Pre-Budget 2021 Expectations of Different Industry Experts
Mr. Manish Sharma, President & CEO, Panasonic India, and South Asia
India’s lockdown in Q1 of FY21 did have a significant impact on the GDP which contracted an unprecedented 23.9 percent. However, over the last few months, macroeconomic indicators are showing signs of recovery. RBI also predicts that the economic shrinkage is over and GDP will grow in the next few quarters. The government continues to show commitment towards introducing long-due reforms leading to ‘Ease of Doing Business,’ making India ‘AtmaNirbhar’ by promoting ‘Make in India’ initiatives aggressively.
With this backdrop, we strongly believe that the consumer durables and electronics industry has the potential to help our economy recover faster. And, our expectation from the Union Budget 2020 is to see reforms that drive consumption and improve consumer demand.
During the upcoming budget session, I would urge the government should consider rationalization of tax rates on certain consumer durable electronics such as Air Conditioners (ACs) and Television (TVs). These are no longer ‘luxury’ items and have become common and essential household. The energy efficiency of air-conditioners has steadily increased and they now offer added features such as air-purification which is important in urban areas. Lowering the tax slab to 18% from 28% would help offset the price pressure and spur demand for both Air Conditioner (Split and Window) and Television (above 68 cm), thereby improving affordability among customers, attracting investments in component manufacturing, and help in penetrating deeper into the market, especially for the AC category.
For manufacturers, reforms like the reduction of corporate tax and introduction of the Production Linked Incentive (PLI) scheme were welcomed and it displays the government’s intent to promote healthy backward integration and provide impetus to domestic manufacturing while elevating India’s position as a global manufacturing champion. To ease supply chain challenges, I would urge the Govt to consider the ‘One Nation, One Permit, One Tax’ system for a seamless and efficient road transport experience.
The continuous tightening of the energy norms, upping the R&D and material cost, put upward pressure on prices for energy-efficient products, further dampening the consumer sentiments. Lowering the GST tax slabs for eco-friendly and energy-efficient products like Air Conditioners, Refrigerators, Washing Machines, etc. will drive demand and increase the adoption of sustainable appliances by consumers. The upcoming budget should additionally offer incentives for manufacturers to produce these energy-efficient products which will be in line with the government’s sustainability agenda.
From a consumer perspective, increasing the deduction under Section 80C to 3 lakhs from current levels of Rs 1.5 lakhs will help reduce the tax burden giving more spending power to people.
We are highly optimistic about the upcoming budget and expect it to usher in a balanced combination of reforms and regulations, which will, in turn, boost the ACE industry, contributing positively to India’s growth story.
Mr Sunil Sharma, Managing Director- Sales, India & SAARC, Sophos
“The pandemic and ensuing lockdown in 2020, saw a huge proportion of organizations pulling out all the stops to ensure their employees can work both remotely and seamlessly. However, the sudden shift to work from home also threw open several opportunities for cybercriminals to take advantage of. As businesses return to offices, it will be a different challenge to regain cyber hygiene due to tampered settings and multiple uses of office devices.
This year’s Union Budget will be one that organizations across industry sectors are looking forward to. We believe it should take into account necessary provisions for companies to secure their operations from cybercriminals and ensure complete compliance. This can be done through incentives and tax subsidies.
As per our recent survey, with 100% Indian businesses being concerned about their current level of cloud security, there is a need for initiatives to develop cybersecurity skill sets that also take care of security of cloud environment which is the backbone of accelerated digital transformation that India is witnessing due to the pandemic.”
Mr Javed Tapia, Managing Director, Clover Infotech
“I believe it would immensely help if the budget can address the MSMEs ( a sector that contributes 30% to the GDP and plays a vital role in 40% of our exports) with incentives to adopt the latest digital technologies and augment growth and operational efficiency. We are at the onset of a decade of accelerated digital transformation across industries and we are well-poised to address this global demand by leveraging the power of young India. To facilitate this, the government must consider initiatives in areas such as broadband internet penetration and building a secure technology infrastructure to ensure democratic access to digital skills and ubiquitous learning opportunities for our largely millennial population.”
