Ahead of February 1, Industry leaders opine their expectations from Union Budget 2021

The Union budget 2021 session of the parliament has already begun with President Kovind’s address to the Joint Session of Parliament. Today, Nirmala Sitharaman tabled the Economic Survey 2020-21 in the Lok Sabha. Highlights include: • GDP growth is seen expanding by 11% in 2021-22 fiscal. • The gross domestic product (GDP) contracted by a record 23.9 per cent in April-June and by 7.5 per cent in the second quarter.  • For the full fiscal year 2020-21, the survey projected a contraction of 7.7 per cent; expects a V-shaped recovery in the next fiscal year. • Govt estimates FY22 (April 2021 to March 2022) GDP growth at 11 per cent driven by consumption. •

The pandemic worn-out country seeks to see a strong recovery in the new financial year. But, the wounds are still fresh. Thus, the experts and industry leaders hope that the Union Budget 2021 will attempt to assess the health of the Indian economy. Further, they have also outlined a few measures to revive and rebound from the de-growth. From Core IT to Startups, here's what industry leaders have to say.

IT Sector

The pandemic has resulted in disruptions of services and activities in every sector and unsettled the economic and business outlook for the year 2020. Thus, the union budget of 2021 is significant. Experts state that the government needs to continue positioning India as an international IT hub. We need to invest more in the technology and digital infrastructure for economic recovery.

As for the budget 2021, Eddie Chandok, President of Global Delivery, Infogain outlines that India could see the emergence of new initiatives and progressive policy interventions. “They will propel digital adoption across industries,” he states. “This year, the government will also need to strengthen its focus on the development of emerging technologies, IT, entrepreneurship and quality of talent in the country. As we continue working remotely, we could also witness initiatives in cybersecurity technology to deter any kind of cyber threats. Only by incentivizing the use of emerging technologies like 5G, IoT, AI, Cloud and more, will India still have a chance at realizing, what at present looks like, ‘an ambitious goal’ of becoming a 5 Trillion Dollar economy by 2025.’’

Varun Babbar, Managing Director, Qlik also states that the year 2020 has been difficult for everyone. “This budget will be a vital one as the country needs to balance investment in the future and deal with the immediate aftereffects of the slowdown. The Govt’s twin vision of 5 trillion-dollar economy and building an ‘Atmanirbhar Bharat’ will depend on how we invest today. There is a clear need for upskilling in areas like critical thinking and data literacy. We also need to create infrastructure not just in terms of technology, but also the legal framework around data, data privacy and AI. We look forward to a budget that clearly balances solving today’s issues while still thinking long-term,” he said.

Software

Ganesh Subramanian, Chief Financial Officer, Tally Solutions states, “There is tremendous scope for Indian Software Products to build upon the strength of Indian IT industry and the innovative & technological capabilities in the country. India has done well in software services and our next big opportunity is in software products. To realise the potential of the software product industry optimally, 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 the 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 which attracts TDS, unlike others. Particularly, for 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 a 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 a cloud platform. The government may clarify the same.

· R&D incentives to software companies: Till FY 2020, the software product companies were enjoying the benefit through a 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 ITA. This benefit has been withdrawn effective 01 April 2020. The government may extend such incentive schemes or equivalent benefits, to promote Research & Development in the Software product sector.

Startups

Ms Prerna Puri - Founder and CEO, Prerna's Handcrafted ice-cream opines that the government emphasizes on a self-reliant India but they still feed to do a lot of things to encourage local companies in India. “The government should invest in the purchase of machinery for new startup companies and give an incubation period of three years for this as for most of the manufacturing startups, machinery requires maximum investment.”

“Further, the government should focus on mentorship to bring women entrepreneurs forward. This will help women entrepreneurs to materialize their business ideas. Mentorship should also be given to startups for international expansions as with such an initiative, we can create big companies like Google, Facebook in the country. With this, the government can give tax exemption and loans at lower interest rates, to such startup companies which are started or led by women. This can bring a revolutionary change,” she adds.

“'The Indian economy is reeling from the ramifications of the Covid-19 pandemic,“ says Amol Roy, Founder, Shutter Cast, “which is still far from being over. It will be a feat to overcome the impact of the current slowdown. Now, technology will play a huge role in the recovery and revival process. Hence, we have our hopes pinned on the Union Budget 2021. We expect the government to make significant investments in the latest tools and technologies. Creating the right environment to boost the start-up ecosystem, adopting measures for cyber and information security, higher internet penetration to push companies in tier-2 and tier-3 cities, and increasing the access to net connectivity in rural areas; these should be some areas of focus to fill crucial gaps in the tech space''.

