Budget 2022 cements the government’s focus toward creating a strong Digital India. Creation of the Digital Rupee to bring new age currency to the country.
The last few years have seen the Indian start-up landscape undergo a sea change. The number of start-ups has increased exponentially, serving different industries and purposes. The government has sought to nurture this ecosystem through the years, by way of tax breaks and policy incentives.
Budget 2022 had several key announcements for the sector, some of which are captured below.
- Thrust on digital innovation and technology advancement: The government’s intent to create digital governance, transparency and encouragement to the start-up community shone through via the announcements made. The focus on start-ups in the agri-tech, space-tech and drone-tech areas should promote innovation in these spheres. The concept of e-Passports was mentioned, which will make use of embedded technology. An open platform for National Digital Health Ecosystem is also to be rolled out.
- Clarity on digital asset taxation and creation of Digital Rupee: The Budget brought some required clarity on the taxation of digital assets. This topic had been under discussion for some time, and now the rates have been fixed at 30 per cent on capital gains from digital assets and a 1% TDS on transactions. The Digital Rupee is the government’s attempt at embracing blockchain technology and bringing it closer to mass adoption.
- Better, faster and far-reaching internet services: 5G rollout is slated for 2023, which will bring the next-gen in robust communication technologies to India. There are PLI schemes and policy incentives planned for telecom infrastructure manufacturers. Through the BharatNet system, it is envisioned that even far-flung villages will have access to high-speed internet.
- Tax incentives and clarifications: The surcharge on long term capital gains has been capped, which is good for investors and will likely boost capital and funding for start-ups. Tax incentive period for start-ups has been extended by one more year till 31 March 2023.
- Digital education channels for modern India: One-class one-TV channel concept to be increased from 12 to 200 TV channels to provide supplementary educational in regional languages from class 1 to 12 under PM e-Vidya. A digital university will also be set up, aimed at inculcating and honing digital skills.
- Digital banking for all: 75 Digital Banking Units (DBUs) proposed to be set up in 75 districts by Scheduled Commercial Banks. This will help bring in more people into the formal banking system.
- Increased funding across industries and channels: Allocation of 1 lakh crore to assist state governments in catalysing investments in start-ups to help digitise the economy and complete the fibre optic network. Co-investment model with NABARD to finance start-ups in the agriculture and farm sectors.
- Support for sunrise sectors: Sectors like artificial intelligence, geospatial systems and drones, semiconductors, space economy, genomics and pharmaceuticals, green energy and clean mobility systems will enjoy supportive policies, light-touch regulations and facilitative action to boost productivity and innovation.
- Promotion of digital activities to boost employment: An Animation, Visual Effects, Gaming and Comics (AVGC) task force will be set up for the promotion of employment of youth in the animation sector.
- Setup of expert advisory committee: The Budget recognizes the key role played by PE and VC investors and setting up an expert advisory committee to study regulations is a very welcome step. Budget 2022 has managed to address a lot of concerns in the tech and start-up sectors. It did not mention direct overseas listing or SPACs in India, which could have had an impetus on new-age companies looking for access to global capital markets.
This article was originally published on Times Now.