Mr Lakshmi Mittra, VP and Head, Clover Academy
“As enterprises move on with their business continuity plans for 2021 after a year full of tech disruptions, the aim should now be to adapt fully to the new normal, and upskilling and reskilling are an integral part of this process. Organizations now need to focus on holistic development of employees and not just on technical skillset enhancement. Since, Artificial Intelligence (AI), Machine Learning (ML) and augmentation are increasingly getting integrated in the workplace, digital literacy has become an imperative for employees to function seamlessly in the post COVID – 19 era. Training and reskilling at organizational level is not going to help the workforce of future. The government need to take this opportunity to re-look at university curricula and skilling programmes and update it with relevant digital-age skills. It must create the technology infrastructure and internet penetration to create a democratized opportunity to learn digital skills. Furthermore, it must come up with learning and development initiatives at various levels – national, state, districts and towns to train the fresh talent in these new-age skillsets that have become vital for survival in the new normal.”
Mr Sonit Jain, CEO of GajShield Infotech
“With a strong push for Make in India, it was never been more exciting ever for companies making products in India for the World. This year, we would like the government to include tax exemption for companies making products in India and also for employees working in such companies. With data security being as important as revenue growth for companies, a policy framework to enhance the digital culture of India, by incentivizing companies to build strong data security infrastructure will fuel further growth of India. Covid has shown how Work From Home is no longer a buzz word, but a necessity, we look forward that this budget accelerates spending in rural digital infrastructure, thus making work from anywhere a true possibility. This will not only ensure the development of our rural economy but also help in decongesting cities. All of this would require a workforce well equipped with the knowledge of latest technology, spending on education to boost research in universities will help build a nation with knowledgeable and intelligent future generation.”
Mr Dhruvil Sanghvi, Chief Executive Officer, LogiNext
“For India, this budget will probably be the most important one in decades. The world has changed and from our perspective, the pandemic has put all focus on the importance of Logistics and Technology. Global and national supply chain is of paramount criticality in 2021 and beyond. This sector is the backbone of modern civilization and the Indian government should look at ways to simplify global trade. We build from India for the world and increasingly, more technology startups would be doing this. Currently, there is a very high degree of compliance and paperwork which makes it difficult for technology companies to serve the global audience and this forces companies to shift base outside the country. Urgent steps in this direction will help high growth companies keep base in India, generate employment across the spectrum and help revive the national economy after the shock of the pandemic.”
Mr Rajesh Uttamchandani, Director at Syska Group
“With the ongoing pandemic and a challenging 2020 for businesses across industry sectors, everyone is looking forward to the Union Budget 2021 that will be presented soon. We believe the government can offer support to the manufacturing industry through tax reforms and by supporting the expansion of distribution and supply chains. Further, the Government could also look at mitigating the legal procedures involved in establishing manufacturing facilities in the country, under its ‘Atmanirbhar Bharat’ initiative. In the last few years, the government led by Modi Ji has brought about a slew of policies and reforms to ensure economic prosperity of the country. Last year, the honorable Prime Minister Shri Modi Ji introduced the production incentive scheme (PLI) scheme with an aim to offer opportunities for home-grown and international electronic businesses to improve their manufacturing competences in India. We are confident that the Modi Ji’s Government will consider this sentiment and enable India based organizations to avail of benefits that will help them establish a strong foothold from a manufacturing perspective. Additionally, there also needs to be focus on undertaking measures to promote production using emerging technologies and automation, which will enhance both production quantity and quality while simultaneously emphasizing on the importance of shifting to energy-efficient solutions in line with the Government’s National Smart Cities Mission.”
Mr. Kishan Jain, Director, Goldmedal Electricals
“In 2020, the manufacturing sector faced several challenges due to the pandemic and ensuing lockdown. To help overcome the obstacles, Prime Minister Narendra Modi gave it a fresh impetus by making it the centre of the Government’s Atmanirbhar Bharat initiative. The government introduced the production linked incentive (PLI) Scheme in November 2020 to help open up opportunities for domestic and global electronic businesses to increase their manufacturing capabilities. Even though such steps have been taken to counter the obstacles faced in 2020, there is a requirement in terms of providing further incentives to industry especially when it comes to manufacturing companies, in the forthcoming Union Budget 2021. The Government can focus on attracting foreign investment, adopting cutting-edge technology, and enhance exports in order to make India a global manufacturing hub, through its ‘Atmanirbhar Bharat’ and ‘Make in India; initiatives. This in turn will boost employment opportunities for citizens which is the need of the hour in a post-pandemic world. We look forward to policies that will leave more money in the hands of consumers as it will help boost demand in the economy.”
