Union budget

Union Budget Expectations: India on the Path to V-shaped Recovery

The Union budget for 2021-22 will be presented by Union Finance Minister Nirmala Sitharaman on 1 February 2021. Post prolonged lockdown due to Covid-19 and the crisis that followed up many have been curious about how the Indian economy would fare as the ramifications of the same is seen across the globe. But, former RBI Governor Duvvuri Subba Rao says that India will witness a V-shaped recovery. We bring in the view of Industry Giants and their expectations on this prior to the union budget.

Prashanth GJ, CEO, TechnoBind

“Yes – there are pointers to a V-shaped recovery and are being talked about by the industry experts. But I would like to exercise caution and would say that to vehemently declare that we are on the path of a V-shaped recovery is slightly premature. Can we get onto a V-shaped recovery – surely yes. There are many reasons to support this – the fact that vaccines are now reality will bring in the much-needed confidence for the economy – we will see investments that were on a go-slow mode pick up steam, which will have a cascading effect for the positive on the economy. We have already seen 2 or 3 months of rising GST collections – they are surely tell-tale signs of a positive upward trend. But it is also a fact that India has lagged behind other emerging economies and that is where the budget needs to focus on – how do we work on the ‘ease of doing business’ part and the squeezed up liquidity situation for the Indian Corporates. Core sectors like steel, power, cement are still declined and this need to be spruced up with support in the budget, for these core sectors, recovery is very important for the overall economy to be in the growth model. The informal sectors which in essence have a big part in the Indian scheme of things also need to be looked into during the budget to ensure that this V-shaped economy that we are hoping for becomes a reality and India can benefit from the same”.

S Sriram, Chief Strategy Officer, iValue InfoSolutions

“Union Budget for 2021-22 is going to be challenging and a critical one with fiscal deficit challenges on one hand along with the need to revive/sustain growth momentum across the board. Q1, Fy21 saw the biggest contraction by over 27% in GDP. Q2 was a good recovery moving H1 GDP to -11.6%. H2 GDP projection is estimated at 3.4% GDP growth implying Fy21 GD P numbers at -4.2%. Even before the pandemic hit us, the GDP was decelerating steadily from 8.2% in Fy16 to 4.2% in Fy20 and now moving down to -4.2% in Fy21 which is an 8% fall in a year. Many small businesses have shut and many more have downsized in a big way leading to employment losses never seen in our history. The key need hence is to revive the economy, business, and employment to drive consumption. Fiscal deficit worries need to be de-prioritized with a clear focus on growth revival and job creation.

Government has to lead recovery through CapEx both at central and state level. More money has to be put in the hands of businesses and people through direct and indirect tax cuts, to enhance spends. We have seen only corporate tax cut but nothing significant on the personal and indirect tax side. Special incentive schemes need to be extended to businesses increasing headcount. Technology investments came as a saviour for businesses due to the sudden lockdown to manage the business continuity. With awareness at an all-time high on the need to go digital and online, Government has to incentivise technology adoption drive for all sizes of business in the near term to build resilience for managing possible second/third waves. The government also needs to take technology investments to overdrive mode for enhancing productivity, transparency, and efficacy of its interface with business and people. Initiatives like 5G rollout needs to be fast-tracked with special focus around areas such as cybersecurity, AI, ML, IoT, Analytics, block-chain, etc. for a sustainable recovery with a view to keep India ahead in the coming years.”

