Budget 2024: Industry Expectations and Potential Reforms Across Sectors

Budget 2024: From skilling to logistics, industry expects significant announcements from FM

The industry expects the finance minister to focus heavily on economic growth, providing a significant boost to entrepreneurship and ironing out challenges on the path to growth.As the anticipation builds for the Union Budget 2024-25, leaders from various sectors are voicing their hopes and recommendations for how the government can foster growth and innovation. From technological advancements to agriculture, and from startup ecosystems to regulatory reforms, the expectations are diverse and reflect the multifaceted challenges and opportunities facing India. Bharath Aitha, Vice President of Marketing at eInfochips (An Arrow Company), emphasises the need for robust public-private partnerships and enhanced investment in R&D to maintain India's technological leadership. "In the face of global economic uncertainties, the upcoming budget represents a pivotal opportunity for India to fortify its economic resilience by propelling its technological leadership," he says. Aitha calls for significant investments in skilling and reskilling the workforce in critical areas such as AI, machine learning, and cybersecurity. Additionally, he advocates for incentivising innovation through tax breaks and grants for R&D, which will attract international investments and nurture a thriving tech ecosystem. Rampraveen Swaminathan, Managing Director and CEO of Mahindra Logistics Ltd says there is a renewed sense of anticipation and optimism within the logistics sector. "Building on the interim budget's foundation, we foresee this budget to significantly boost infrastructure investments, particularly in multi-modal transport and advanced warehousing. We expect a continued emphasis on green energy and strong EV infrastructure, accelerating our journey towards green logistics. Focus on automation and digitization across the logistics value chain will be crucial to achieving higher efficiencies and reduced costs," says Swaminathan. Additionally, expediting the National Logistics Policy and projects like ONDC, ULIP and direct freight corridor is essential for creating a unified logistics ecosystem. Addressing skill development in the sector is vital to meet the demands of modern logistics, Swaminathan adds. Rakesh Kumar, Founder Square Insurance, says currently, there is a limited tax exemption on health insurance premiums. The expectation is to raise the tax exemption limit to Rs 75,000, which would make healthcare more affordable for individuals. Kumar also draws attention to another area of insurance- there are no specific insurance incentives for electric vehicles (EVs). "The expectation is to introduce subsidies or tax credits for comprehensive EV insurance to promote EV adoption by addressing insurance concerns," he says. He adds that currently, home insurance premiums do not qualify for tax deductions. "The expectation is to introduce a tax deduction under Section 80C, aiming to encourage homeowners to protect their assets," says Kumar. Akshal Agarwal, Co-Founder at NatureNurture, brings attention to the importance of education spending. He argues that while historic spending on education has hovered around 3% of GDP, a more significant portion of the budget should focus on improving the quality of teaching and learning processes rather than just infrastructure. "Investments made on school infrastructure should be part of the infrastructure budget, and the education spending should solely focus on improving teacher quality, creating robust audit and assessment methods, implementing technology solutions in the classroom, and forming partnerships that benefit learners," he explains. Agarwal stresses the need for qualitative metrics to measure educational progress, moving beyond just Gross Enrolment Ratios. Agri is a backbone of India and Rohit Bajaj - Co Founder Balwaan Krishi, believes the government should introduce a multi-pronged approach to incentivise agritech ventures. This could include tax breaks to encourage entrepreneurs. "Offer a 10-year tax holiday for startups and small businesses engaged in developing and implementing agri-tech solutions. Provide direct subsidies of up to 50% on capital expenditure for setting up food-processing units, factories for farm machinery production, organic waste recycling plants,biogas production units, or nutrient recovery facilities. The subsidies could be linked to the amount of the quantity of products generated," Bajaj says. He adds that exports of agri-produce is full of opportunity. "Offering interest-free or low-interest loans with extended repayment periods for agritech ventures. This would make companies compete in export markets and have competitive advantages. Additionally, the government could consider setting up a dedicated fund with an initial corpus of Rs 1,000-2000 crore to support research and development in the agri tech sector. This fund could be used to provide grants, seed funding, and equity investments in promising agritech startups," says Bajaj. The over $12-billion waste management sector in India is poised for significant improvements with the right budgetary allocations and government actions, says Abhishek Gupta, Co-Founder WeVOIS Lab. "First, the sector suffers from underfunded infrastructure, with a lack of adequate waste processing and recycling facilities. To