Mr. Niraj Hutheesing, Founder and Managing Director, Cygnet Infotech
“The ’21 Union Budget provides two big opportunities. Firstly, boost economic growth by scaling investment in digitization. Secondly, drive technology enabled rationalization of the country’s tax infrastructure. The former will bring employment and self-employment opportunities for the youth through digital initiatives of Start-ups and MSMEs. The latter will enable businesses to thrive in a simplified indirect- tax compliance regime powered by new technologies like hyper automation. This will also ensure that the funds collected through GST are used efficiently and help in generating economic growth in this financial year. It is important to have a set framework and policy for GST compliance for all businesses in India, let us see how the government addresses this.”
Pre budget quote by UPS Manufacturer Association
Umda, UPS association in Southern India; UPS manufacturer association north member: Mr. RK Bansal, Mr. Sumath Kumar, UMDA member Rajesh Kumar said, “With the present government focus on manufacturing with special Atma Nirbhar Bharat & make in India campaign, but still the sector needs more incentives to grow. As per McKinsey report Modi government’s initiatives to boost manufacturing in India, the sectoral growth fell to 7.4 percent per year over the last six years, compared to 9.5 percent per year growth during FY2006 and FY2012. Also, India’s manufacturing sector share of employment increased by just one percentage point. More favorable incentives and schemes are needed for manufacturing to grow in India. Therefore, we request the government to review the policy for the manufacturing sector. The government should encourage domestic manufacturers & promote innovation in the sector so that newer technologies are introduced in the sector.”
“With regard to GST, We request the government to declare UPS with the battery as a composite supply, and UPS GST of 18% should apply to all components. Further, to remove confusion, GST on all types of batteries being used in capital investments, in offices, homes, etc. should not be treated as luxury items. It should have a uniform rate of 18% GST only”, they also added.
Mr. Madhusudan Ekambaram, Co-Founder & CEO, Kredit Bee and Co-Founder, FACE (Fintech Association for Consumer Empowerment).
The anticipation around the Union Budget 2021 is tremendous, especially for the fintech industry, considering the seam it has picked up in 2020. Given the surging prominence of digital initiatives in multiple facets, further attention needs to be given in the budget, towards enhancing its application and effectiveness. The multi-pronged implications of the same could be tax and policy reforms for the start-ups and tech centric firms, a prominent support towards strengthening the digital infrastructure and a profound support towards local innovation in the Make in India initiative.
Further, a clear and detailed guideline on global listings is the need of the hour as more fintech players are ready to list their companies on foreign stock exchanges while awaiting clarity on legal requirements, taxes, and other details. Foreign listings can help fintech players get greater access to capital and enjoy more exposure to a larger investor base. Guidelines clarifying where the companies can get listed and taxations are one of the sector’s key expectations from the budget.
While the government’s effort towards providing liquidity support to financial institutions is appreciable, its efficacy can be improved by covering alternative lenders (like digital lenders). The same can be ensured with an institutional framework providing liquidity to the NBFC industry, holistically. While the efforts have already been made towards instituting a regulatory framework for the digital lenders, a definite stance is awaited.
Mr. Dipesh Kaura, General Manager, Kaspersky (South Asia)
“The financial budget for 2021 will be very crucial for various sectors including Tech/ IT, especially after the year 2020- where economic growth of our country almost came to a standstill, due to the pandemic and its after effects. However, it was the use of digital technology that helped companies run their businesses remotely and steadily throughout the year.
