India's Union Budget 2020: Expectations of Industry Leaders and Entrepreneurs - Startup Terminal

Thursday, January 30, 2020

India's Union Budget 2020: Expectations of Industry Leaders and Entrepreneurs



On February 1st 2020, India’s Hon’ble Minister of Finance, Smt. Nirmala Sitharaman, will present the union budget 2020. Union budget plays an important role in determining the country’s future economic activities and growth. The effects of a government's budget on society and the political economy are of considerable concern to economists as well as to consumers and taxpayers.

Various Industry leaders and entrepreneurs have their own opinion and expectations from this year’s union budget.

Startup Terminal presents budget expectations from various industry leaders and entrepreneurs (Part II).

Diwakar Nigam, Chairman and Managing Director, Newgen Software

"The Indian IT sector provides significant opportunities for growth. The government can further incentivize organizations creating software intellectual property through tax exemption on IT exports. We expect that the government would bring in more business-friendly policies and take steps to reduce regulatory compliance, thereby creating a holistic environment for ease of doing business.

As data security, privacy and compliance become increasingly critical, the government should encourage the private sector to set up data centres in the country.  The government should also continue its thrust towards various initiatives, namely Digital India, Skill India, Make in India and emphasize on technologies that encourage digitization and creation of rural e-infrastructure.

Sustaining the global competitiveness of the Indian IT sector will require increased government investments in skill development for the new-age technologies such as artificial intelligence, big data analytics, robotics, and blockchain. Reintroducing the SEZ scheme and streamlining the current SEZ processes, will give the required boost to the IT industry and provide a more conducive business environment. The labour laws governing the IT sector also require streamlining owing to its unique requirements.”

Bhavin Turakhia, Founder & CEO, Flock

“The two important sectors that should be an area of focus in the coming Union Budget should ideally be – technology and startups. Last year, we saw India jump 14 places to be 63rd among 190 nations in the World Bank’s ease of doing business ranking, a testimony to the fact that India has made significant strides in making it easier for startups to set up their operations. In the upcoming budget, we would like the government to bring in measures to ease the compliance and filings guidelines for startups and eradicate the current penal provisions. Also, with technological disruption being a catalyst for the growth of startups today, we expect the government to make significant investments in technology hubs that will help strengthen emerging technologies such as artificial intelligence, machine learning, internet of things etc. As India is witnessing this boom in digital technology adoption, it has put us on the global map and we need to ensure that we take the relevant steps to ensure that our country is at the center of the fourth industrial revolution.”

Jeetender Sharma, Founder & MD, Okinawa Autotech Pvt. Ltd

"The revival of the automobile industry is expected to be on the priority list in the upcoming Budget session. Low market sentiment and the transition to BS VI emission standards were said to be the prime reasons for the industry slowdown last year. The industry is hopeful that the government will announce policies to support the industry and increase the demand in the market. Another buzzing word is about the growth of the electric vehicle segment in India. EV revolution has certainly picked up well in India. The government has also fuelled the market with subsidies and incentives to accelerate adoption. However, the cost of components and import duty remains a big concern for EV manufacturers. Certain parts of products are still imported, due to lack of manufacturing facilities, and this forms a major part of the overall product cost.”

Bishan Jain, Director, Goldmedal Electricals

“The Indian manufacturing sector has become one of the most attractive destinations for investments in the recent past. While the government has already unveiled plans to boost growth in manufacturing, construction sectors and improving infrastructure, the government should ramp up its efforts in the upcoming budget. The government must underline its continued commitment towards electrification of villages across the country. Furthermore, it should definitely put in additional efforts on solar energy projects, with the right incentives, which can be a valuable avenue for income generation and also help combat climate change. As consumers are becoming more aware about environment sustainability, there should be more focus on promotion of sustainable solutions that will help in reducing India’s carbon footprint.”

Sheshgiri Kamath, Co-founder & CEO of Kapture CRM

The tax cuts implemented by the finance minister, combined with the new fiscal boost that was announced recently are sending the right signals to the markets about the government's intent to address the economic concerns. We expect to see a cutting-edge impactful budget this time around which focuses on landmark reforms.

With the recently announced RBI eKYC and other digital measures, the internet economy is going to witness some key reforms. 2020 should be an interesting year for consumer internet startups.   

Vinay Agrrawal, Founder of Hubbler

Startups like us have a huge expectation from the upcoming budget to make India the preferred hub for this sector.

Some expectations that we want are: to consider Unlisted securities treated at par with listed securities when taxed for long- term gains.  GST has already become one of the biggest economic reforms that our country has witnessed. To make it more successful, there needs to be a simplification in the filing process for companies. GST is now accountant-friendly, it needs to become business-friendly as well. Also, startups with less than 25 cr turnover should get automatic exemptions from TDS. We spend money faster to grow faster. But because of TDS, our precious funds get stuck, costing us dearly in terms of working capital and interest.

Yash Rane, Founder, Chizel

With Indian economy on slowdown, we need policy with long term sustainable growth and not just for a few years. We are looking at 9% GDP growth and that is not easy. GST has hampered the cash flow of SMBs thereby affecting their buying power. Government should enable monthly filings and quarterly GST payments. Also, it is the time to accept that manufacturing is and has always been the backbone of India.
With China-US relationship getting better, India needs stronger partnerships to bolster exports.

