Budget Expectation 2020 By Industry Leaders
Mr. Nakul Kumar, Co-Founder & COO, Cashify, said, “While the Indian economy has hit a rough patch, the refurbished phone sector in India has been on an all-time high last year. As a part of the startup ecosystem and the refurbished industry, we expect the Union Budget 2020 to give a further boost to the sector by strengthening the startup quality norms, so that good quality and authentic players are available in the market. The recommerce trend is breaking all barriers of selling smartphones and influencing pre-owned smartphone users to sell their smartphones without taking hassles of negotiations and prices. Thus the budget should focus on promoting a more safe and secure ecosystem and at the same time democratize technology for an amplified and unified reach.”
Mr. Sunny Kataria, VP Auto, OLX India, said, “Given the ongoing tumultuous times for the automobile industry, I expect the industry to kickstart recovery by the mid of FY 21 in order to adjust to the market reaction towards the transition to the BS6 transmission norms. Hopefully, the budget will focus on reducing the GST from 28% to 18% for passenger vehicles- a long pending demand from the industry, a clear incentive structure for the scrappage of old cars and most importantly, an economic stimulus to lift the morale of the industry. OEM’s will look to spruce up sales of older BS 4 models before the 31st March deadline and seek to make BS 6 models more affordable for the consumer as prices of new passenger vehicles will increase by 5-10% owing to the transition. This, in turn, would augur well for the pre-owned car market in 2020 since this would lead to a fresh supply of cars in the pre-owned car market owing to the price differential between BS 4 and BS 6 cars. The anticipated increased supply to the pre-owned-car market due to the ongoing liquidation of BS-4 cars will also help bridge the gap between the higher demand and insufficient supply for cars.”
Dr. Rishi Bhatnagar, President, Aeris Communications, said, “India needs a strong domestic manufacturing policy for boosting ease of doing business and incentivize big businesses to invest in Indian start-ups and SME’s. While the government has given due importance in terms of facilitating foreign investments in India, this outlook needs due diligence to promote more local innovations under the ‘Make in India’ campaign. According to research by Accenture, emerging technologies like IoT & AI could add a whopping $957 billion to the Indian economy by changing the nature of work to create better outcomes for businesses and society. While the pace of technology adoption has become faster in India, sectors like in healthcare and agriculture continues to remain one of the most demanding sectors in the country. Though the government has made an investment of Rs 2 Lakh crores towards Agriculture and Healthcare infrastructure. However, I believe that the government will also plan to utilise these funds for automation and mechanisation leveraging technological advancement to bring in the much-desired mass reach of healthcare services while reducing waste and achieving higher productivity in the field of agriculture.”
Mr. Manish Sharma, President and CEO, Panasonic India and South Asia, said, ‘Make in India’ story is evident with the consumer durables industry. The companies have already invested around Rs 7,000 crore* in past few years. The growing middle class and a youth-driven economy is likely to further increase penetration of white goods in local households and have potential to open up 150,000 additional jobs by 2024-25*.
With this backdrop, we believe that the consumer durables and electronics industry has the potential to help our economy move faster towards the USD 5 trillion target. And, our expectation from the Union Budget 2020 is to see reforms that drive consumption and improve consumer demand. The decision to exempt basic custom duty on open cells from 5% to 0% was a welcome move last year and allowed us to pass on the benefits to the consumers by reduction in TV prices. Such initiatives with phased manufacturing programmes are helpful. However, the consumer appliances industry witnessed a flat growth over the last two years, and we urge the government to continue in the trajectory of positive policies to lend support and drive growth in the sector.
To give you a perspective – product categories like air conditioners, refrigerators, washing machines, television (TV) and audio, have gradually moved from luxury items to necessity in urban India- the overall market size is Rs 76,400 crore* and the market is estimated to grow at a CAGR of 11.7 per cent till FY25 on the back of India’s consumption story. Infact refrigerators and TVs are turning into necessity products even in rural India. So reduction in GST for TV and refrigerators will help reduce costs for you and drive further penetration of these products.