SMB

Mr Vikram Wadhawan, Founder & CEO, Vasitum, says “With the upcoming union budget, we look forward to the government’s decision to elevate the startup ecosystem including the MSMEs. They are one of the biggest growth drivers of the economy. One of the major problematic areas for them is the availability of working capital. Thus, a framework which can mobilize funding for Startups and MSME will be a great initiative and will drive serious growth for both the sectors.”

He also adds, “Besides, we anticipate the government to focus on extending credit facilities to MSMEs; by re-levelling the banking and NBFCs to the same ground to benefit consumers. Furthermore, we are also confident that an easy to maintain compliance agenda will provide the required impetus to various startups to stick to their homeland. We are also expecting the government to introduce new policy incentives that will accelerate the business growth of startups & MSMEs; thereby helping them to expand, hire resources, generate employment opportunities and contribute to the GDP. In short, we feel a stronger and simpler framework for the Startups and credit/grants to the MSMEs should form a part of the Union Budget along with other usual announcements.”

Digitization and infrastructure

Mr Rajiv Kumar, Founder & CEO, StoreHippo says, “This has been an unprecedented year for businesses as well as humankind. So, we expect the government to focus on helping businesses cope with the challenges and effects of the pandemic. The pandemic hit offline businesses. Every business owner plans to go online. So, we expect the policies make it easy for businesses to go online and manage their online store and marketplaces. Not all businesses have resources to meet the tedious compliance requirements like GST or going with the paperwork needed for starting an online venture.”

“The government should ease rules and also offer support/exemptions to small and medium businesses from certain mandatory compliances. Overall the budget needs to facilitate easy access to capital to businesses that are reeling from after-effects of COVID. Apart from this, there should be some relief for businesses that have suffered significant losses during the lockdown and thereafter.” he adds.

Prasoon Shrivastava, Founder and CEO, Zepth says, “India has committed to spending the US $ 1.4 trillion on infrastructure from 2019-23 to have sustainable development of the country. In line with this vision and poor economic growth, the government must enhance its spending on various infrastructure projects in transport, freight, railways, energy, etc. Also, the budget ought to encourage PE funds to invest in infrastructure projects with better investor-friendly policies by the government.

Healthcare

Harshit Jain MD, Founder and CEO, Doceree states that the government should eye reaching its healthcare spending target in the next two years. He also adds that it is high time that we increase healthcare spend significantly wrt the population of our country. He adds, “In the upcoming budget, allocations and timelines should be announced so that they get implemented in an organized manner and we are closer to realizing the vision of making healthcare accessible and affordable. Besides, innovative healthcare startups that are working to promote accessibility and affordability should be encouraged by way tax benefits and tax holidays so that government and private partners can work together to make the condition of Indian healthcare better.”

“The Union Budget 2021 will be tabled in just over a month. We expect the health sector to receive more specific allotments in this year’s budget to mitigate Covid and growth of the telemedicine sector. The government should also support startups and private players in this segment to increase the current coverage of the locations including tier-2 and tier-3 cities. It should aim to provide advanced healthcare facilities in these areas,” states Mr Ayush Mishra, CEO and Founder, Tattvan E-clinics. On the same line, Anmol Arora, CEO, Docvita says, “There's no better time for the government to give the industry impetus to bridge the gap between healthcare accessibility and affordability. The post-pandemic budget should keep health as a top-notch priority. Increased allocations in the Union Budget 2021 for Telemedicine & NDHM can benefit our healthcare infrastructure and build a strong backbone for our country's digital health infrastructure.”

Education and upskilling

Mr Kounal Gupta, CEO and Founder, Henry Harvin Education outlines the need on upskilling. He said, “The government must extend relief to individual income taxpayers, to increase their power of expenditure and investment. Sectors which defied the trend and witnessed a spike in growth such as EdTech, FinTech, HealthTech, HRTech, etc. have contributed to the GDP by expanding and hiring. For these, the Government should reduce tax burdens, simplify tax GST structure, incentivise digital innovation and extend credit facilities. Last but not the least, the government should provide a thrust on skill upgradation to help India become a global manufacturing and business hub soon.”

Mr Rakesh Kharwal, MD, India-South Asia & ASEAN, Cyberbit says that the focus of the government should be to build superior trust in technology. “The Union Budget 2021 should concentrate on stepping up cybersecurity measures to safeguard critical infrastructure & Data for financial systems, public health, science, safety institutions, defence, aerospace, and intelligence agencies. An optimum forward strategy would be to leverage simulation-based cybersecurity platforms to impart real-world experience on the ever-evolving global threats. It will aid in resolving the glaring skill-employability gap in the Indian cybersecurity industry. It will also deftly pivot the sector to compete in the global market,” he said.