Budget 2022: A thumbs-up for Digital India
By Srinath Srinivasan
Budget 2022’s announcements on manufacturing, sustainability, electronics, digital currency, innovation and startups with technology as the cornerstone are expected to give a fillip to the tech industry. “The government’s focus on productivity and climate action will foster technology adoption and help India achieve its sustainability goals along with economic growth. Furthermore, significant increase in capital expenditure and push towards domestic manufacturing will spur economic growth, bolster the Make-in-India commitment and, importantly, empower the mass mid-segment,” says Ashish Gaikwad, president, Honeywell India & MD, Honeywell Automation India.
The suggested framework around Gati Shakti and inclusive development will lay a good foundation for long-term infrastructure with an eye on short-term economic and job growth, says Mahesh Palashikar, president, GE South Asia. “We welcome the encouragement to private industry for taking up the design and development of military platforms and equipment in collaboration with DRDO. We are committed to bringing those technologies in the areas of sustainable aviation, green hydrogen, emission controls and decarbonization to India to support the country’s goals,” he says.
Announcements made for the semiconductor industry and 5G growth have paved the way for more actionable developments in the sector. “The call-out on semiconductors as a sunrise sector and the 5G roadmap post the success of PLI schemes launched last year will provide impetus to the segment. Furthermore, data centric growth and democratisation of digital banking augur well for our industry and will further bolster India’s aspirations, as the fastest developing digital economy in the world,” said Anand Ramamoorthy, managing director, Micron Technology India.
Budget 2022 said startups incorporated between April 1, 2016 to March 31, 2023 can qualify as eligible startups for income tax benefits. Overall LTCG on unlisted securities is now 23.92%, as opposed to 28.5% previously, which willl apply to founders, ESOP holders and domestic investors. “This is a 16% reduction in the tax rate. This is a Digital India budget. ” says Siddharth Pai, founding partner, 3one4 Capital. An expert committee to look into compliance & tax framework and thematic funds with government capital has been welcomed by investors. “Thematic funds with 20% government capital will increase capital availability in sunrise sectors of climate action and deep tech,” says Pai. According to him, retooling of Inter Ministerial Board framework to avail income tax benefits as a startup, clarity on overseas direct listing and parity of taxation between listed and unlisted securities were some areas that were missed in the Budget announced.
The Budget announcements also had interesting bits about Web 3.0, with emphasis on gaming, virtual worlds, digital currencies and digital assets. “The proposed Animation, Visual Effects, Gaming and Comic task force will play an instrumental role in creating viable employment opportunities,” says Ankit Prasad, founder & CEO, Bobble.AI.
Taxing digital assets and crypto is viewed as legitimising futures and other derivatives asset classes, which will lead to web 3.0 companies proliferating in India as opposed to flipping overseas, says Pai. “High income tax on digital assets may discourage some investors as prima facie it appears severe. However, taxation signals at the Indian government and the ecosystem accepting digital assets,” says Pratik Gauri, Co-founder & CEO, 5ire. “I am thrilled at the introduction of the digital rupee, using blockchain and other technologies by the Reserve Bank of India starting 2022-23. Digital currency will open up great opportunities for innovation, as well as invite foreign investment in venture capital.”
With India @100 in mind, this Budget gives the much-needed thrust on financial inclusion by expanding the access of digital banking in the remote areas of the country. “Initiatives such as bringing all post office banks under the core banking umbrella while setting up 75 digital banking units in 75 districts of the country are a welcome move forward. The Budget especially gives a boost to the startups in the fintech sector who are working towards making digital payments safer and more frictionless than before,” says Rajeev Agrawal, CEO, Innoviti Payment Solutions.