Budget 2022-23 Expectations: As Union Finance Minister Nirmala Sitharaman is all set to present her third Union Budget on February 1, 2022.
Here’s what the industry experts expects from Finance Minister Nirmala Sitharaman:
Kunal Vaid, Founder, Resham Sutra:
We would like to see a more inclusive budget with higher levels of focus on women’s development and on rural employment and livelihood generation, as these sectors currently constitute over 50 percent of the Indian economy. New and fresh ideas are needed to improve income opportunities and to increase the productivity of rural women in the poor and underserved parts of the country. Additionally, the Government must focus on the creation of non-agricultural income streams for bettering livelihoods for the rural women, as well as increase investments in community rural livelihood infrastructure building and development and furthering training infrastructure, including skill training for aspiring micro-entrepreneurs in rural India as well as technical training to the rural producers.
We also strongly feel that the scope of existing schemes/initiatives like textile mega parks need to be broadened and implemented for distributed rural production centres and producer companies, as they are the backbone of the Indian textile industry. Furthermore, the Government should address the need of setting up village-level procurement centres, and prioritize on ensuring easier access to affordable credit for all rural women textile producers with minimum documentation. To this end, including the implementation of schemes like the PM Kisaan to be in the name of women, irrespective of land ownership can be a great step. Lastly, I would like to suggest that the Government should simplify the process of formation of rural-based producer companies and allow partial shareholding to promoter organizations. Such initiatives will go a long way and have a multiplier effect on rural incomes and the economy at large, and these have the potential to further reduce the need for mass migration to urban areas for low-paid, unskilled work.
Aanan Khurma, Co-Founder & CEO of Wellversed:
It’s futile to expect anything from the government when it comes to start-ups. Even the so-called Startup India Programme is of little actual help to entrepreneurs. For e.g. The government proudly claims that start-ups will not have to pay income tax for the first seven years of its incorporation. Now any real entrepreneur knows that anything worth building runs in losses for the first few years of it’s incorporation and hence such policies are just a way for government officials to pat each other’s back in the boardroom (probably over chai and samosas). So we don’t really think or care about what the government has on the charts for Start-ups as we understand that we are on our own.
Dipika Jaikishan, Co-Founder & COO, Basis:
It’s no secret that women who run businesses are far and few in-between. Incentives for women entrepreneurs and investors backing women-run businesses will be a welcome change. While budgets year-on-year have been catering to the tasks of the start-up ecosystem, a systemic nudge to bring more entrepreneurs into the fold should be encouraged by establishing SOPs in place — allowing women to take the plunge when it comes to running a business.
Akarsh Singh, CEO & Co-founder, Tsaaro:
The key expectation from the government for the Union Budget this year, in light of the recent JPC recommendations report, would be the adoption of the long-awaited privacy bill, which will place India on the worldwide map of data privacy regulations. To encourage a privacy-first mindset in the Indian business landscape, the Union budget should allocate seed funding for startups in the data protection space and incentives for obtaining certifications from regulatory authorities to show adherence to data protection standards. And to resolve the gap between the demand and supply of data privacy specialists across the industry, the government should prioritize cyber upskilling and reskilling programs, ensuring that the next age of privacy professionals has the necessary training and expertise to lead India towards developing an international standard for data privacy.
Nishant Behl, Founder, Expand My Business:
To increase demand, the b2b services procurement and fulfillment companies like Expand My Business are seeking a reduction in 18% GST to 5%. This move will empower the sector by lowering operational costs and increasing exports with other forward & backward linkage industries to achieve growth while achieving higher export targets, consequently pushing the economy towards the targeted $1 trillion worth of exports, as set by the Government. The B2B e-commerce market is also anticipated to expand at a CAGR of 18.7% from 2021 to 2028.”
