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Union Budget 2025 is seen as a decisive moment for India to drive sustainable growth, enhance its taxation framework, and boost global competitiveness. The key areas include expanding the PLI scheme, simplifying GST rates, resolving customs disputes, investing in infrastructure, skill development, and supporting green energy and start-ups.
As India gears up for Union Budget 2025, the moment feels decisive. It’s not just another budget—it’s an opportunity to set the country on a path of sustainable growth, simplify its taxation framework, and position itself as a leading global economic force.
By expanding the Production Linked Incentive (PLI) scheme, rationalizing GST rates, and introducing tech-driven measures like faceless assessments, India can leap ahead. But the big question is: Will the government seize this chance to bring the reforms India needs to stay globally competitive?
Since its launch in November 2020, the PLI scheme has been a game-changer for Indian manufacturing, pulling in investments worth ₹2.5 lakh crore and creating more than 5 lakh jobs. Sectors like electronics, pharma, and white goods have reaped big rewards. But it’s time to think bigger.
Expanding to New Sectors: Imagine India becoming a hub for electric vehicles (EVs), semiconductors, or green hydrogen. These are the in industries of the future. Currently, India imports $15 billion worth of semiconductors every year. What if we made them here?
Encouraging R&D: The world's most advanced economies spend around 4% of their GDP on research and development. India spends just 0.7%. Allocating a portion of PLI incentives to R&D could help Indian firms become global leaders.
Getting SMEs on Board: Small and medium enterprises (SMEs) make up 30% of India’s GDP. By simplifying compliance processes, they can also be part of the PLI revolution. Suggestion: Introduce a ₹10,000 crore innovation fund to boost R&D in EV batteries, artificial intelligence, and renewable energy.
Simpler Rates: Merging the 12% and 18% slabs into one would make life easier for businesses. These two slabs cover 70% of all taxable goods and services.
Including Petroleum: Right now, petroleum is outside the GST ambit. Bringing it in could save industries ₹50,000 crore annually by cutting down cascading taxes.
Upgrading Technology: Enhancing the GST Network (GSTN) portal could eliminate technical hiccups and handle the rising number of taxpayers more efficiently.
Suggestion: Lay out a phased roadmap for GST reform, starting with sectors like FMCG and textiles.
Custom Reforms: Time to Resolve Legacy Issues India has customs disputes worth over ₹1 lakh crore, which is a drag on business operations. Clearing this backlog should be a priority.
Amnesty Scheme: Offering businesses a 75% waiver on penalties for voluntarily settling disputes could clear the logjam. Tech-Driven Solutions: Using AI to resolve cases faster could cut processing times by half.
Clear Guidelines: Simplified and transparent rules could make compliance easier for businesses of all sizes.
Suggestion: Launch a six-month amnesty scheme aimed at resolving 80% of disputes by the end of 2025.
Beyond the Obvious: Other Budget 2025 Opportunities While the PLI scheme, GST reforms, and customs dispute resolutions are essential, Budget 2025 an also address several other pressing needs to ensure holistic economic growth and global competitivenss.
"The infrastructure push is essential not just for improving domestic mobility but for positioning India as a global investment hub," says Dr. Anil Gupta, an economist at a leading think tank. An enhanced focus on infrastructure would strengthen India’s economic resilience and fuel growth for years to come. Infrastructure development drives job creation and boosts productivity. Allocating substantial funds toward roadways, railways, and urban infrastructure can attract foreign direct investment (FDI) and enhance domestic connectivity.
As automation and artificial intelligence reshape industries, reskilling India’s workforce becomes a critical task. Budget 2025 offers an opportunity to focus on vocational training and upskilling, particularly in emerging fields like data science, , renewable energy, and AI. Investment in skill development will be crucial for sustaining growth," says Nisha Mehta, CEO of a leading HR consultancy. A dedicated focus on future-ready skills could equip millions of young Indians with the tools to thrive in a competitive global economy.
India's commitment to achieving net-zero carbon emissions by 2070 requires a substantial investment in renewable energy. A green energy fund dedicated to solar, wind, and hydropower projects could help the nation transition toward sustainable energy sources while creating jobs and reducing dependence on fossil fuels. "The green energy revolution is a vital step towards a sustainable and self-sufficient India," says Ramesh Kumar, an environmental policy expert. Budget 2025 could play a pivotal role in accelerating this transition by prioritizing clean energy initiatives that not only meet environmental goals but also boost economic growth.
"The start-up ecosystem is ripe for exponential growth. The right policy interventions can transform India into the world’s next innovation hub," says Rajeev Ranjan, a venture capitalist. In addition, government-backed funds aimed at nurturing early-stage companies could propel India’s entrepreneurial spirit to new heights. Offering tax breaks and incentives to venture capitalists investing in early-stage start-ups could provide critical support to this sector.
The reforms we’ve discussed aren’t just about numbers or policies—they’re about making India a better place to do business. Expanding the PLI scheme, simplifying GST, and resolving customs disputes could transform how the world sees India as an economic player. Infrastructure investments, skill development, green energy, and start-up support are equally crucial to this vision.
But will the government deliver bold reforms that truly make an impact? Or will this budget be another missed opportunity in India’s growth story? As the clock ticks toward Budget Day, the country—and the world—waits for answers.
This article first appeared in The Economic Times on 8 January 2024.