In anticipation of the Union Budget 2024-2025, India, holding the prestigious position of the world's 3rd largest economy, eagerly awaits transformative measures poised to fortify its global standing. As the nation stands on the brink of a critical budget announcement, these expectations emphasize the imperative for forward-looking policies that will intricately shape the trajectory of India's economic landscape. As India awaits the budget announcement, the collective optimism from industry leaders reflects a spectrum of expectations, from digital infrastructure to manufacturing incentives, regulatory flexibility, and sustainable growth initiatives. The budget is poised to play a pivotal role in shaping India's economic trajectory and global competitiveness.
The technology industry's expectations in the run-up to the budget underscore the indispensable role of digital infrastructure, identity, and security in India's ambitious journey towards becoming a global technology hub. Envisioning a secure, innovation-friendly digital ecosystem, industry leaders express the vital need for policy support and funding in these pivotal areas. This collective effort aims to unlock India's vast potential in technology and talent, fostering an environment conducive to groundbreaking advancements.
Explore the expectations and insights of industry leaders as India eagerly awaits the Union Budget 2024-2025. From technology advancements and manufacturing incentives to regulatory flexibility and sustainability initiatives, discover the transformative measures that could shape India's economic landscape and global competitiveness.
Amplifying "Made in India" with Technological Innovation
Envisaging a strategic reduction in the corporate tax rate, industry stakeholders foresee a facilitation of manufacturing facilities, leading to a reduction in early startup costs and a surge in price competitiveness. This visionary approach aims to propel the "Made in India" campaign, with a resounding call for the government to scale the existing Production Linked Incentive (PLI) scheme for electronics.
Madhava Yathigiri, Partner, TMT-Tax Leader at Deloitte India, along with insights from Sangita Prakash, Director, sheds light on the transformative impact of various government schemes, especially the Production Linked Incentive (PLI) scheme and other initiatives in the technology and manufacturing sector. These programs, including the India Semiconductor Mission, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), and Modified Electronics Manufacturing Clusters Scheme (EMC 2.0), have collectively positioned India as an attractive manufacturing hub.
Despite significant government traction, companies are yet to fully benefit from the incentive programs. The article notes an added emphasis on PLI for the emerging space sector. Anticipated to broaden the manufacturing ecosystem, the schemes aim to facilitate progressive localization and provide an extended investment window. Additionally, the Manufacturing in Customs Bonded Warehouse (MOOWR) scheme, a promising initiative supporting domestic manufacturing, faces challenges due to a crucial amendment in the Finance Act 2023. The removal of upfront GST exemption on imports could impact companies' working capital. The industry hopes for a deferment of the proposal's implementation to encourage manufacturing initiatives under the MOOWR scheme.
Industry Voices on Manufacturing Initiatives
Despite significant government traction, companies are yet to fully benefit from the incentive programs. Anticipated to broaden the manufacturing ecosystem, the schemes aim to facilitate progressive localization and provide an extended investment window.
"Scaling the existing Production Linked Incentive (PLI) scheme for electronics is crucial for encouraging Indian manufacturers. This strategic move will contribute to the growth of the manufacturing sector, attracting businesses to introduce cutting-edge technologies and enhancing overall productivity and quality," emphasizes Pallavi Singh, Senior Vice President of Super Plastronics Pvt Ltd.
Archana Srinivasan, Chief Financial Officer, iOPEX Technologies, offers insights on the expectations from the IT industry: "We are witnessing a runaway increase in labor costs, and this affects the IT industry. Keeping the interest intact among smaller companies, the government should come up with specific schemes related to the IT sector. This is similar to measures like the PLI scheme for the manufacturing sector."
Outlook for Semiconductor Industry
Dr. Venkat Mattela, CEO & Founder of Ceremorphic, a prominent semiconductor startup in India, anticipates positive prospects for the semiconductor industry in the upcoming 2024 budget. In alignment with global efforts to reduce carbon emissions, Mattela underscores the importance of policies like the National Green Hydrogen Mission in advancing the economy toward low carbon intensity.
"We anticipate positive prospects for the semiconductor industry in the upcoming 2024 budget. Collaborations between the renewable energy industry and semiconductor fabrication plants can establish ESG norms, incorporating sustainable waste management and water recycling techniques for ecosystem-wide sustainable growth," states Dr. Venkat Mattela.
Automotive Sector and Import Duty Relief
Prashanth Doreswamy, President and CEO of Continental India, expresses the industry's anticipation for favorable announcements in the upcoming budget. He emphasizes crucial areas for consistent industry progress, including a balanced approach that promotes domestic innovation and global collaboration in semiconductor manufacturing and R&D.
"The automotive sector eagerly awaits import duty relief to stabilize raw material costs and enhance competitiveness, especially in the export market. We need fair competition while localizing, streamlined import processes, and reduced bureaucratic hurdles to attract foreign investments and facilitate the smooth flow of technology," states Prashanth Doreswamy.
Cement Industry's Call for Support
Arun Shukla, President and Director, JK Lakshmi Cement, adds his perspective on the cement industry. "Amidst robust infrastructure development, we anticipate strong cement demand, spurred by increased budgetary support for roads, railways, rural projects, and further boosted by initiatives like PMAY," says Arun Shukla.
"We would like to draw the government’s attention to help address rising input costs through GST rationalization and easing import duties on key materials like coal and petcoke. Additionally, budgetary support for sustainable practices and manufacturing innovation is vital," he adds.
Global Capability Centres (GCCs) and Data Center Sector
Madhava Yathigiri and Sangita Prakash highlight two key facets reshaping India's technological landscape: the booming data center sector and the rise of Global Capability Centres (GCCs).
"The 18% GST cost incurred by companies in the data center sector is a significant consideration. Allowing GST input tax credit will help alleviate costs and contribute to attracting additional investments into this sector," note Yathigiri and Prakash.
GCCs, major contributors to India's technological prowess, call for an expansion of the scope of refund provisions under GST. Specifically, they advocate for the refund of Input Tax Credit (ITC) paid on capital goods, aiming to streamline and incentivize their contributions to India's digital ecosystem.
"As major contributors to India's technological prowess, GCCs call for an expansion of the scope of refund provisions under GST. Refund of Input Tax Credit paid on capital goods will streamline and incentivize our contributions to India's digital ecosystem," states a representative from the Global Capability Centres.
As India propels itself into the digital future, these insights underscore the importance of addressing taxation concerns, fostering a conducive regulatory environment, and capitalizing on the growth potential offered by data centers and GCCs. The budgetary considerations outlined by industry leaders are positioned to play a crucial role in shaping India's digital destiny. The collective anticipation reflects the nation's eagerness to embrace transformative measures and build a tomorrow that is technologically advanced, economically robust, and globally competitive.