Deepak Syal, Director & Co-founder, GreyB:
The Union budget last year had six pillars, and ‘Innovation and R&D’ was one of the pillars. In the budget, the National Research Foundation (NRF) was given a five-year outlay of Rs 50,000 crore to boost innovation in the country. As the world is changing, the increase in automation and technology will affect every sector, whether it is ITES, FMCG, Banking, Automobile, Telecom, or Retail.
If we have to be ready for the future, as a country, we have to start working on this shift now. The country should aim to become the knowledge capital of the world in the next 20 years. This implies bringing innovation to the center of future growth. It was good to start this through NRF, but it may take a while to bring the change centrally via one organization.
Therefore, the government should aim to push this initiative further in a decentralized way. For example, tax incentives are a good way to encourage firms of all sizes to innovate and create intellectual property. India has so much brainpower that if the government can allocate 1% of the budget to this Innovation pillar, we have high chances of achieving this goal of becoming knowledge capital in 20 years. This will also enable our domestic players to compete at a global level and generate 10x export revenue for the country.
Amit Bhatia, Founder & CEO, Aspire Impact:
As India recovers from the third COVID wave, she must catalyse sectors & companies with the greatest potential for inclusive growth, i.e., job creation as well as social & environmental impact, since research shows that impact enterprises create 10x-14x more jobs per dollars invested.
Therefore, in the 2022 budget, the Government must introduce annual corporate “Impact Reporting” initially voluntarily and later mandatorily. Impact focus can create >50 million new jobs annually in 5 years. We assessed five sectors (Agriculture, BFSI, Education, Water & Waste & Disabilities) and found that by 2025, individual investment ideas with the greatest job creation potential are: Dairy Farming (22 mn) Tech-enabled K-12 (3 mn); Digital Consumer Savings Products (1.3 mn) Supplemental & Extra-Curricular Education (1 mn); Student Housing Solutions (1 mn); Neo-Banking (0.6 mn); and, Digital Lending (0.5 mn). India must kickstart Impact Reporting for a resurgent Impact Nation.
Anand Kumar Bajaj, Founder, MD & CEO, PayNearby:
The digital payments space has proved its mettle as a stable growth avenue during the pandemic. A positive impact was seen on digital payments due to benign taxation for self-service digital customers. To ensure the same benefits reach the less-savvy citizens, our government could waive GST and TDS for financial inclusion services at Business Correspondent (BC) outlets across India. A GST and TDS waiver will help reduce the cost of offering seamless financial services and help high-end tech reach the technology-oblivious segment. We stand with the government’s intent of taking digitization to the last mile and passing the GST waiver benefit to end-users as this will push for greater financial inclusion and a digital economy in the country.
Moreover, low-income citizens are mostly catered to by low-earning retailers who barely cross the value of taxable income, and hence, do not file IT returns to claim a refund of TDS. Thus, TDS is only a cost to them and not a refundable deduction because they do not know how to take a refund by filing returns. We sincerely hope that TDS for income below ₹ 50,000 a year can be waived off. We are positive that this Budget will consider the grim working condition of the BC network and make the needful regulatory changes to ensure the viability of a community that has been vital in driving the cause of financial inclusion and democratization of digital payments in the country.
Lalit Arora, Co- Founder, VingaJoy:
The year 2021 was a challenging one for every sector due to the Pandemic situation. Hence, there’re a lot of expectations from the Central Government about its new policies, and if they would announce sops for the industries to sustain. We hope that the upcoming budget will have provisions for strengthening the entire system and take progressive initiatives such as ‘Make in India’ & ‘Digital India’.
In the upcoming budget, we are hopeful that the Government would continue extending its valuable support as initiated in the first term with the implementation of uniform GST, ‘Make in India’, besides offering a host of other initiatives that would help industries to come back to the platforms. Industries to develop newer technology in order to launch innovative products in order to compete with the current market scenario.