address this, the government needs to allocate more budget towards building modern waste treatment plants and recycling units. This increased funding would lead to more efficient waste processing, reduced pollution, and enhanced resource recovery. In the second decade of the Swachh Bharat Mission, we must start taking data-driven decisions. Understanding the behaviour of residents and using data to inform our actions will be crucial," says Gupta. He pitches for greater private participation in waste management projects through incentives like tax breaks, subsidies, and streamlined regulations to attract private companies. He points out that there are significant technological gaps in the sector, with limited use of advanced waste treatment technologies. "Investing in research and development (R&D) for innovative solutions, particularly in resource recovery and the circular economy, is crucial. Such investments would result in the development and adoption of eco-friendly waste management technologies, promoting sustainable solutions," says Gupta. Vinay Agrrawal, Founder and CEO of Hubler, highlights the need for tax reforms to enhance the ease of doing business. He points out that while progress has been made, there are still significant impediments, particularly concerning the withholding tax in dealings with overseas consultants. "Addressing these challenges through thoughtful reforms will bolster the confidence of entrepreneurs and investors," Agrrawal asserts. He advocates for tax reforms that foster a seamless business ecosystem, paving the way for sustainable growth and innovation. Dhawal Jain, Co-Founder & CEO at Mave Health, hopes for increased funding for healthcare, particularly mental health initiatives. He points out that India's healthcare spending is significantly lower than that of developed countries, emphasising the need for enhanced funding to expand access to quality mental health care. "A well-funded mental health sector can lead to improved diagnosis, treatment, and support for those suffering from mental health conditions," Jain states. He also looks forward to supportive policies that encourage research and technological innovations in mental health care. Kshitij Jain, Co-Founder of All Things People, an HR Tech Startup, calls for greater flexibility in attracting capital and simplified FDI compliance procedures. He notes that startups still spend a disproportionate amount of time and resources managing compliance requirements. "Startups need flexibility to attract capital, both domestic and foreign, without facing onerous regulatory hurdles," Jain explains. He advocates for easing restrictions on convertible instruments and hybrid securities and simplifying FDI compliance procedures to support startups' growth. Vikas Singh, Co-Founder of NFTFN, a Web3 Fintech Startup, urges the government to reduce TDS on virtual digital assets (VDA) transfers and allow the offset and carryforward of losses from VDA trading. "Lowering the TDS rate on virtual digital assets from 1% to 0.01% and increasing the threshold limit to ₹5,00,000 will enhance market liquidity and participation," Singh suggests. He also calls for equal treatment of crypto income and the establishment of a dedicated regulatory body to oversee crypto transactions, ensuring transparency and investor protection. Shubham Jhuria, Partner & CFO at Aeravti Ventures, looks forward to continued government support for business growth, especially within the Aerospace, Defence, Energy, and Agriculture sectors. "In its third term, the Government is likely to maintain its emphasis on business growth in India, fostering the rapid development of the startup ecosystem," Jhuria notes. He hopes for policy advancements that simplify the establishment of incubators, venture capital funds, and angel investors, thereby reducing compliance complexities and enhancing tax regimes. By addressing these foundational aspects, the government can signal its commitment to making India a global tech leader. As the government prepares to unveil the Union Budget 2024-25, these insights and recommendations from industry leaders highlight the diverse needs and priorities across sectors. By addressing these areas, the budget can pave the way for a more resilient, innovative, and inclusive economic future for India.

Possible changes in capital gains tax, tight F&O norms, sops for startups, AI, would be eyed in Budget

An Interim Budget was presented by Nirmala Sitharaman on February 1 of this year to take care of the financial needs of the in-between period. With the Union Budget 2024 around the corner, Indian financial markets, corporates, and entrepreneurs have various expectations from the government. Many have voiced their requests and made presentations before the government as part of pre-budget consultations. These stakeholders provide liquidity and capital, and their participation plays an important role in the nation's economic growth and stability. While talking about the upcoming Budget 2024, CEO and Founder of Fhero Accounting Solutions, Prashant Bothra talked about regulatory changes that may be needed. He anticipates changes in the Securities Transaction Tax (STT) and taxes on long-term capital gains, and short-term capital gains (LTCG, STCG), and intraday transactions. As per definition, any profit or gain that arises from the sale of a 'capital asset' is a capital gain. "Additionally, we expect tighter regulations on futures