Akshay Singhal, Founder, Log 9 materials

I think for startups there are already a lot of initiatives in action, improved mechanisms for execution of those schemes is extremely important. However, I am more concerned about the economy as a whole. To boost economy my suggestion would be to increase spending under Swachh Bharat Scheme may be via MNREGA to get Indian cities clean by employing the bottom of the pyramid. 

Sidhant Lamba, Founder, Fabrento

"Income tax holiday for start-up should apply for all start-up companies registered beginning April 2015." "Under GST, the extra GST inputs should be credited back to the startups (like for us, when we buy furniture, we have to pay gst in it, now when we rent, the gst in rent is adjusted against the already paid gst during purchase. But even then, the gst on purchase is much higher compared to what we adjust in rent, so we want that extra gst to be credited back to us."

Siddharth Jain, Co- founder, Vaahika

Indian economy needs an urgent dose of consumption booster; thus it would be wonderful to have provisions in the budget which could assist in an instant rise in consumer expenditures. Relaxation on personal income tax rates could be one such move that can act as a booster shot. We expect the budget to bring in provisions for lesser and reduced compliance for smaller companies; which as of today have to follow almost similar compliance that of a larger corporation. We expect this budget to come up with revolutionary steps to overhaul the complete compliance and fillings guidelines for smaller companies and startups and do away with the current penal provisions. The current economic slowdown could be linked with the rapidly declining health of MSME in India; especially the ones in the manufacturing sector. Though the government has already reduced the applicable income tax for this segment; but it appears that it has not been helpful in bringing the required turnaround. More needs to be done to address the concerns of liquidity crunch, ever-increasing compliance and reducing competence for the overseas markets. It has a worse impact on the Logistics sector, especially on the small and medium-sized fleet owners. On one side it is the demand which is declining and on the other side increased operating expenditures have made it very difficult for them to even pay the EMI's regularly thereby increasing defaults. It is very much expected that the coming budget would have provisions to support not only the survival; but the revival of the logistics sector.

Dhananjay Sharma, Director & CEO, Log 9 Spill

Cleantech companies around the country seeks special incentive programmes and larger tax benefits with aggressive government push for innovative cleantech solutions. So that this sector becomes more desirable and stable resulting in more investments in this sector. A conducive environment should be provided to encourage the creation of new cleantech businesses by easing regulatory and compliance policies for such companies.

Pradeep David, General Manager, South Asia, Universal Robots

"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."

Prasad Shejale, Founder and CEO, Logicserve Digital

“Taking a step closer to the Digital India initiative, the budget should include a key emphasis on the implementation of the National Centre of Artificial Intelligence as it will prepare organisations for better human-machine partnership and analyse consumer patterns using Big Data. Furthermore, building 1 lakh digital villages will open up an untapped marketplace for digital marketers to cater to consumer needs with bespoke services that were earlier consumed only in urban and semi-urban areas.

Also, the budget should include measures to ensure that India continues to lead in the mobile data consumption space that has grown about 50 times over the past five years. While developing regulations around the digital economy for the protection and privacy of end-consumers, the Government must adopt a pragmatic approach so that new opportunities open up for existing businesses operating within the premises of fair practices."

Saurabh Sood, Founder, Nature Homes

"Since the general trend of economic slowdown which was witnessed in the year 2019, would be seen having its aftermath in the year 2020 as well. With respect to housing and real estate even the eco-friendly and green housing did witness a slump in the year 2019 but the commercial demand for these structures were there with respect to office spaces and co- working spaces. In the year 2020, we expect to see the commercial space demand helping our business grow with a remarkable improvement and also the need for such houses is expected to witness growth in cities like Hyderabad, Chennai, Bengaluru, Mumbai and Delhi NCR as India is set to become a manufacturing hub for reputed global brands and their top management will be a decisive factor bringing along with them their particular lifestyle tastes as well.”

Amit Sharma, Founder and CEO, eExpedise Healthcare

With the government’s vision of ‘healthcare for all’, we expect Budget 2020 to have two-fold purposes: ‘home healthcare’ and ‘affordable elder care’. A large section of India’s population is expected to enter old age and with that comes, chronic or terminally ill patients who will need medical attention. However, taxation policies as of now do no cover the home healthcare expenses and the cost of tests. There need to be concrete policies that ensure accessible and affordable healthcare; this could be done by exempting critical health equipment from the GST. This year’s budget should be a relief in this aspect of the healthcare industry as it will prompt more people to take up health-checkups and help in achieving the expected CAGR of 27% by 2023. If the government relieves the ‘taxes under Section 80D’ associated with the cost of preventive check-ups, we would be able to focus on this segment of our population. As opposed to the last budget, 2020 Budget should put emphasis on ways to increase funding in the healthcare sector.

Neeraj Jain, CFO, Cosmo Films

"We expect that the government would bring in more business-friendly policies and take steps to reduce regulatory compliances, thereby creating a holistic environment for ease of doing business. Removal of MAT from SEZ and simplification of domestic sales from SEZ will give required boost to the manufacturing industry.

Last but not the least, removal of capital gain from equity transaction will facilitate overall market capitalization of stock market"

(Views expressed are of different industry leaders. Email us your feedback at startupterminal@gmail.com)