Akshay Mehrotra, Co-Founder & CEO, EarlySalary:
With the current rise in the cases and surge over major parts of the country, there is a threat of pause repetition in the economy. And the 2022 budget is expected to regain confidence throughout various sectors. The previous 2 years have been challenging for everyone, especially the working population. There was an increased strain on income and risk to health. The increased healthcare costs during the pandemic have given many of us a setback. Hence, I think some anticipations on the 2022 budget with regards to income tax relief in the areas of the standard deduction to be increased from Rs. 50,000 to Rs. 1 lakh.
A considerable workforce currently works from home. Hence, setting up work from home capabilities like deck, electricity, internet, and many more be provided with a tax-exempt. Likewise, a reduction of GST to 5% on insurance can help promote health insurance purchases by the middle class. To help incentivize homeowners, the tax deduction of Rs. 1.5 lakh on interest can be increased to Rs. 2 lakh. The reduction of VAT on fuel can help tackle the inflation due to surging fuel prices.
Apart from the working force, the country needs to work on strengthening the public health infrastructure with the rise of Omicron cases. We hope to see many relief measures coming around this space and many enhancements to be furthered that were initiated in the last budget. Lastly, we hope the 2022 budget will be a boon to the fintech sector as the lending space continues to grow. For the same, I think that there should be changes in debt financing options to get access to financial institutions beyond banks. Fintech and new direct digital lending players need access to more debt capital and carveouts, which can help lower the cost of borrowing for them and help customers get access to more affordable credit on demand.
Priyank Shah, Co-Founder & Director, RENEE Cosmetics:
In 2021 Indian startup community witnessed that more women have started their entrepreneurship journey and the entire industry has been cheering them on. However, specific reforms that encourage women-led start-ups are still missing. We hope to see some relief in taxation and GST policies so that women entrepreneurs can be encouraged to take the leap with a little more convenience. We can expect the government to encourage and provide funds to enable academic incubation centres in women-only colleges, which will enable more young women to not only explore entrepreneurship but also create startups as well.
Support of working capital and interest-free loans would also be highly beneficial to encourage Women-led startups. In addition to this, COVID-19 has been challenging for the entire industry in terms of production, therefore we seek easy and low-interest loans to cover the manufacturing part and provide the audience with better products. In this budget, the government should provide financial assistance to growth-oriented start-ups with proven capabilities to enhance their R&D.
Anish Bafna, CEO & MD, Healthium Medtech:
The Finance Budget of FY 2021-22 had made a landmark allocation of 137% increase over FY21 in the healthcare sector, by allocating a total of INR 2,23,846 crore for healthcare. As the country faces the imminent third wave of the pandemic, the expectations are higher for a significant increase in the budget allocation into the healthcare sector to promote the preventive, curative, well-being and essential services’ sectors that have already started off on a high note to not only cater to the country but also the world.
As we gear up for the budget of FY 2022-23, the expectation is high in terms of research and development push to the Medtech and Devices sector in terms of Incentivisation and tax holidays for a period of 10 years to be provided on the spending on research. There is also a need to increase the export incentives under the newly introduced Remission of Duties and Taxes on Export Products Scheme (RoDTEP), rationalisation of Custom Duty, roll back Health Cess on Imports of Medtech Products and amendment of SEZ Act to allow SEZ medtech manufacturers to sell their produce in the domestic market.
Facilitating of single-window clearances for government approvals for the local companies, rebates on costs related to product registrations in foreign countries and keeping exported products outside the purview of price control will together contribute to a more significant push for exports. Strategic investments and partnerships with Medtech Parks that have already been commissioned in four states and their readiness for national and international medical devices companies should be able to push the needle in the positive direction. The above measures will go a long way to ensure that there is a further boost in the domestic R&D ecosystem that will provide world-class quality products for domestic and international use.
Sanjay Dangi, Director, Authum Investment and Infrastructure Ltd:
The union should consider flat tax rates for everyone. Let’s have IT both at 5% for all categories. A flat income tax rate will make sure that compliance is high, and the tax base is broader. Surcharges on super-earners can stay: the burden is not high but the benefit to society is. The pandemic-hit lower and middle classes deserve some relief – lower taxes on salaried employees will directly boost consumption, and thus the economy.