Shibu Paul, Vice President, Array Networks

“The World Bank has estimated that India’s GDP will contract by 9.6 percent Fy 2020-2021, this is based on a sharp decline in household spending and private investment. Keeping this in mind, the government should emphasis reviving the country’s economy. With vaccinations being distributed across the country and declining Covid cases, businesses are set to make a comeback, but that comeback needs to be facilitated by the government by pumping more funds to keep the businesses running. The government has initiated many measures to counter cybersecurity concerns, more funds need to be allocated to fight cybercrimes which will only increase in number with the digital boom. The government needs to focus on creating strong domestic manufacturing policies favouring global companies to invest more in India. We would require the government to create policy frameworks that incentivize investments from big players in manufacturing locally in India. The government should provide a strong thrust for core R&D investments as part of its ‘Make in India’ initiative. The government needs to come up with practical tax slabs and custom duties for advanced networking and security products as these products will now more than ever be of importance especially with the digital India push and remote working relaxations. We expect the import/export process to be made digital and transparent so as to have an efficient RMA system for customers. There should be clear actions, policy, and reforms to promote the latest technologies like AI, IoT, Zero Trust, Machine learning, 3D printing, blockchain and simultaneously ensuring training facilities for all the mentioned technologies as part of skill development. The government has already given a huge push towards electrical vehicles, but there needs to be a planned allocation and execution of this project as we need to consider the implications of not conserving our surroundings.”

Gurpreet Singh, Managing Director, Arrow PC Network

“India ranks 63 in the World Bank’s ease of doing business list featuring 190 countries. This is a testimony that India is a growing hub for investment, start-ups, and MSMEs which is also witnessing a boom in the adoption of digital technology. But the upfront cost of adopting technology is also huge. The government needs to support organizations of various sizes with tax relaxations and subsidization which would lead to overall improvisation. To further facilitate the ease of doing business, the government needs to simplify various laws that are complicated and demotivate investors. The government should also look towards the reduction of personal income tax rates which would help the struggling economy and the people. With Covid-19 more and more companies have suffered irrespective of their sector and size, the government should support the businesses that are struggling to survive. The government should give more priority to the digital India movement that has gained momentum, especially in the past year. From remote working to digital shopping and interactions the growth has been tremendous, but to ensure this momentum is not lost due to lack of security and policies to protect the people, the government should come up with a robust cybersecurity policy. Tech companies that provide cybersecurity products and solutions should be given relaxations as more and more cybersecurity based companies are coming up in India.”

Ganesh Parkar, Head, Global Sales, Decimal Technologies

“Being at the frontier of AI development is key for India as many legacy and emergent problems can be solved with the application of AI an ML techniques. With its vast and connected populace, India is sitting on one of the largest data mines in the world. Each and every transaction at a retail counter, in a hospital, in a bank is a data point that can be collected and analysed.

While we have no dearth of IT talent, India still lags significantly on generating original research and applications of AI in comparison to rest of the world.

In the 2021 budget, we would expect the Indian government to make allocations for original research on AI. AI and ML technology without reliable data is meaningless. There should also be allocations for creation of data banks at an industry and potentially even at pan industry level – especially for use cases in healthcare, finance, retail and FMCG. To speed up application of AI in real world scenarios, the  government should explore hackathon contests to bring India’s hidden talent in the forefront and leverage their expertise to become an AI leader.”

Rishi Bhatnagar, President, Aeris Communications

“After five years of the Digital India Mission and Post COVID, right from businesses to government, have realized the  need to implement digital technologies, especially IoT. We witnessed accelerated pace of technology adoption during lockdowns, especially in the healthcare and education sector. However, given that the pandemic is still not over, a robust digital infrastructure is required to sustain large, medium and small businesses, the outlook needs due diligence to promote more local innovations under the Make in India Campaigns. 

Though the government made few announcements to narrow the digital divide in 2020, for enabling a global competitive edge with natural growth, the Government needs to support with special investment package for facilitating the Small to Medium Enterprise sector’s technology adoption and implementation. This will go a long way in making India Atmanirbhar and a global leader. I believe that the Government will come up with schemes to help boost innovation and the economy. The upcoming budget needs to  focus on integrating technology with data privacy and security designed at the core, across multiple sectors like manufacturing, automobile, and healthcare.”

Khadim Batti, CEO & Co-Founder, Whatfix

“The past year has shown us how critical digital transformation is for business continuity in a pandemic world. As digital transformation continues to open growth avenues, we are bullish about the digital adoption landscape in India and expect the upcoming budget announcement to spur further growth.