Manufacturing
We believe strategic efforts must be put in under the aegis of National Policy on Electronics (NPE) which will not only help boost the Make-in-India vision but also, help India become the hub for electronics manufacturing. To improve India’s exports performance and letting outwards shipments drive growth for the country, it is essential for the government to incentivize local firms and establish an ecosystem for domestic manufacturing while also establishing beneficial trade agreements with consumption economies to push exports. In order to realise the ‘Make in India’ vision, it is essential for the government to reduce basic customs duty on parts used in manufacturing of key components such as Motors and PCB which currently ranges from 7.5%-10%. To give a perspective, reduction in custom duty on these parts, used in manufacture of PCB and motors which are further used for manufacturing Washing Machine, Refrigerator and AC will reduce input cost, allowing Indian manufacturers to be far more competitive.
Coming to imports, we would urge the Government to expedite the process of introducing BIS standards ensuring safety and quality to stop import of low quality products into the market. While standards have been defined for a number of consumer electronic products, it is still pending for crucial ones like air purifier, rice-cooker, induction stove, vacuum cleaners, pressure cooker, water purifiers to name a few.
Export
Under the current Merchandise Exports from India Scheme (MEIS) policy, export incentives are pegged at 2%. We are delighted that the Government has been in discussions with us on the new policy – Remission of Duties or Taxes on Export Products (RoDTEP). We are hoping for better incentives under this to promote the whole ‘Make in India’ concept for exports. After all, ‘Make in India’ is not just ‘Make for India’ but for other markets too.
Taxes
On the tax side, the industry breathed a sigh of relief when corporate tax rates were cut last year. Similarly, we urge the government to simplify the income tax regime through introduction of direct tax code as it will help facilitate compliance. We also recommend abolishment of dividend distribution tax and replaced with TDS at a lower rate. The SEZ benefit which is expiring in Mar ’20 should be extended to propel the ‘Make in India’ narrative. Consumers on the other hand can benefit significantly, if there’s a reduction in personal income tax rate.
Mr. Yogesh Bhatia, Founder, and MD, Detel said, “In order to increase the penetration of LED Television in the country, we urge GOI to introduce entry-level GST Slab for TV i.e. 5%-10%. This move will certainly impact the sales of TVs in India with the affordability aspect and hence making the Television a mass product. Also, recently we have been invited at Government of Haryana’s Pre-Budget Consultation 2020-21, where Honorable Haryana CM, Mr. Manohar Lal Khattar has acknowledge our suggestion for Budget 2020 and have also appreciated Detel’s vision of connecting 40 crore Indians.”
CP Gurnani, Managing Director & Chief Executive Officer, Tech Mahindra, said, “Realizing the dream of India becoming a 5 Trillion Dollar economy by 2025 truly outlines the ‘art of possible’ and depends largely on the choices we make. Digital continues to be the cornerstone of India’s strategy, therefore, sharpening focus on enhancing skills in new age technologies like 5G, improving the quality of education, and nurturing the start-up ecosystem are some key measures that will accelerate India’s IT exports and will help sustain its global competitiveness. As part of the Union Budget 2020, we hope to see focused initiatives by the government that will help India fortify its digital growth momentum and contribute to the global growth story. With 1.3 billion consumers and a large talent base including over 400 million millennials, India can play a key role in scripting a unique success story amidst the global economic slowdown.”
Rajiv Bhalla, Managing Director, Barco India, said, “As the country gears up for the Union Budget on Feb 1, the Indian economy is dealing with several issues including a drop in GDP, liquidity crunch, rising inflation and low tax revenue. While the Centre took multiple measures to boost the slowing economy, some of which have borne fruit, we believe that more steps are needed, especially in promoting growth in rural consumption and labour-intensive segments. Barco remains positive on the India growth opportunity and we look forward to favourable measures from the Centre, predominantly in the technology-enabled sectors and the domains we cater to – medical imaging, smart cities, technological innovation in tourism, among others.”
