The first Budget in Amrit Kaal, the Union Budget 2023 by our honourable Finance Minister, provided a clear vision of a technology-driven, digital and knowledge-based economy. With technology and digital being one of the central themes across sectors, this year’s budget also showcased a clear intent and commitment towards a digital economy to make India a global technology, digital and knowledge powerhouse.
There have been a series of positive announcements that will boost the technology sector, opening up opportunities for businesses, including technology start-ups.
The Budget very nicely anchors on four focus areas for the tech sector, tech and digital talent, digital infrastructure & innovation, ease of doing business and enhancing electronics manufacturing.
Let’s have a look at some of these:
- Firstly, the focus on digital talent development, which is key to driving growth in the tech sector. Some of the proposals include:
- The Pradhan Mantri Kaushal Vikas Yojana 4.0, which aims to skill lakhs of youth through on-job training, industry partnerships, and the alignment of courses with industry needs within the span of the next three years;
- The introduction of new-age courses like coding, AI, robotics, mechatronics, IOT, 3D printing, drones, etc. will address the rising demand for tech talent with in-demand skillsets to enhance skilling;
- The establishment of 30 Skill India International Centres and a unified Skill India digital platform will nurture and upskill the existing talent and make them future-ready.
- Consistent efforts and investments by the government in building a robust digital infrastructure will drive innovation and increase tech adoption across various domains. Some of the proposals include:
- Implementation of a national data governance policy will generate an ample amount of business opportunities, particularly for startups, by enabling access to a large amount of anonymised data and opening paths for research and innovation.
- Three centres of excellence for artificial intelligence (AI) are positive investments to make AI a reality in a data-driven world. It will help in widening usage across various sectors such as BFSI, healthcare, etc.
- One hundred 5G labs for developing applications using 5G services will add to our digital capabilities through the network’s rapid and efficient expansion, currently rolled out in more than 50 cities. It will also bring a significant transformation to the telecom sector, opening avenues for the private networks in the country.
- Digital public infrastructure will be set up as open source for agriculture and is expected to transform the agriculture value chain and increase opportunities for agritech companies.
- Measures taken to facilitate the ease of doing business through the introduction of DigiLocker and the use of PAN as the universal ID are some of the key steps. Moreover, 39,000 compliances have been reduced, more than 3,400 legal provisions have been decriminalized, and the Jan Vishwas Bill has been introduced to amend 42 Central Acts. These steps would surely go a long way towards improving the ease of doing business.
- The Budget has also encouraged domestic manufacturing of electronics products like mobile phones by reducing the custom duty on the import of certain parts, including camera lenses. The initiative is in line with the government’s consistent efforts to build an Atmanirbhar Bharat and to make India a global electronics hub.
- The Budget also recognises the importance and impact of the Indian start-up ecosystem which is now the 3rd largest globally and provides a boost by focusing on new age technology, addressing the ease of doing business by reducing regulatory compliances, and extending the tax holiday as well as carry forward of losses from 7 years to 10 years. Moreover, the creation of Agriculture Fund would be a boost for agri-tech start-ups and takes the start-up story beyond cities and would provide inclusive growth for start-ups.
- As part of the phased manufacturing programme, mobile phone production in India has increased significantly from 5.8 Cr units in 2014-15 to 31 Cr units in the last fiscal year. This, in turn, has led to relaxations in customs duties to deepen domestic manufacturing in the country.
- On a separate note, the government has also set aside Rs. 3,000 Cr for the Indian Semiconductor Mission, which aims to build a vital semiconductor ecosystem, again in line with our vision to become a global hub for electronics manufacturing and design.
Moreover, other initiatives around digital include fiscal support of Rs. 1,500 Cr to expand the digital payment ecosystem, the expansion of the scope of documents available in DigiLocker for enabling more fintech services, the establishment of a national digital library, etc.
Capital gains tax rationalisation for unlisted equity with listed equity was an industry expectation which was perhaps a miss. Another aspect that could have been covered would be around digital security and cyber risks.
Given the strong boost around digital infrastructure, new age technology and ease of doing business, in my view India is well poised to touch US$ 350 B in revenues, by 2025.
Overall, the Budget embeds progressive thinking and forward looking to achieve the vision of “Make AI in India and Make AI work for India” and in our view, provides strong impetus to make India truly “Vibrant Digitally” in this decade.