and options (F&O), potentially removing some derivative products to reduce speculative trading. We also request the government to consider extending the LTCG holding period for listed equity shares from one year to two or three years, encouraging longer-term investments," Bothra added. A Research Analyst for Trustline Securities Limited, Ankur Saraswat added to this by saying, for agrochemicals, implementing Production-Linked Incentive (PLI) benefits and lowering GST rates can boost local production and reduce costs for farmers. "The IT sector seeks digitalization and technological advancement, while the healthcare sector needs increased spending on technology integration. The specialty chemicals Industry calls for faster capital expenditure approvals and R&D incentives. Lastly, the steel sector expects reduced taxes on raw materials and higher import duties on Chinese steel to enhance competitiveness. These measures aim to bolster growth and sustainability across sectors," Saraswat added. The MSME sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the past decades. This sector contributes significantly to the economic and social development of the country by fostering entrepreneurship and generating employment opportunities. About creating a more favourable financial environment for MSMEs, Bothra of Fhero Accounting Solutions, adds, "Enhancing MSME competitiveness through ease of doing business is crucial. We anticipate initiatives aimed at reducing compliance burdens, paperwork, and streamlining approval processes." Further aligning it with the Viksit Bharat vision, he adds, "The upcoming budget is expected to provide a concrete action plan to support MSMEs. Additionally, the reduction or abolition of the Angel Tax is essential for better funding mechanisms, enabling more investments in MSMEs and fuelling growth. We also expect significant budget allocations for upskilling and reskilling programs in automation, AI, and data analytics to support workforce development and job creation for MSMEs." To this, Ankur Saraswat (Trustline Securities) also added, the upcoming budget is expected to significantly impact Indian startup investment. "Key areas like digital infrastructure, AI, and cybersecurity are likely to see increased allocations, positioning India as a global tech hub. Support for SMEs and skill development, along with encouraging public-private partnerships, will drive innovation and growth. More domestic capital allocation and tax incentives for investors and promoters will further boost the startup ecosystem," Saraswat added. Moving on to the bullion sector, another key sector of the economy, there is an expectation that the government will keep focus on continuation of pro-growth and pro-gold policy reforms including further ease of doing business that will aid the industry's reform and organized growth. The gold industry is integral to the Indian economy, contributing 1.3 per cent to Indian GDP and employing approximately 2-3 million people. "In the current Union Budget, we are expecting there will be a general policy thrust aimed at higher economic growth that will provide tangible benefit for gold as well, as it is well established that income growth is the single dominant factor in long term gold demand," said Sachin Jain, Regional CEO, India, World Gold Council. The World Gold Council also urged the government to significantly reduce import duty on gold from current highs of 15 per cent. "Government is cognizant of the fact that gold prices have risen to historic highs of Rs 74,000/10 gram and at present total taxes on gold is over 18 per cent (including 15 per cent of import duty) and such high taxes act as incentives for getting gold into the country from illicit routes, impacting tax compliant industry stakeholders," said Jain. Jain also suggested that there is a need to facilitate the orderly growth of the digital gold market to protect and promote micro-savings through transparent digital gold channels and to deter any unscrupulous fly-by-night operators from misusing the emerging opportunity. "The government should consider bringing out appropriate guidelines and regulatory oversight that would introduce checks and balances to ensure customers of digital gold are protected and a transparent way to buy and hold gold digitally, aligned with the broader economic agenda on digitalization of assets, is promoted," Jain asserted. Gold, considered a safe investment bet, has been in demand for a considerable period, with its prices rallying to hit record highs now and then. Gold is a scarce commodity, and any mismatch in demand-supply conditions may invariably trigger a sharp price rise. Further, Ajai Rana, Chairman of the Federation of Seed Industry of India, also weighed in and suggested his industry's recommendation to the government. Research and development (R&D) in agriculture, he said, demands significant investments and long-term commitment, involving multi-year, multi-environment evaluations requiring extensive resources. "To encourage private-sector investments in R&D in agriculture, particularly, seeds, the industry seeks a conducive policy and regulatory environment. Establishing a mechanism to recognize R&D-focused seed companies based on certain qualifying criteria, through creation of a National Register is the foremost expectation from Budget 2024," Rana said ahead of Budget. (ANI)

Union Budget: What Do Startups Expect From FM Sitharaman?