It is a fact that the emerging trend of digital transformation created various opportunities for us, however, it also led us to a juncture where newer opportunities met newer threats. The use of digital technology has not only transformed the way we operate today, but has also opened gates for nefarious cybercriminals that are waiting to exploit our vulnerabilities. From growing number of cyberattacks on enterprises, critical infrastructures, consumers, to increased cyber warfare, we have witnessed a drastic change in India’s threat landscape in the past year. To keep the digital transformation ongoing, it is imperative to embed cybersecurity at the most initial stage of digitization. While Digital India is our future, the right investment made in cybersecurity today can help us secure this future, and hence the funds should be allocated accordingly. Increase in cybersecurity awareness and maturity amongst the growing internet users in India is equally important in order to protect them from the potential threats and encourage them to explore opportunities digitally.
It is true that the Finance Minister has to look at various aspects while announcing the budget, but with right investments made in the technology sector, the country is sure to soar to new heights.”
Pre Budget Quotes from Industry Experts
Mr. Vinay Jain, Founder & CEO, Grafdoer (Sanitaryware manufacturer) “The Ministry of Finance will be presenting the budget on 1st February for the assessment year 2021-2022, and everyone including corporates, individuals, taxpayers and professionals have different expectations from the upcoming budget. Considering the slowdown in the economy and growth, MSMEs which form part of the backbone of the Indian value chain are expecting a big relief and reforms in the upcoming budget. We expect that the upcoming budget will take stringent actions to empower the MSME sector to revive the economy from the current slowdown. Apart from GST rationalization, we expect extension of credit facilities from the upcoming budget, since the Government should focus on infusing liquidity into the markets and promoting ‘Make in India’.”
Quote by Mr. Kapil Bhatia, CEO, UniMask (Mask manufacturer) “MSME has always been the backbone of the Indian Economy with around 29 percent share to India’s GDP. We expect the government to re-establish favorable policies and allocate substantial funds for the growth of MSMEs. 2020 was a blessing in disguise for MSME industry where the initial most of 2020 was quite brutal but the later half came to the rescue especially with the #boycottchinesegoods campaign and push towards Make-In-India. The MSME sector is hoping to get rid of challenges like lack of access to capital, infrastructure, skilled labor, and power supply issues that plague MSMEs in India. Therefore, Indian entrepreneurs hope that the Union Budget 2021 will provide some long-term benefits to the sector with better access to credit and lenient taxation policies.”
Consumer Technology & Electronics
Mr. Lalit Arora, Co-founder and CEO, VingaJoy “The consumer tech industry has great expectations from the Union Budget 2021-22. We hope that the upcoming budget has provisions that can strengthen progressive initiatives such as ‘Make in India’, ‘Digital India’, and the ‘Smart Cities Mission’. In the upcoming budget, we are hopeful that the government would continue the good work it began carrying out in its first term with regards to GST, Make in India, along with a host of initiatives it has undertaken in the consumer tech / FMCG sector. There has been an abolition of Chinese applications in India; this has led to considerable slowdown in import of Chinese products, so our industry is expecting improved funding and credit facility from the upcoming budget. Additionally, we are hopeful that the Government will continue to promote manufacturing in India through its ‘Make in India’ initiative as this would not only provide a boost to Indian companies but also aid in creating more employment opportunities.”
Mr. Ashwani Rawat & Mr. Amarsh Chaturvedi, Co-Founder & Director, Transerve “Innovation is an important driver in India’s business and economic growth and this was proven true during the pandemic crisis. India as a nation has a great potential in the R&D space, especially owing to the large talent pool we have. Being a part of NASSCOM’s Deep-Tech Club we saw 10% rises in tech startups in 2020 alone with the addition of over 12 new unicorns. According to NASSCOM, Indian deep tech industry led by AI is capable of adding USD 957 billion to the country’s GDP by 2035. We expect the Union Budget to increase its expenditure in the R&D sector especially in the Location Intelligence industry to bore the benefits that the technology offers. We expect liberalizing the policies and framework to support the startup ecosystem.”