A dual slab GST (say 5% and 12%) will not only make it simpler for all businesses to comply, but level the playing field for small businesses. In a strange irony, many of them pay higher rates on specialty products compared to big corporates that pay lower rates. The government should also eliminate the irony that some raw materials are taxed higher than finished products, baking in higher costs to the consumer. Finally, the cash spared from GST can be reinvested to boost production and hence employment.
As for other taxes, the government should leave corporate tax alone so companies can look at retooling and raising production. It can also consider a buy-back tax and long-term tax to reduce the effective tax rate and to align with global standards.
Raj Mruthyunjayappa, President, India, Anthology Inc:
Last year was a watershed year for the Indian start-up ecosystem that led to the birth of numerous unicorns including few in the edtech space, in a clear indication that education in India is about to witness a digital disruption. The pandemic has already kick-started that revolution with learning moving significantly online in schools and colleges across India. With upskilling and reskilling becoming the new watchwords, there is ample opportunity for educational institutions to boost their efforts to revitalise education by adopting technology tools that will foster greater inclusivity.
The National Education Policy (NEP) has identified skill gaps and has mapped local opportunities by putting together a skills framework. I hope that the Union Budget will look into augmenting the efforts in this space by setting aside a corpus that will help in creating a focused India Education Stack with the necessary infrastructure and focus on reskilling especially in tier-II and III towns and rural areas. This would be important if we have to sustain our projected GDP levels. Without knowledge there is no progress and we are sure the finance minister will back all efforts in the education sector by channelizing resources that will substantially boost primary and higher education in the country.
Rajat Gupta, Founder & CEO, TESSOL:
The Cold Chain storage sector has been one of the most underdeveloped sectors in India. Considering the long-term vision of reducing food spoilage and growing the retail sector in India, building the cold chain is a mandatory requirement. The sector has started gaining attention during the pandemic due to the increased demand for vaccination as well as food storage and delivery. The Indian cold chain industry has a long journey to cover. From the upcoming budget, we expect lower GST rates for cold chain products to encourage entrepreneurs in the cold chain industry to bring in more solutions and new innovations benefitting the associated sectors like pharmaceutical companies, e-commerce, FPOs as well as end consumers.
Input tax credit to transporters who invest in cold chain and commodities under 5% GST regime like restaurants, and subsidy on environmentally sustainable solutions along the lines of Indian Cooling action plan for promotion of those technologies. Promotion of locally manufactured products in the refrigerated storage and transport industry through subsidy on manufacturing and R&D investments. Consider a reduction in import duties for critical components like compressors that is essential for cold chain solution providers in India. This will not only motivate the cold chain companies but will also enable the building of a robust cold chain infrastructure in India.
Alok Bansal, Managing Director & Head of BFSI Business, Visionet Systems India:
The BFSI industry has had to speed up digital innovation and spend vast resources to be able to adapt to disruptive changes during the past two years. We look forward to Budget 2022 for some support to continue these innovations. Reduced GST will certainly bring relief and we also hope for reforms that would help simplify and streamline rural banking processes. Financial inclusion in India is very important to ensure the long term economic well-being of all citizens. Since most of the banking activities will take place online in the times to come, provisions to plug digital gaps would be most welcome too.
Himanshu Arya, Founder & CEO, Grapes:
The Indian advertising industry is unfolding at a tremendous pace. It is projected to be the second-fastest-growing advertising market in the Asia-Pacific region. The Indian advertising industry is poised to reach up to 700 billion rupees by 2022 from 564 billion rupees in 2020. Despite the pandemic, the industry has witnessed substantial growth, and this all happened on the back of digitalization. A&M advertising has fairly contributed to the economy and is on an evolving stage due to the rapid expansion in digital media.
