerate the growth of our digital economy.”

Electronics, which is an allied sector to IT, did find mention in the Budget presentation this year. Dinesh Aggarwal, Joint MD, Panasonic Life Solutions, said, "Reflecting on the continued focus on self-reliant India, the Finance Minister has announced extended support for the manufacturing of electronic components & sub-assemblies, including mobile phones."

"Specifically for the Electrical Construction Materials industry, reduction of import duties on steel flats & copper scrap, is a steps that will create a strong export-led economy in the Manufacturing sector."

--Dinesh Aggarwal, Joint Managing Director, Panasonic Life Solutions India

Thus, we see that most leaders have highlighted the digitisation of the administrative procedures in the government. However, some questions remain, as to how the expenditure on digital infrastructure shall be managed and how the expertise for this digital overhaul can be obtained.