Founders also want the government to spend more on infrastructure to improve last-mile connectivity in the logistics sector by reducing logistics cost It's Budget Day today. With finance minister (FM) Nirmala Sitharaman all set to present the Union Budget 2024-25 (FY25) in a few hours, the Indian startup ecosystem is hoping that she will spare some time and the nation's resources for it. While the general expectation is that the FM will go for policy continuity under the third term of Prime Minister Narendra Modi, startups are hoping for some sops and tax cuts to give a further boost to the world's third-largest startup ecosystem. Ahead of the Union Budget, Inc42 spoke to a wide gamut of entrepreneurs, VCs and other industry stakeholders to understand the hopes and aspirations of the Indian startup ecosystem. As usual, solving legacy issues such as simplifying India's complicated compliance regime and the taxation regime figured heavily in the demands of the startups. Entrepreneurs and industry experts want the Budget to overhaul the country's entire startup taxation regime and address "demons" such as angel and corporate tax, Section 68 of the Income Tax Act, and ESOP and Redomicile taxation regimes. They also want tax credits and incentives for research and development (R&D) and facilitating the redomiciling of startups to India by minimising tax liabilities to foster a more vibrant entrepreneurial ecosystem in the country. Additionally, they want a more strategic blueprint to support the growth of startups in India in the long run. Streamlining India's tax maze can have a far-reaching impact on the Indian startup ecosystem in terms of funding and help the country attract more foreign direct investment (FDI). Many of the founders Inc42 spoke to expressed optimism that the Budget will see the FM announce measures to spur foreign direct investment (FDI) into the country. The industry stakeholders want a reduction in corporate tax rates, in line with global standards, to make India an attractive destination for foreign investors, at least in the sunrise sectors. While emerging areas such as climate tech and green energy might see tax rebates, experts want a clarity on their implementation. "If tax incentives in climate tech necessitate fresh investments, this could make large-scale investments in conglomerates attractive, but it won't exactly be a boon for MSMEs or startups. We'll have to wait and see how the government looks to enable smaller businesses in this space as the focus is always on large-scale energy production," said an economist with Kotak Mahindra Bank. Meanwhile, the climate tech industry wants reduced customs duties on imports of solar energy industry, expansion of green and climate finance through registered entities, and revision of GST on renewable energy production and sources to woo international investors to India. On top of that, industry stakeholders believe that tax exemptions or reductions for strategic relocations, especially for startups in priority sectors, can be a massive boost for FDI. While the upcoming Budget, as per media reports, may rejig the personal tax regime, Indian startups opine that boosting consumer spending will require more long-term measures rather than just tax cuts. Founders believe that higher capital allocation for areas such as manufacturing and infrastructure development can propel consumer spending indirectly. They also want the government to spend more to improve last-mile connectivity in the logistics sector to improve order fulfilment and reduce cost of doing business for brands in the long run. These savings can be passed on to consumers eventually, an industry stakeholder told Inc42. Many also believe that these accrued savings can enable B2C startups to spend more in rural areas, particularly in infrastructure, manufacturing and agriculture, which can fuel job creation and revitalise the economy outside the large cities and metros. Industry experts also want the government to build a unified logistics platform to bring all stakeholders on a single platform and simplify regulatory frameworks to offer further impetus to the logistics sector. Additionally, strong push for EVs may pave the way for transition towards green logistics and help consumer internet firms trim last-mile delivery costs. Moving on, manufacturing is widely expected to emerge as another key focus area in the Budget. Previously, the Centre has not shied away from offering sops to push India towards a product-led deeptech economy, with production-linked incentives (PLIs) being the bedrock of this push. However, industry stakeholders want much more. Deeptech startup Ethereal Machines' cofounder and CEO Kaushik Mudda wants PLI schemes to be expanded across the value chain so that incentives are not limited to the top few beneficiaries in the end-product manufacturing. The manufacturing industry also wants tax incentives like tax holidays, accelerated depreciation rates, credits for expenses, and reduction in GST for private sector electronics R&D investments. Additionally, electric vehicle (EV) players want GST rates on batteries to be reduced to 5% from 18% and reduction in customs duty for cells and other key components Another facet of deeptech is AI, which has rapidly gained prominence globally in the past two years. However, infrastructure remains the most challenging hurdle for the AI industry in India. It is this bottleneck for which the industry stakeholders are seeking a resolution in the Budget. AI startup founders want the Budget to subsidise upfront costs (GPUs and other resources) associated with training and fine-tuning machine learning models for the first three years. They want the finance ministry to waive or reduce import duties on GPUs and related hardware to help foster a thriving indigenous AI ecosystem. The AI startups also want to engage with the government at a bigger level, and increase collaboration with government agencies, including increasing the number of AI-focussed incubators and crafting policies that advance startups beyond initial phases. The ecosystem also wants the Budget to offer tax benefits for early stage AI startups and formulate clear and consistent AI regulations that foster R&D without stifling innovation. While it remains to be seen how many demands the FM can accommodate as she tries to balance the country's growth and fiscal consolidation, the Indian startups will be waiting with bated breath as Sitharaman takes the stage to deliver her Budget speech later today.