Mr. Udaya Bhaskar Rao Abburu, CEO & Managing Director, iRAM Technologies, said, “The Government has been paying a lot of attention towards energy efficient processes to help streamline business and markets today, and hence we are hopeful that then honourable Finance Minister will announce awaited reforms and allocation of resources to help the sector achieve more growth at the grassroot level. The Govt Infra projects should provide exception from GST and Customs duty to lower the cost of project. This will help in contractors and Large system integrators to make investments available for multiple projects. Consequently, all PPP projects shall be payment / legal guaranteed by Govt, so that investments can happen in this sector without a hesitation about legal troubles when Govt changes. We would expect lowering the GST on Batteries which are used in Electronic Vehicles. Though GST Counsel has reduced the GST on EVs from 18% to 5%, they did not reduce the GST on batteries fitted at factory from 12%. This needs to be lowered further as batteries form major portion in any EV. This change will make affordable EVs. Apart from that, Income Tax rate slabs have to be reduced to make the cash available for tax paying people, so that they can support the economy growth by spending more and income-tax deduction towards interest paid on a home loan, on a self-occupied property should be doubled. This will help the real estate sector and also to banking sector. In addition to this, deduction under Section 80C of the Income-tax Act, 1961 should be increased to 5 Lakhs, which will then enable employees to save money for their retirement and exemptions for individual tax payers such as Children education, differently abled dependent medical expenses should be increased at par with real expenses. Currently children education expenses are limited to Rs 100 to Rs 500 Per month. This is not sufficient for the present landscape. We expect total education fees/dependent medical expenses to be considered for tax exemption.”
Mr. Puneet and Yatin Jain Directors ODHNI, said, “Over 6 crores MSMEs are sharing around 29 per cent to India’s GDP and they expect the government will introduce favourable policies and allocate substantial funds for the growth of MSMEs. Presently, out of 32,385 applications filed by MSMEs, 2,031 applications have been disposed of by the government under the delayed payment monitoring system called MSME Samadhaan. Apart from the lack of access to capital, infrastructure, skilled labour and power supply issues are some of the problems that plague MSMEs in India. Therefore, Indian entrepreneur hopes that the Union Budget 2020 will provide some long-term benefits to the MSME sector with better access to credit and lenient taxation policies.”
Mr. Rachit Chawla, Founder & CEO, Finway, said, “Better liquidity and sector-specific incentives to MSMEs should be the top priorities of the Finance Minister in the Union Budget 2020-21. 6.5 per cent GDP growth in the coming fiscal is not a formidable task once liquidity resurges and conditions of MSMEs get improved. There is a strong connection between the health of NBFCs and health of MSMEs. The financial goals of the latter depend a lot on the financial stability of the former, and their collective growth is an index to economic growth. IL&FS and DHFL crises bring drastic repercussions on India’s financial markets and MSMEs, the back-bone of Indian Economy are still bearing the brunt of reduced liquidity in the market. A large number of MSMEs are struggling with financial challenges, and without special subsidies, their sustenance is difficult. It is very much shocking that out of 6.33 crore MSMEs in India, only 0.05 lakh are medium enterprises, and they usually deprive of Public Procurement Policy which mandates 25 per cent procurement from MSEs. They are also barred from availing delayed payment reliefs through facilitation councils. So, to revamp the economy, the Finance Minister should take adequate measures which may empower the NBFCs and consequently ensure better prospects for the MSMEs.”
Mr. Pradeep David, General Manager, South Asia, Universal Robots said, “The current economic slump has to be tackled in smarter ways by introducing landmark policies and stronger governance which will be beneficial in the longer run. The upcoming Union Budget has to incorporate these factors to bring back the required liquidity and put the economy on track. The automation sector has lately become a significant contributor to India’s mission of digital empowerment, and the current government is fast-pacing the development to enable SMEs & MSMEs to further compete on a global level. Banking on high-end technology and automation for the manufacturing sector will prove to be a game-changer, also helping in stabilising and flourishing the Indian economy. According to the data of the International Federation of Robotics (IFR), on average, 99 robots are deployed per every 10,000 employees. India lags with the number being just 4 robots per 10,000 workers-reflecting the dire need to make technology and robotics accessible to all. Thus, to fill that void, relaxation in taxes for robotics could neutralise the slowdown and further increase the rate of manufacturing in the country, inviting more FDIs and trades. The measure would encourage small and medium-sized businesses to accelerate their profits, quality, and productivity, as well as contribute to the economic growth of the country.”
Shibu Paul, VP – International Sales at Array Networks, said, “With more and more security breaches happening every day, we expect the government to have a greater focus on creating more funds to battle the growing concern of cybersecurity in India. Government needs to focus on creating strong domestic manufacturing policy favoring 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. As far as Data security is concerned, our government needs to work on policies and reforms to increase qualified cybersecurity professionals, waive off taxation for homegrown cybersecurity technologies as well as set up local compliance for Data Security across all sectors. Smart city initiative with a strong push towards rural e-infrastructure with added emphasis on security compliance and data protection would be beneficial for creating a positive impact on organizations. The government should provide a strong thrust for core R&D investments as part of its ‘Make in India’ initiative, enabling more indigenous innovation and increased investments in future technologies to shape the IT infrastructure and increase adoption of technology to encourage digitization.”
