Union Budget 2019: 12 Expectations from the Technology Point of View

Union Budget 2019 is all set to be announced by interim finance minister Mr Piyush Goyal on 1 February 2019. The Union Budget is being announced a day after the Budget session of Parliament starts off on 31 January. This interim budget will be the last budget for the current government and is being announced just months before the 2019 Lok Sabha elections.

Although it is an interim budget, which is different from the General Budget, the IT industry and several startups have a lot of expectations from it, considering it is final budget for the current BJP led NDA government. Here are expectations compiled from 12 notable companies:

Launch Data Literacy Initiatives - Mr. Arun Balasubramian, Managing Director, Qlik India

Transformations ushered in by technologies such as AI, data science, and analytics have made information ownership the new centre of power. Recent policy discussions on issues such as Data Protection and Data Localisation highlight that the government realises the ever-increasing value of data. However, in order to create a level playing field for all stakeholders, it is just as critical to ensure that data ownership is decentralised.”

To begin with, the government must look to increase public awareness about the need and impact of data by launching large-scale data literacy initiatives in association with leading domain players. Furthermore, it should look to facilitate the creation of a high-performing technology infrastructure that thrives on networked distribution. Implementing these measures can improve access to data for relevant stakeholders while keeping it secure and decentralised, thus enabling India’s transformation into a data-driven economy. Empowering the masses with information will, in turn, drive greater collaboration, innovation, equality, and progress.

Ease Policies for Fintech - Anupam Bhat, CFO and Co-founder, Goals101

In the last few years, Fintech has already begun transforming the Financial Services ecosystem in India and while the Government’s intent to provide an enabling environment is clear, the industry hopes for further ease in policy and processes. As the hotbed of the next billion Internet users, Fintech companies would increasingly look at serving rural India. Increasing digital transactions penetration would require concerted awareness efforts and it is hoped that the budget would account for incentives to companies looking to invest in and grow this market.

As data security and privacy becomes increasingly critical, it is expected that the Government, through the budget and other policy measures, would balance this against the commercial realities of viably operating in the Fintech space and thereby bring in valuable information and benefits for the consumers at large.

Finally, an issue that is broader to the startup and unlisted companies – angel tax. The interim budget would hopefully reconsider provisions of the Income Tax Act as applicable to investments in unlisted companies by investors. This shall provide much-needed relief to the startup space and promote innovation, which is one of the current requirements for the Indian economy.

Forfeit Tax Collected at Source - Raman Mittal, VP-Marketing, TO THE NEW

The Union Budget 2019 holds great significance being the last Budget of the BJP led NDA government. With the announcement of last Union Budget we witnessed some major policy and structural reforms with the launch of Digital India programme, focus on improving internet connectivity even in rural areas, and establishing centers of excellence for research & training on robotics, AI, big data analysis, and IoT.

As the government recognizes the importance of the IT sector, there are high expectations from this budget to see reforms enabling the ease of doing business and promoting the growth of this sector. However, few issues that the budget must address is equalization of 6% levy on overseas online advertising business as this has a direct hit on companies like us providing digital advertising services. Further, this year the industry also expects the government to soften the GST rates from 18% and bring in more clarity on its implementation.

We also look forward to forfeiting Tax Collected at Source (TCS) under the GST completely given its uncertainty and clarity. Further, any budgetary aids to promote the telecom infrastructure and BFSI sector would be an indirect added advantage to the IT services sectors having a strong foothold in these industries.

Simplify Tax Structure - Arun Nathani, CEO, Cybage

Budget 2019 is an Interim Budget and the last roll of the dice for the current government before the General Elections. Hence, populist measures are expected.

Currently from an industry perspective, there is a double taxation on dividend. The companies have to pay corporate tax and tax on the dividend declared. Dividend received by shareholders is also taxable in the hands of an individual. So simplification of the tax structure will help the industry as well as encourage businesses. This will boost the economic growth further.”

Provide Clarity on Angel Tax - G S Venkatraman, Chief Financial Officer, Subex

While a lot of work has been done by the government on defining ownership of personal information and developing an Electronic Consent framework, what would be very useful is a frame work, which all the different partners looking to make available services to the owners of the personal data, can leverage in a legal and efficient way.

The RBI has developed a framework for financial sector participants. A similar framework for Telecom and other sectors, who would be able to leverage the information and make it available for interested end customers in a mutually beneficial commercial model, will go a long way to drive usage and adoption of high-end analytics in the country. Given the massive interest in automation and AI, the number of start-ups coming up to address this space is also growing dramatically. A lot of global private equity, angel investors and VCs are looking to invest in these start-ups.

It would be useful to provide absolute clarity on Angel tax provisions to provide a further push for investments in this space. Similarly, given the geographical spread of operations on start ups in the Analytics, AI and Automation space, the need for clarity on POEM and tax provisions will make business function more efficiently. Finally, rationalizing transfer pricing regulations will also go long a way on ease of doing business from India.

Remove Startup Tax - Aprameya Radhakrishna CEO and Co-founder at Vokal and Mayank Bidawataka, Co-founder at Vokal

Startups are looking forward to abolish the so called ‘angel tax’ forever. It’s been a problem for both investors and startups. I am both a startup founder as well as an investor in startups. For most angels, investing is a way of paying it forward. However, you don’t want the hassle of going through some scrutiny just for investing a small amount in a startup. As a startup, we don’t expect the government to tax us for having raised angel investment. Startups are employment generators. Startup investments need to be incentivized.