Mr. Sangeet Kumar, CEO & Co- Founder, Addverb “From the Union Budget 2021, we expect that the Government will ease the legal processes and regulations involved in setting up manufacturing facilities in India under its ‘Make in India’ initiative. As the future of manufacturing is driven with robotics and other automation technologies, I feel necessary steps need to be taken to encourage ingenious technology production as well as consumption in India. Measures such as extension of PLI schemes for the Indian Industrial Robotics Manufacturers from suppliers’ front, and from buyers’ front, mandating automation adoption for PSU enterprises to enhance their performance indices. Overall incentivising adoption of industry 4.0 technologies adoption from across the sectors will enhance the manufacturing quantity as well as quality.
Increasing minimum wages is the need of the hour as during the Covid pandemic most of the labour left for their hometowns and to bring them back while providing them with a meaningful life, their wages should rise. According to a recent study, the total number of jobs related to developing and deploying new technologies, i.e. Automation, AI and robotics-related applications, may grow to 20 to 50 million globally by 2030 and more than 375 million workers globally will have to master fresh skills as their current jobs evolve alongside the rise of automation, robotics, AI, and the capable machines thereby enabled. Thus, the Government should come up with more upskilling programs to make the workforce ready to work with robots & other automation through industry partnerships.
Mr. Aloke Paskar, President & CEO, JK Technosoft “As the economy gets back on track to recovery, we expect the upcoming Union Budget to propagate export-led growth and continue with export benefits. This will help add to India’s foreign exchange reserves. As part of the Union Budget 2021, we hope that the government comes out with possible solutions like bringing down the tariffs and putting our exchange rates and trade facilitation properly. Our Government has been extensively promoting ‘Make in India’, which is great to boost the domestic industry through domestic consumption, but we should be selling the “Make in India” good aggressively and to the external world, as strong foreign exchange reserves will give India the power to grow exponentially”
Quote by Mr. Mandeep Arora, Managing Director, UBON “The year 2020 was a year of challenges for nearly every sector, so, we are eagerly waiting for Budget 2021. Every sector is expecting the government to focus on overall economic growth and taking measures to continue positioning India as the business epicenter of the world. We expect new policies promoting R&D innovations by pushing relevant initiatives, making innovative and bold policy interventions to propel the process of Make-in-India across sectors. There’s no denying that Digital Innovation is an important building block for India’s future growth. Thus, nurturing new-age tech, improving the quality of talent, and enabling MSME must be on the agenda for the Government.”
Quote by Prof (Dr.) Sanjiv Marwah, Director, JK Business School “We anticipate that Union Budget 2021 will bring in revolutionary changes to the education sector. The New Education Policy (NEP-2020) brought aggressive changes in the Higher Education System of our country – provided flexibility in the learning curve, emphasized on conceptual understanding, and blended learning. Similarly, the upcoming FY budget must promote the perfect amalgamation of digital and traditional education and strive to encourage the adoption of emerging technologies such as Augmented Reality, Virtual Reality, Internet of Things as well as promoting Research & Development. Along with it, another key aspect that we are looking forward to in the Union Budget 2021 is financial support that can be provided to private sector institutions, including low-cost and zero-cost loans, which is done in many countries. We request the Govt. to consider ‘National Education Bank’ as a concept, just like the ‘National Housing Bank,’ such that education loans too can be provided at the lowest possible interest rate.”
Nikhil Rungta, Country Manager, India, Verizon Media
“I look forward to a progressive budget with structural reforms that drive consumption and growth. In particular, I see an opportunity for a ‘WIN’ formula focused on ‘Women, Infrastructure and Norms.’ Job market trends show a disproportionate increase in women’s unemployment during the pandemic. This budget must empower more women to take their place in the workforce, to drive inclusive economic growth. Secondly, we are now seeing even smaller, traditional businesses think digital — the time is ripe to expedite investments in infrastructure, specifically digital infrastructure to increase digital inclusion for Indians across our towns and villages. Lastly, we would like the government to relax the norms around ease of doing business to encourage enterprises and startups to create a truly ‘Aatmanirbhar Bharat.’”
Telecom Industry’s recommendations for Union Budget 2021-22
Lt. Gen. Dr. SP Kochhar, DG, COAI
Recommendations for the Budget 2021-22
1. Regulatory Levies:
Currently, the total License Fee (LF) having a rate of 8% of AGR is uniformly applicable to all licensees, of which 5% goes to the USOF and the remaining 3% is levied as License Fee (LF).