The government has rolled out several schemes and initiatives to boost entrepreneurship, skill development and business over the past year. As we gear for the post-pandemic world, we expect the budget to enable continued acceleration for startups through policy incentives. Although investments in startups may return to pre-pandemic levels soon, the availability of working capital is a serious matter of concern at the moment. Therefore, mobilising funding for the ecosystem would serve a great boost to help add on more resources, retain employees and plan expansion.  Further, easing FEMA legal guidelines and simplifying compliance procedures could offer some flexibility to startups to drive serious growth and get back to being one of the key GDP contributors for the economy.”

Dinesh Aggarwal, Joint MD, Panasonic Life Solutions India

“As India moves ahead on its growth trajectory, with partial recovery from COVID-19 already happening, a strong impetus through the Union Budget-2021 is crucial. Sustained investment in Infrastructure by the government, constant effort to introduce FDI in manufacturing including electronic components and sub-assemblies, and conscious support for the real estate developers through priority lending; all of these will assist in stimulating the economy, which is still largely dependent on home demand. Also, commodity prices in the past 8 months have gone out of control and are unpredictable. It is expected that some strict measures are taken to diffuse such situations in the near future as it leads to dilution of business confidence.
We expect further impetus to clean energy generation, specifically for Solar, wherein there is a significant requirement for uniform and friendly policies for rooftop generation in factories, commercial spaces, and residences. On the other hand, Electric Vehicle adoption will get galvanized through supportive policies and funding tools. Thus, energy generation & savings will mainly remain a key area of focus. While the 100 smart cities project has taken a shape across India, it’s time for the government to push more aggressively for modern city infrastructure. This will attract more talent and boost investment across all cities in India. A predictable change in import duties, including various surcharge and further reforms in labour laws, will be a progressive step to make Indian manufacturing more competitive and give the country its rightful position as a global design and manufacturing hub.”

Rajiv Bhalla, MD, Barco India

“We expect the budget to act as a much-needed catalyst for boosting demand, curbing inflation and thereby reviving the economy. There is a need to undertake definite policy measures and provide fiscal stimulus to ensure financial recovery and spur economic growth, specifically across, sectors, like healthcare, EdTech, Infrastructure and Manufacturing. We are also hopeful that the budget will address measures essential for an accelerated digital transformation. This includes investment in R&D, automation technologies, skilling and development of a talent pool trained in digital age skills which will help accelerate the pace of development.”

CP Gurnani, MD & CEO, Tech Mahindra

“2020 has been an unprecedented year and we hope that the upcoming budget will address the challenges faced by businesses and propel the economy towards faster recovery and growth. Digital technology and connectivity continue to be the cornerstone of India’s growth and leadership. The pandemic accelerated the shift to digital and we need to maintain this growth momentum, as it will have a cascading effect on creating efficient businesses, new jobs and all round development. R&D (Research and Development) spending must be increased in order to accelerate digital transformation and jumpstart education with focus on next-gen technologies, skilling, reskilling and upskilling programs, to nurture our young talent pool and thus accelerate our journey towards an ‘Atmanirbhar Bharat’ (Self-reliant India). We also hope to see focused initiatives to boost consumer sentiment, accelerate infrastructure development, move towards a lower interest rate regime and increase investments in key areas including healthcare and education. From an IT (Information Technology) perspective, we expect the government to create a fund for product companies along with extended SEZ (Special Economic Zone) benefits in the new normal of remote working, besides nurturing an ecosystem for deep tech startups in areas including blockchain, artificial intelligence, augmented reality and virtual reality. India is on the path of a higher growth trajectory and the vision of a $5 trillion economy can be achieved with focus on economic growth and development.”

Karthikeyan Natarajan, President & COO, Cyient

“It will be a critical Budget as India battles the twin challenges of economic slowdown and COVID pandemic.

We hope the Budget lays down a clear roadmap for a higher Innovation Quotient and sets vision to carve India into an Innovative Economy by 2050. This would require India to grow from 0.5 % of R&D spend to the GDP to improve to 1.5% by end of this decade and reach 2.5-3% by 2050.  At Cyient, we are hopeful of an increased Research and Innovation enabling more IP to come from India in the budget from the Finance Minister. Companies are also eagerly awaiting a central Research & Innovation Fund to help build up intellectual property out of the country. This will not only help domestic technology companies but attract global clients to set up their engineering centres out of India.