PLI in agrochemicals, cut in GST on farm inputs among major expectations from Budget

Stakeholders in the farm sector, equally important in ensuring a robust harvest and better prices, are wondering if Finance Minister will announce something new or tweak some taxes/rates to prop up growth. businessline compiled some expectations from key players in the farm sector. Anuj Kumbhat, founder and CEO of WRMS, a climate management company said, "We hope for robust governmental support to enhance climate resilience, climate change adaptation and disaster preparedness initiatives across various sectors. Increased investment, alongside strong policy support, regulations and incentives in advanced technologies such as IoT, AI and data analytics can revolutionise climate risk assessment and mitigation strategies in agriculture, infrastructure, urban planning, disaster management and insurance." Shailendra Singh Rao, founder of Creduce said, "We seek substantial funding for clean energy projects, including solar and wind. This should encompass investments in grid infrastructure, tax breaks, and subsidies. This will be a significant relief, particularly for the transition sector. In order to accomplish our immediate 2030 objective, we must concentrate on it." Rao expects Sitharaman to announce budgetary support for battery storage solutions and said that the sector would be permanently crippled unless a substantial budget is allocated. He also said that funding for planting of new trees and the restoration of degraded forests is urgently required and financial assistance to farmers and communities that adopt sustainable forestry methods should be provided. "Strategies to mitigate the effects of climate change, including droughts, floods, and heat waves, may be included in the budget," he said. Simon Wiebusch, president of Bayer (south Asia), said, "Government will use this year's Budget to further its commitment towards farmer welfare through measures to enhance market linkages, increase access to quality inputs, promote digital technologies and accelerate creation of more farmer collectives (FPOs). Additionally, incentivising investment to support research in the sector, especially in regenerative agriculture and climate-smart practices can further catalyse sustainable growth, ensuring a steady rise in farmer incomes. "India has the potential to emerge as a global player in the horticulture sector and hence fiscal policies aimed at creating the right infrastructure and ecosystem for horticulture will not only drive rural livelihoods but also bring in foreign exchange through exports." Raju Kapoor, director at FMC India, said, "With monsoon playing truant, agricultural growth has dipped from 4.7 per cent to 1.4 per cent, which further added to the rural distress. The Budget presents a crucial opportunity to address these concerns and propel the sector towards a brighter future. The government must prioritise agriculture and rural India, focusing on making farmers more resilient while simultaneously mitigating food inflation that disproportionately affects society's underprivileged segments." R G Agarwal, chairman of Dhanuka group, said, "For a stronger agricultural sector and national food security, a PLI scheme for crop protection be announced and GST on pesticides should be reduced. This will empower farmers and make these crucial tools more affordable." SK Chaudhary, founder director of Safex Chemicals, said, "Given the increasing threat to crops because of adverse weather conditions arising from climate change, one looks forward to a robust rise in the R&D outlays so that both private and government institutes are motivated to develop climate-resistant crop varieties." Vimal Kumar, MD of Best Agrolife said: "Our heavy reliance on imports of agrochemicals from China highlights the need for implementing PLI benefits to boost local production." Sanjiv Kanwar, MD of Yara India, said: "We expect initiatives that will enhance credit and insurance frameworks for farmers and introduce an agriculture accelerator fund to spur growth. Tax parity for fertilizers and micronutrients, coupled with direct benefit transfers, will empower farmers to improve both the quantity and quality of their produce while minimizing environmental impact." Sanjay Borkar, CEO and co founder, FarmERP, said: "Agritech industry holds high expectations for significant advancements in new-age technologies and the integration of sustainability within agriculture. Tax incentives and subsidies for agritech start-ups will accelerate innovation and attract young entrepreneurs to the sector." Saroj Kumar Mahapatra, executive director at PRADAN (an NGO), said: "Prioritising enhanced irrigation infrastructure, especially in under-served regions like south Odisha and Chhattisgarh, is crucial. The budget should ensure timely and affordable credit, enforce Minimum Support Prices, and strengthen agricultural insurance. We urge the government to increase the number of women FPOs to create more lakhpati didis in next 2-3 years." Sat Kumar Tomer, founder and CEO of Satyukt Analytics, said: "We advocate for real-time integration into agricultural delivery, farm-scale credit assessments and crop insurance. Promoting precision agriculture, particularly in water optimisation and crop advisories, and incentivising agri-tech start-ups to collaborate with institutions like KVKs, will drive sustainable growth." Swarup Bose, founder and CEO at Celcius Logistics, "Budget can provide support to boost rural infrastructure, increase public and private investment and promote technological innovation in cold supply chain solutions." SHARE Copy linkEmailFacebookTwitterTelegramLinkedInWhatsAppRedditPublished on July 21, 2024