With the union budget around the corner, I think it’s time the advertising industry should get its due share. The government should strive and encourage innovation and entrepreneurship in the digital media and the ad-tech sector. India has the brightest and sharpest young minds. We should create an atmosphere that is more conducive for the blooming of start-ups, and at the same time, incentivise investments and funding. The government should bring some stimulus packages and formulate policies focusing on digital infrastructure that bolsters the advertising industry. I hope that the forthcoming budget will only accelerate the wheel of the Indian economy.
It is expected from budget 2022 that the Solar Industry will boom with a potential investment of over USD 15 billion. As the government concentrates on electric cars, green hydrogen, manufacturing solar equipment, and meeting the ambitious 175GW renewable capacity target, the solar industry is predicted to expand in 2022. In my opinion, the Union Budget for 2022-2023 should include tax breaks and credit guarantees to encourage technology adoption in the solar power industry.
Also, installing a solar system is a considerable investment, and not everyone can afford it. Well, to relax in this issue, it is also anticipated that a credit guarantee programme will be established to reduce the risk for consumers with poor credit scores. As a result, such customers will get bank funding for rooftop solar installations.
Jaya Vaidhyanathan, CEO, BCT Digital:
As far as Union Budget 2022-23 is concerned, expectations are at an all-time high. The good news is that despite the obvious pandemic-induced impediments, economic recovery and expansion are still on track, and we seem to be moving closer to the US$5 trillion target. This is in no small part due to the recovery measures taken by the Government of India since 2016. Positive indicators in the stock market could also be interpreted as signs of progress. In addition, December 2021 saw robust GST collections of Rs.1.3 lakh crores, indicative of an era of monthly figures consistently above the Rs.1 lakh-crore-mark. On the flip side, persistent and high inflation in retail and wholesale leaves the economy in a precarious position.
For consumers and salaried employees, simple tax-related exemptions and benefits would be welcomed this year. On the business side, reduction in duties, concessions, simplified compliance measures, investment incentives, and state-sponsored programs to boost manufacturing, are all desirable steps to keep up the momentum of growth. It is also most critical to acknowledge the role of fintech in the future of economics. The expectation is for the government to reward and sustain fintech intervention to bolster India’s position as a global growth leader.
Ashish Chandra, Co-founder, COO & CFO GlobalFair:
India today is sitting on a cusp of a great economic opportunity. Covid has had a seismic impact on global production networks such that the logistics cost and sourcing networks have altered fundamentally. Businesses today are more worried about resilience in their supply chain and therefore looking to expand their supplier networks. Over the last few decades China has been the de-facto factory of the world. From industrial raw material to chemicals to finished building materials were all being sourced from China. But the pandemic has made businesses realize that they cannot just rely one a single production hub – what the commentators have dubbed as “China+1” business sentiment. This is a once in a century economic opportunity for India. A small 10% shift of demand from China to India can double India’s exports.
The export sector has been supported in successive budgets through a number of schemes. However some strategic issues persist. We need to put more impetus on a trade deal with the UK, EU, US and other like-minded countries in the Asia Pacific region. While India has passed on the opportunity to join regional networks like RECEP, more focus on bilateral deals could bring increased trade activity in these corridors. India’s economy and private sector today are strong enough to compete with global MNCs. India has far more to gain from these trade agreements than we can possibly lose. We need to shed our protective mindset and play from the front foot. Lower trade barriers, special treatment for Indian merchandise, synchronization of product specifications and certifications can open demand floodgates.
India needs to give a renewed focus on promotion of industrial clusters. More manufacturing capacity needs to come up and fast. Promoters need support around land, labour and capital to execute planned projects at great speed. Number of industrial corridors along Delhi-Mumbai, Chennai-Bangalore, Vizag-Chennai etc were planned but the execution is lagging behind. It is also time to revamp SEZ zones policy and provide more focussed export incentives and remove inverted tax structures in import of raw materials.