At Cyient, we have outlined areas of Sustainable Mobility, Smart Manufacturing & Digital plants, Clean plants for Semicon/Pharma industries, smart Healthcare as areas of innovation/IP internally. We would like to request to create innovation clusters across India and help realize the Vocal for Local commitment.”

Lakshmi Mittra, VP and Head, Clover Academy

“As enterprises move on with their business continuity plans for 2021 after a year full of tech disruptions, the aim should now be to adapt fully to the new normal, and upskilling and reskilling are an integral part of this process. Organizations now need to focus on holistic development of employees and not just on technical skillset enhancement. Since, Artificial Intelligence (AI), Machine Learning (ML) and augmentation are increasingly getting integrated in the workplace, digital literacy has become an imperative for employees to function seamlessly in the post COVID – 19 era. Training and reskilling at organizational level is not going to help the workforce of future. The government need to take this opportunity to re-look at university curricula and skilling programmes and update it with relevant digital-age skills. It must create the technology infrastructure and internet penetration to create a democratized opportunity to learn digital skills. Furthermore, it must come up with learning and development initiatives at various levels – national, state, districts and towns to train the fresh talent in these new-age skillsets that have become vital for survival in the new normal.”

Dhruvil Sanghvi, CEO, LogiNext

“For India, this budget will probably be the most important one in decades. The world has changed and from our perspective, the pandemic has put all focus on the importance of Logistics and Technology. Global and national supply chain is of paramount criticality in 2021 and beyond. This sector is the backbone of modern civilization and the Indian government should look at ways to simplify global trade. We build from India for the world and increasingly, more technology startups would be doing this. Currently, there is a very high degree of compliance and paperwork which makes it difficult for technology companies to serve the global audience and this forces companies to shift base outside the country. Urgent steps in this direction will help high growth companies keep base in India, generate employment across the spectrum and help revive the national economy after the shock of the pandemic.”

Kishan Jain, Director, Goldmedal Electricals

“In 2020, the manufacturing sector faced several challenges due to the pandemic and ensuing lockdown. To help overcome the obstacles, Prime Minister Narendra Modi gave it a fresh impetus by making it the centre of the Government’s Atmanirbhar Bharat initiative. The government introduced the production linked incentive (PLI) Scheme in November 2020 to help open up opportunities for domestic and global electronic businesses to increase their manufacturing capabilities. Even though such steps have been taken to counter the obstacles faced in 2020, there is a requirement in terms of providing further incentives to industry especially when it comes to manufacturing companies, in the forthcoming Union Budget 2021. The Government can focus on attracting foreign investment, adopting cutting-edge technology, and enhance exports in order to make India a global manufacturing hub, through its ‘Atmanirbhar Bharat’ and ‘Make in India; initiatives. This in turn will boost employment opportunities for citizens which is the need of the hour in a post-pandemic world. We look forward to policies that will leave more money in the hands of consumers as it will help boost demand in the economy.”

Niraj Hutheesing, Founder & MD, Cygnet Infotech

“The ’21 Union Budget provides two big opportunities. Firstly, boost economic growth by scaling investment in digitization. Secondly, drive technology enabled rationalization of the country’s tax infrastructure. The former will bring employment and self-employment opportunities for the youth through digital initiatives of Start-ups and MSMEs. The latter will enable businesses to thrive in a simplified indirect- tax compliance regime powered by new technologies like hyper automation. This will also ensure that the funds collected through GST are used efficiently and help in generating economic growth in this financial year. It is important to have a set framework and policy for GST compliance for all businesses in India, let us see how the government addresses this.”

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.”