Arvind Didwania, Founder at ANT MY ERP, said, “We believe that allowing SOPS for MSME sector that involves less and easy steps to access credit will surely boost the Indian MSME sector. We expect the budget to highlight startup-friendly policies and tax reformations to boost the economy. We need more policies favoring local businesses. The government should focus more on implementing a refined education policy with added focus on skill development for crucial next-generation technologies such as AI, big data analytics and robotics. The budget should focus more on kick-starting domestic and foreign investment to make India a more desirable FDI destination for future investments. We need proper policy and framework from a holistic perspective covering tax reforms and skill development to better meet the skill gap. For this to happen we need more policies that make our education system further liberalized as well as globalized to accommodate new imitative towards vocational training, thereby addressing crucial employability issues. Education loans should be made easily available to all at lower interest rates.”
Ritesh Keshavrao Deokar, Country Manager at Milestone Systems India, said, The India Government’s “Digital India” initiative has kicked-off well as expected. Adoption of technologies such as Cloud, IoT, Blockchain, Machine Learning etc., has seen significant benefits across both the private and government sectors and especially so in areas of Retail, Transportation and Smart cities. With the government’s Smart Cities initiative, we foresee that every individual will be influenced digitally in some way or another and will need to be prepared for a digital transformation. While cybersecurity remains at the epicentre of all digital deployments, we at Milestone Systems, strongly believe that personal security as well as personal data protection is of equal importance and technology companies have to take responsibility for the data that we have. Our expectation from the union budget is that the Government should emphasize more on the personal security of individual citizens and their data. We hope that more budget can be allocated in the form of subsidies and tax exemptions to the companies, and or manufacturers dealing with security products.”
Sriram S, Co-Founder at iValue InfoSolutions, said, “We expect new policies and frameworks promoting homegrown IT innovations to be a vital part of budget. There is a need for continued reforms for inclusive growth in areas of home, education, health and employment. As most banks spend most of the time nowadays managing NPA issues, we expect the Prime Minister and the Finance Minister to restart bank lending on priority. IT will continue to drive success for all types of business with innovations and this in-turn will determine overall success of other industries including government’s digital drive. Hence IT industry, as the enabler for success of all other government and private business, should be accorded special status. Startup, SME, and SMB need to be efficiently addressed so that they grow and provide employment in a sustained way. Government and RBI need to cut interest rate and ensure credit at affordable rates for business to build on the growth momentum. Also, we expect the Finance Minister to expedite TDS refunds which are stuck for 3 to 5 years helping business with cash flow in the absence of bank funding. As a system TDS refunds should be closed within 2 years with all data now available online in real-time. Government should consider the extension of Tax sops for companies which are increasing employment, till economy revives.”
Rajendra Chitale, CFO at Crayon Software Experts India, said, “Last year’s budget took serious considerations for jurisdiction-free and faceless assessment and scrutiny to simplify compliance, reduce manual work and speed up the tax processing. The budget from an indirect tax perspective was mostly aligned to digital initiatives of the government and promoting ease of business in India. The recent slash in corporate tax was a major reform for the industry. However, for sustained growth in business, more people must buy products/solutions, so we are expecting reliefs in personal income tax rates this year. Also, the cash flow strains of businesses can be lowered by pushing the TDS payment date (which is currently on the 7th of next month) to 27th of next month – move 20 days. This will give some breathing space to companies to recover money from their customers and make payment of TDS. While the overall intention is in the right direction, government through this union budget should take new measures to constructively boost the economy.”
Priya Mahajan Head of ASPAC Public Policy & Regulatory Counsel, Verizon, said, “There is great anticipation around the presentation of Union Budget 2020. As Finance Minister Nirmala Sitharaman is set to present the Union budget on February 1, we’re optimistic about the upcoming announcement. We are expecting that the government will initiate some remarkable steps to foster the growth of the Information and Communications Technology industry. A key area where ICT industry is expecting reform is ensuring predictability, consistency and rationalization of levies and taxes including a reduction in the License fee to promote innovation and investments in the sector to achieve PM Modi’s Digital India vision. We hope that the government is considering rationalization of levies and taxes for ICT sector including a reduction of the license fee, which is currently at 8%.”