The industry believes that the current unutilized corpus is sufficient to meet the objectives of the USOF.
International benchmarks show that India’s LF percent is way above the world average. Given the above, the industry recommends that the License Fee is brought down to 1% from 3% at the earliest to cover admin costs by the DoT/Government. USOF need to be abolished.
In addition to this, the industry demands that the effective rate of the Spectrum Usage Charge (SUC) be reduced by 3% for all the TSPs.
2. Goods and Services Tax (GST)
a. Request for Removal of GST on License Fees, Spectrum Usage Charges and Payment of Spectrum acquired in the auction.
Levy of GST on License Fees, Spectrum Acquisition Charges and Spectrum Usage Charge is compounding the operational challenges. Thus, the industry recommends that in line with the international practice, payment of regulatory levies made by telecom operators should be exempted from tax under GST.
Alternatively, at present, GST is being paid by the operators under the Reverse Charge Mechanism (RCM). Input Tax Credit (ITC) arising out of this is creating a huge imbalance with outward liabilities. For industry, it involves the heavy cost of funds for compliance, whereas, for the government, this is revenue neutral.
In the above context, GST would not be applicable on the LF, SUC, and Spectrum Acquisition Fee would extend a huge relief to the entire industry. Alternatively, permit payment of RCM on Government Services from Input Tax Credit (ITC) balance.
b. Refund of unutilized ITC of Rs 35,000/- Crs.
The current market dynamics have led to the accumulation of massive ITC. The credit would further increase with upcoming significant capital expenditure to further enhance customer experience and achieve the vision of a digital India.
The industry recommends suitable amendments in the GST law may be made to allow a refund of unutilized ITC. Alternatively, an unutilized amount may be applied to other government liabilities of operators.
3. Service Tax Exemption and Clarification
a. Service tax on “Right of Way (ROW)”
The DGGSTI across India has been pursuing for recovery of service tax on ROW service from central/ state governments and the development authorities in respect of the past contracts. To address this issue, in November 2018, the government allowed an exemption for Service Tax on ROW services by ‘local authorities. However, the industry recommends that the scope of the exemption be expanded to include ‘appropriate authority’ as defined in ROW rules in addition to the exemption granted to the ‘local authority’. In short, the Scope of Local authorities either need to be widened or the phrase needs to be amended to include State or Central Government including but not limited to the Departments of State and Central Governments.
b. Service tax on AGR
Prior to the SC decision on AGR dues, the telecom operators were under a bona fide belief that only core revenues should form part of the AGR. Accordingly, the entire industry believed that LF and SUC were not required to be paid on non-core revenues. The said belief and practice were also in consonance with the order of the TDSAT passed in 2015.
Telecom Operators as a matter of general practice were making payment of Service tax on LF and SUC paid to the DoT and were availing full credit of the same. Levy of service tax today on the incremental AGR would be an unjust cost for the sector.
The Industry recommends for relief by way of exemption from payment of Service Tax for the period of April 2016 to June 2017. Similar exemptions from payment of Service tax on various services have been issued in November 2018 (Service tax on ‘right of way’ charges for the period April 2012 to June 2017). Alternatively, the Government may prescribe a time-bound simple process to claim cash refund of the Service tax to be paid under the RCM (Reverse Charge Mechanism).
4. Custom Duty on telecom equipment.
a. Exempt Custom Duty on certain telecom equipment which presently increases the cost of rolling out critical infrastructure.
Around 85% of Telecom Equipment’s are imported under Chapter Head 8517.
BCD of 20% is levied on import of most of Telecom equipment like Antennas, Optical Transport Equipment’s/ Networks, IP Radios, MIMO/LTE products, Switches, VoIPs etc.
Higher duty of Customs on the telecom equipment disrupting the cost-effectiveness of the Telco’s
This is disrupting the cost-effectiveness of the telcos and impacting the financials of the sector negatively.
An exemption from the levy of BCD should be granted on the Telecom equipment under CTH 8517 which has been increased w.e.f. October 11, 2018.
Also, till the time good quality equipment is available in India at affordable price, customs duties for the 4G/5G related network products along with other related products should be brought down to NIL.