Tech sector hopes Budget 2023 will accelerate Digital India push
The technology sector in India is hoping the Union Budget will turbocharge the Digital India dream via initiatives focused on emerging technologies, R&D, upskilling and improved business policies.
The Indian IT industry, which accounted for 7.4% of India’s GDP in FY22, is expected to contribute 10% by FY2025, according to India Brand Equity Foundation (IBEF). Industry players hope that the upcoming budget will focus on emerging tech, skilling and ease of doing business to push the sector forward.
Both Artificial Intelligence (AI) and Cloud Computing found their place in Budget 2022 as Union Finance Minister Nirmala Sitharaman spoke about AI and its potential to assist sustainable development at scale besides providing employment opportunities for youth.
The previous Budget also provided infrastructure status to data centres which enable them to reduce their cost of capital and avail credit at a lower rate.
“We hope the upcoming Union Budget 2023 will be a beacon of hope for creating National R&D Ideas Incubators, which will nurture critical cross-disciplinary research, new ideas, and technologies through the early phase. Encouraging joint collaborations and ownership by industry and academia, along with centres of expertise will also be a welcome experience,” said Jagdish Mitra, Chief Strategy Officer, Tech Mahindra.
Technology companies often collaborate with academic institutions to develop new solutions. The industry hopes that the Budget 2023 lays out an outline for such projects, especially in terms of providing grants and facilitating an easier flow of capital into such projects.
Making India a digital hub
In her previous Budget, the finance minister had spoken about the government’s work towards promoting digital economy. Platforms such as Aadhaar and Unified Payments Interface (UPI) are already used to deliver various welfare schemes to beneficiaries.
Industry insiders say that tax policies around the development of new technologies could benefit the Digital India dream. For example, temporary tax waivers on R&D could boost investment in the sector.
This would require the participation of multiple stakeholders such as government-controlled research bodies, industry and academia.
“The budget must consider investments in state-of-the-art incubation centres which can digitally transform ideas from all over India into sustainable businesses of today and giant corporations of tomorrow. The budget must include measures that can help better industry-academia connect to make ‘India’ a hotbed of technology innovation and digital transformation services for the world,” Clover Infotech CEO Kunal Nagarkatti said.
The Indian IT industry employs more than 4.85 million people during FY22, according to data from Statista.
Upskilling is the way to nurture talent in this sector, say industry insiders.
“In 2023 and beyond, upskilling of talent in an environment driven by technology will be mission critical. The government has made great strides towards this, through the Skill India program. In this year's Union Budget, it would be good to see more investments and programmes in upskilling, as this is an important factor towards achieving the collective Digital India dream of our nation,” Puneet Gupta, MD, NetApp India said.
According to Prakash Balasubramanian, Executive Vice President, Ascendion, talent will always spearhead digital innovation and skill development needs to be aligned with the requirements of the technology industry.
“Essential funds need to be allocated to talent development and digital skilling, including schools and universities,” he remarked.
Ease of doing business
Indian IT industry revenue touched $227 billion in FY22, an annual growth of 15.5%. In the current fiscal, IT exports alone are expected to touch $200 billion.
Building a better environment for businesses will aid the sector.
According to the National Association of Software and Service Companies (NASSCOM), companies want more clarity on issues such as transfer pricing dispute resolution, rationalisation of mark-up rates, standardising the process of summons, rationalising penalties, prescribing timelines for disposal of appeals, various proceedings, and refunds.
In addition, the industry is also hoping that the Budget 2023 would sort out certain issues around special economic zones (SEZs). These include a smoother process for the movement of goods between two units and simplifying the permitting process to facilitate remote working.
According to Gartner, even with the looming tension of global inflation and a weakening rupee, businesses will continue to increase their spending in key segments of information technology in 2023, with the investments expected to touch $112 billion.
“The headwinds are in favour of technology as businesses realised how going digital can benefit them in the long run. Depending upon the maturity level of the digital enterprise, the spending context may be different for different businesses, but overall technology spending will continue to be on the rise in 2023,” Arup Roy, VP Analyst at Gartner said.
Edited by Affirunisa Kankudti