Satish Kumar V, CEO at EverestIMS, said, “Amidst the economy slowdown in 2019, the Union Budget 2020 should revive the specific growth elements which will boost the economy. FM needs to focus on offering special budgetary concessions to manufacturing, IT, transport, and farming industries. We suggest our government for an extension and relaxation in GST payment cycles for start-ups. Time period of tax rebate approvals for start-ups should be minimized. Government should allocate more funds for programs which help Indian start-ups grow bigger and gain presence in international markets too.”
Tarun Bhutani, Managing Director at AMANI, said, “IT Industry leaders are excited about the Union Budget 2020. We are expecting that the upcoming budget will have measures to spur the ‘Make in India’, ‘Digital India’ and ‘Smart Cities’ initiatives. The industries have flourished a lot, but there has been a full stop for grey channel market or grey imports. With initiatives like ‘Digital India’ ‘Make In India’, the government is committed to the growth of the manufacturing sector. This evolving aspect of the IT industry brings in immense business opportunities, but requires special attention for its optimal utilization. So the government should roll out new schemes and incentives to encourage the electronics manufacturers to take these initiatives to the next level. In September 2019, the current government took a bold decision of lowering Goods and Services Tax (GST) rates on items like outdoor catering, hotel accommodation, diamond job work, electric vehicle, and housing, but still the government is continuously facing tough questions over the current economic situation of the country. We expect the budget to address the dip in GDP growth rates and take constructive steps to boost India’s economy. We hope that 2020 will be a better year for the markets as compared to 2019.”
Mr. Amit Gupta, CEO & Co founder at Rapyder , said, “We are optimistic about the country’s economic growth as he foresees better days compared to the current slow down. He said, “India, no doubt continues to remain the software development hub for the world. More hurdles in the path of MSME growth would be removed as I foresee a significant relaxation in the lending aspects for MSMEs to survive the current economic changes. Government could relax some of the compliances, which were mandatory earlier. It will also address the issue of delayed payments to MSMEs. The ecosystem of MSME lending is set to see significant transformation. Thanks to better access to authentic data from various credible sources that provide a better understanding of the nature of the specific business, its growth potential and profits. Government will become even more citizen friendly, by providing a boost in consumer confidence with lowering personal income tax in the coming budget. This is inturn is expected to fuel demand of goods and services, leading to consumer-spending more for buying and consumption.”
Mr Shailesh Shah, Co founder at Strata Consulting , said, ” India needs to garner over $10 trillion to get its urban infrastructure going in the correct direction. We need relevant, innovative and bold policy interventions to help make this happen. In the short term, we need to foster exports and domestic consumption while we start thinking beyond taxes the way we currently are to balance budgets. The Insolvency and Bankruptcy Code is a step in the right direction but is in its infancy in comparison to the depth and width the nation needs to resolve thousands of cases and trillions of rupees. As a nation, we need to commit to monetary policy that helps align inflation and interest rates to massive growth.”
Dr. Vaibhav Kapoor, MBBS, MS & Co founder at Pristyn Care, said, “As a startup trying to increase the accessibility and affordability of minimally invasive surgical technologies beyond the confines of corporate hospitals in Tier-1 cities to Tier-2 and Tier-3 cities, we could benefit a lot from partnerships with the government. Existing infrastructure of government hospitals, coupled with experienced surgeons and latest technology from the private sector can go to great lengths in ensuring that the vast majority of the population, that was previously bereft of the benefits of quality secondary care, can now be guided on the path to health. As the largest and sole provider of Laser General Surgery treatments in India through Ayushman Bharat, Pristyn Care has already taken steps in this regard to extend the benefit of Government schemes through a hassle free patient experience, but now the Government must also include provisions for such partnerships in the upcoming Union Budget.”
K G Prabhu Group CFO, Smartlink Holdings Ltd., said, “As India is gradually moving forward on the path of digitization, for Union Budget 2020, government should focus on giving a strong push to the initiatives that will drive the process of digital adoption across various sectors. We are expecting that the upcoming budget will have measures to encourage domestic manufacturing by introducing polices that will allow global companies to collaborate with Indian companies and manufacture in India.”
