Sector Wise Reactions to Union Budget 2022

Union Budget 2022 is being largely appreciated, and here are sector-wise reactions to announcements made by the Finance Minister

Union Budget 2022 has been announced, and industry reactions have started trickling in. Several initiatives have been announced that have been appreciated by the industry. “Digital led transformation will underpin India's sustained socio-economic growth. Great to see progressive measures including tech interventions for health, finance, education and skilling in Budget 2022,” said Rekha M Menon, chairperson and senior managing director, Accenture in India.

Here are sector wise reactions to the budget announcements made today.

Jaya Vaidhyanathan, CEO, BCT Digital on FinTech

The Union Budget 2022 has lived up to expectations on many fronts. The FM has delivered a budget that addresses holistic measures to take the economy towards the $5 trillion target. Overall finances seem to be in good shape, with fiscal deficit for FY22 at 6.9%, and GST collections at a record Rs.1.4 lakh crore in January. Capex budget has been increased by a steep 35.4%, which is the need of the hour.

The highlight for the year has been the unfaltering focus on complementing macro-economic growth through micro measures, such as all-inclusive welfare, domestic production, tech-aided development, and public infrastructure, while pushing the envelope on the energy and climate agenda – a tall order.

The fintech industry will welcome announcements such as 100% CBS coverage for the post office, liberal regulation for the GIFT IFSC centre, and heightened emphasis on fintech education. All of these acknowledge the government’s efforts to transform India into a global fintech hub. The FM has also announced FY23 as the timeline for the much-awaited RBI CBDC – the digital Rupee. Crypto enthusiasts will appreciate the clarified stance on cryptocurrency, although gains will be taxed at 30% with 1% TDS.

SR Patnaik, Partner and Head – Taxation, Cyril Amarchand Mangaldas on Cryptocurrency

Cryptocurrencies have been subjected to tax at the rate of 30% (plus surcharge and education cess) without allowing for any deduction on the transfer of such assets. In case such an asset is gifted, the recipient has to pay tax on the same. This is expected to cover cryptocurrencies as well as other virtual digital assets like nun-fungible tokens (“NFT”s). While the term cryptocurrency has not been mentioned explicitly, it is evident that the target has been cryptocurrencies because of the manner in which the term virtual digital asset has been defined.

Arvind Bali, CEO, Telecom Sector Skill Council (TSSC) on Skilling and EdTech

In line with the current reality, this budget has pushed a major thrust on Digital Skilling at different levels with new channels for school education, Digital DESH e-portal for skilling, upskilling & reskilling of our youth and Digital University, etc. This is probably the first time so many initiatives related to Skilling has been talked. Also for Telecom sector announcement of Spectrum auction in 2022 for the rollout of 5G and Scheme for design-led manufacturing for 5G ecosystem is likely to uplift human resource requirements significantly and also need to train the existing and new workforce. Rural OFC  in villages through BharatNet is also a great opportunity for Skilling the rural youth. We are proud to be part of Skilling under KAVACH and also connecting our Telcojob portal with ASEEM. TSSC is constantly adapting to the changing dynamics and looking forward to contributing to telecom industry developments.

Nilesh Mali, Founder, KDM India on Electronics Manufacturing

Budget 2022 has given a boost to domestic electronics manufacturing and provides the much-needed incentive to the manufacturers and help in building manufacturing bases in India. Concessions in customs duty to electronics manufacturing is a positive move and will promote manufacturing across wearables, hearables and specific mobile phone components. Though the government is pursuing policies that promote the ‘Make in India’ concept, giving incentives and subsidies for companies designing products or doing Research and Development (R&D) in India would be a step in the right direction. Besides, the roll out of 5G is going to be a big game-changer for us as this will increase demand for our products which are all 5G compatible.

Ravi Annavarapu, President, FMC on Agricultural Initiatives

We welcome this budget as it focuses on growth and inclusive development of farmers and rural communities by emphasizing on technological advancement, infrastructure and access to services for better productivity and cost-efficiency. The increased access to digital and high-tech services, use of kisan drones for crop assessment and increasing input use efficiency under the drone-shakti program, reduction of logistics costs via PM Gatti Shakti program will increase overall production and cost efficiency for farmers across the country. Further, provision for capital allocation towards aid for agri and rural start-ups, FPOs and Custom Machinery Hiring Centers for farmers will enhance access of small holder farmers to affordable mechanization. Enhanced focus on the production of oilseeds and promoting adoption of suitable varieties of fruits and vegetables will support farmers. However, we do feel the country needs more cohesive and impactful initiatives for crop diversification. The government should also consider rationalization of GST rate on pesticides in-line with other agricultural inputs to reduce the cost burden on the farmers. Additionally, there are opportunities to harness solar power for agriculture, which can reduce its CO2 footprint significantly, in-line with the sustainability goals set by the honorable PM at COP26. Incentivizing innovation by allowing income tax waiver on 200% of the R&D and extension investment by private companies would be positive for advancement of agriculture.

Pawan Goyal, Director JRG Automotive Industries India Pvt. Ltd. on EV

The government's proposal to introduce a battery swapping policy with interoperability standards for electric vehicles (EVs) will benefit the entire ecosystem of the EV business, particularly the electric two-wheeler and three-wheeler segments. The regulation will hasten the development of battery swapping stations, where EV owners may recharge their vehicles by exchanging out depleted batteries for fully charged ones. It will ease range anxiety and charging time, which are two of the most common concerns among potential electric vehicle purchasers.

Lalit Mehta, co-founder and CEO, Decimal Technologies with a focus on the digital lending sector.

Starting with the paperless budget, the common thread throughout the Finance Minister’s speech was the focus on promoting digital and technological innovations across sectors, which will spell accelerated growth for technology led development, energy transition and climate action, while ensuring an inclusive welfare society. It is heartening to see a sustained push towards making the benefits of digital banking reach every corner of our country with an initiative that marks the 75th year of independence by establishing 75 digital banking units across 75 districts. Core banking across hundred percent of the 1.5 lakh post offices by 2022, financial support for digital payments ecosystem, and a 6,000 crore rupees programme to rate MSMEs to be rolled out over 5 years, are some much needed steps in this direction.

Annuj Goel, MD, Goel Ganga Developments

In the backdrop of dropping Coronavirus cases, Ms Nirmala Sitharaman presented an enabling, positive and futuristic Union Budget 2022-23. The real estate sector has faced severe headwinds in the recent past but is hopeful of a solid recovery with several key budget announcements. With a focus on the construction of over 80 lakh affordable houses by the year 2023, focus on urban development via the concept of mega cities and enhanced focus on Tier 2 and Tier 3 cites will provide the much-needed impetus to the real estate sector. As steel is the backbone of the construction sector, the budget announcements have extended the budget scrap duty by another year. It is in addition to the scrapping of the anti-dumping duty on stainless steel. Reduction in corporate tax for co-operative societies from 18 percent at present to 15 percent will reduce burden on the ancillary support industries related to construction and real estate sector. Overall, this is a progressive, supportive, and budget with increased focus on infrastructure development.