Nikhil Das, Founder, Agdhi
We have yet again reached that time of the year when the industry awaits the annual budget with heightened anticipation and expectations. For me personally, a conducive budget is likely to considerably improve the business prospects. And thereby, we expect Prime Minister Modi and Nirmala Sitharaman Ji to deliver on the hopes and aspirations of the agritech sector.
Although fairly nascent in India, the sector has the potential to improve productivity by manifold, if provided with the right kind of incentives and opportunities. At a time, when the farmers are not entirely convinced about the new farm laws, it is the perfect opportunity to provide them with avenues that would improve productivity significantly.
For this, the Modi government can either announce subsidy or cutback on taxes to farmers who opt for agritech products. Thereby encouraging farmers to adopt agritech in a big way than in the past when there wasn’t enough awareness of technological interventions in agriculture.
Besides this, agriculture was the only sector that has shown resilience during the COVID crisis to grow by 3.4% in the current fiscal year. This remarkable achievement amidst overwhelming odds shows the unmatched potential of the agricultural sector. This growth trajectory could be acknowledged by the government through agricultural-centric policies that provide the necessary boost to the overall economy. Such policies would also help associated sectors like agritech that are closely aligned to agriculture.
In the current scenario, when the world is taking note of India’s efforts in combating the COVID pandemic, the government must present a budget that paves the way for economic revival. On behalf of the industry, I would like to request the government to put policies in place that allows farmers to be better aware of technology-centric approaches in farming. This can be done as an offshoot of the much-publicized “Digital India” where there was added impetus on the adoption of digital technology.
We envision a future where technology has a significant role in providing the average farmer with the best productivity from their limited means. Hope the government gives agritech the necessary opportunities & incentives to grow as a robust sector within the Indian economy.

Rajesh Murthy, Founder Architect & Vice President (Engineering) Intellicus Technologies

“The 2021 budget is going to be crucial, as the government sets out to revive the economy. Technology has emerged as one of the key drivers of growth in 2020 and is expected to further boost productivity and sustenance for businesses across sectors. Therefore, we believe that technology adoption and uptake should be one of the key priority areas for this year’s budget. Last year, we saw significant interest from businesses to leverage the power of data and analytics to make better business decisions and predict future outcomes. We believe that the use of modern BI tools and augmented analytics is going to be the future of how businesses operate. We at Intellicus, remain positive on the tech-driven growth opportunities in the country and look forward to some favourable measures from the centre.”

Ganesh Subramanian, CFO, Tally Solutions

“There is a need for a framework to work in synergy and ease in certain taxation issues followed by the software product industry, as enumerated below –

  • Dispense TDS on purchase of software: Presently, under section 194 J of the Income Tax Act, TDS @ 10% is applicable on software purchase. The income tax does not make difference in software product and software service. Software products are classified as Goods. Being a Goods, only software product attracts TDS and there are no other tradeable goods that come under the purview of 10% TDS. Particularly, for new start up and new ventures, when they are already struggling for working capital, this TDS become additional cash outgo, causing cash crunch to the Industry. We expect that Government either remove this TDS or at least reduce it to 2%.
  • HSN /SAC Code for Software Products: There is big dilemma that exists in the industry about using of HSN/SAC code for software products, especially in case of software products delivered through electronic medium and software as a service (Sass), hosted on cloud platform. Government may clarify the same.
  • R&D incentives to software companies: Till FY 2020, the software product companies were enjoying the benefit through tax incentive for their spends on research and development. Such benefits were extended in the form of additional deduction under section 35(2AB) of the Income Tax Act. This benefit has been withdrawn effective 01 April 2020.  The government may extend such incentive schemes or equivalent benefits, in order to promote Research & Development in the Software product sector.”

Ranga Reddy, CEO, Maveric Systems

“I expect that budget 2021 should –

  •  increase the investment in new technology areas such as AI/ML/Cloud/Data streaming etc. These technologies should get an investment tax credit at 250% of the investment for 5 years.
  • also enable a credit cover for SME (similar to fintech) at a concessional rate by ECGC.

 Finally, Digital enterprises like e-commerce, health care, food distribution, and cab aggregators are capable of generating or reviving the employment of people from the economically vulnerable background. They should be provided tax credit at 25% of the compensation paid to recruits or rehires they have done.”

As told to Dr Archana Verma, Editor, DQ Channels and Ankit Parashar, Asstt Editor, DQ Channels

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