On the one side the government is trying to protect local businesses when it doesn’t allow FDI in multi brand retail but on the other hand they are discouraging local businesses and investors by levying startup / angel tax.

We hope the government removes the startup tax in all forms from the budget. There should be no ambiguity / subjectivity when looking at funds raised by startups. The onus is on the government to find ways to separate the few questionable transactions from the thousands of genuine startups.

Need Financial Intervention in Skilling - Sanjay Bahl, CEO and MD, Centum Learning

We urge the government to have greater push in this budget, towards skilling. We expect a greater financial intervention in Skilling, in order to realize the Skill India’s mission 2022, which should include:

Since Skill Development is a key ingredient in nation building, hence GST should not be applicable on revenue incurred through skill development courses, especially those which are funded under any government or CSR donor.

In order to encourage wider industrial acceptance of Skill India certified candidates, those companies who hire such candidates above a certain number, should be offered incentives as deemed appropriate by the government. This will help make skills aspirational and acceptable among youth and motivate a lot of organizations from the private sector to lay emphasis on certified candidates.

An industry wide ask by all the training partners, who are registered with NSDC or other state and central ministries etc. is to  have a single window support for setting up centres. This will ensure speedy implementation of Skill India Mission as well as greater transparency in training delivery.

Those Skill training providers who have proven track record should be offered soft loans as part of working capital to help them scale and expand Skilling pan-India. Additionally, ministries and government agencies should streamline funding, its shortage or delays in payments, since it is directly affecting the related skilling interventions.

Enable Feasible Policy and Tax Framework - CP Gurnani, MD and CEO, Tech Mahindra

We need to sustain our global competitiveness and ensure continued support to the start-up ecosystem. We need to further improve the ease and cost of doing business in the country by enabling a feasible policy and tax framework. In Budget 2019, we hope to see more initiatives towards the training and skill development of our youth, thus, addressing the employability issues in crucial next generation technologies such as Artificial Intelligence, Blockchain, 5G, Machine Learning, and Cyber security. Additionally, continued thrust to the Digital India program is essential.

Highlight Current State of eWay Bill Adoption - Kushal Nahata, CEO and Co-founder, FarEye

The Budget 2019 should include regulations that will drive organizations to digitalize key logistics and supply chain processes. For instance, by mandating digitalization of certain key accounting, billing and logistics processes the government can ensure greater levels of compliance (especially with regards to environmental sustainability) and tackle corruption better. Also, this year’s budget should highlight the current state of eWay bill adoption.

The pace of development of some crucial infrastructure remains slow. There is a need to speed up the development process of projects like the Dedicated Freight Corridor (DFC). We are also expecting announcements with regards to building integrated transportation hubs or Multi-Modal Logistics Parks.

The government can plan to introduce special windows to help logistics startups compete with large technology providers when it comes to winning government tenders. Also, there is an urgent need to simplify GST, especially with regards to the logistics industry. Once multiple types of businesses are brought under an organized trade structure, supply chain organizations will be able to deliver better value propositions to customers and hence boost revenue collections for the government. Deploying a uniform GST rate across the country is another initiative that the government needs to talk about in this year’s budget.”

Focus on Emerging Technologies - Saptorsi Hore, Chief Operating Officer, ThoughtWorks

The 2018 Budget put a focus on emerging technologies such as Machine Learning, Internet of Things (IoT), Artificial Intelligence (AI), 3D printing etc. through planned investment in research, training and skill development. NITI Aayog's efforts to facilitate research in AI and it's applications further bolstered the efforts that have been underway towards the Digital India vision.

Proof of concepts (PoCs) using Blockchain technology in areas like payment services, agriculture, financial exchanges, infrastructure, education, healthcare, among other sectors have been a great step forward to improve inter-operability through digitization and to enhance efficiency through the creation of trusted networks.

Extending Credit Guarantee Schemes like MUDRA - Alok Mittal, CEO and Co-founder, Indifi Technologies

We expect the latest budget to define concrete steps to mobilize access to financial services and empower the fintech companies that facilitate them. For instance, extending credit guarantee schemes such as MUDRA and facilitating better data access to alternate lending companies can help in bolstering the impact and reach of these initiatives. Doing so can ensure high growth potential for MSMEs in India - being one of the most dynamic and critical sectors of the nation’s economy.

Need Easier Procedural Clearance and License Approvals - Kumar Abhishek, CEO and Co-founder, Amazon backed ToneTag

The startup ecosystem is eyeing the Union Budget 2019, as the government is slowly recognizing the potential of startups and framing policies that create a favorable environment for them. While the Startup India Scheme has aimed to provide multiple benefits to startups in the form of easy license clearance, tax cuts and minimum regulatory interference, it has not entirely been a smooth road for the startup ecosystem.

The government believes that the startup industry is the backbone of the economy and is the major generator of employment. The Reserve Bank of India has issued new guidelines for debt reconstruction for Micro, Small and Medium Enterprises, which would help the sector to lead the current consolidation phase in the country. From the Union Budget 2019, startups are expecting a faster and easier method for procedural clearance and license approvals. They are also looking for an increase in allocation of funds towards the adoption of new technologies such as AI and Blockchain.

With the success of the Digital India scheme, the industry is looking for an allocation of adequate funds to further the cause. Startups are also expecting a decrease in unnecessary regulatory supervision and government interference which will allow them to operate without any pressure. Increase investment in training, research and skill development in areas like Big Data, IOT, Robotics, and other digital tools, will act as a facilitator of the startup growth. With the Union Budget around the corner, the startup sector is keenly awaiting the policies the government will lay down.