Budget Reactions -2
February 2, 2020: Here is another set of reactions to the Indian Budget 2020, from tech industry leaders:
Sharad Sharma, Co-Founder of iSPIRT Foundation: The Indian economy needs to become an innovation economy in the next ten years. This needs increased R&D investments in both public and private sector, early-stage rupee capital formation, ramp-up of digital public infrastructure, an aggressive shift to an open-API based value-chain and the creation of a zero-friction environment for our entrepreneurs. This Budget shows an intent to move in this direction. However, bolder and faster action is needed. Baby steps are not enough.
Nakul Saxena, Director-Policy iSPIRT: The proposed 5-year deferment of tax payments on ESOPs by startup employees in the Union Budget, we believe, is a great move to attract high-quality talent to the startup ecosystem in the country. However, there are certain limitations to it which are restricting the benefits. The ESOP taxation changes in its current form apply only to around 200 startups recognised by the IMB (Inter-Ministerial Board), thereby, severely restricting its scope. Making it applicable to all DPIIT-registered Startups will empower all of the players to enjoy the benefits of the proposed changes, without unduly penalising others.
B Prasanna, Group Head - Global Markets, Sales, Trading & Research, ICICI Bank: The first Budget of the new decade appropriately focused on holistic growth objectives by resorting to the escape clause permitted by the FRBM act even as the commitment to consolidation remains in place. The budget sets out goals for boosting income in agriculture and allied sectors, boost export and commerce, concentrate on physical infrastructure and promote much needed focus on the country’s human capital through health, education and skilling. In this regard, the proposal of encouraging foreign flows into education is encouraging. The focus on digitization to facilitate governance has been given a commendable priority and was underscored in this Budget as well. The idea of disclosing extra budgetary borrowings in the budget document is laudable as transparency would be welcomed by the investor community.
KT Prasad, Country Sales Director, Zendesk India: I believe the Union Budget 2020 will have a positive impact on helping further drive Indian businesses, given the current local and international market conditions. The startup sector will benefit greatly from the tax breaks, and the move to tax ESOPs on liquidation will encourage the retention of talent in the sector, poising it for continued growth on the global stage. We are happy to see the push for adopting AI and ML particularly in the healthcare sector, which will help boost access to services as well as quality of care for more people, and further infuse growth in the economy. It is also interesting to see that the government has invested Rs. 8000 crore to the National Mission on Quantum Technologies, which will ensure India remains a key global technology player. This move aligns and propels India into the future with an eye on data, communications, cybersecurity, and technology, and from Zendesk's position as a global Saas company, this is particularly encouraging.
R. M. Agarwal, Chairman & Managing Director, ITI Limited: We are happy to see that this budget brings a new scheme of smart energy meter for households across the country with allocation of Rs 22,000 Crore to power and renewable sector. An additional budget of Rs 6,000 Crore allocated towards BharatNet to cover 100,000 Gram Panchayats will also ensure the digital connectivity to last mile. To boost data localization, it is appreciable that the government is bringing a policy to build data center parks across the country.With diversification in many business verticals, ITI’s presence is visible across projects like ASCON, BharatNet, Network for Spectrum, Smart Energy Meter manufacturing. In BharatNet phase I, we have already facilitated connections to 47,000 Gram Panchayats where we have indigenously manufactured and installed 47,000 Optical Network Terminals and 1850 Optical line terminals. As part of BharatNet phase II, we are executing projects for Maharashtra and Gujarat State Governments. ITI is also expanding existing data centre and plans to set up manufacturing hub initially in Bengaluru.
Mukesh Kalra, Founder & CEO - ETMONEY:The Finance Minister's proposal to introduce new tax regime is a great step towards giving equal chance to every Indian in lower income segment to maximize their post tax incomes. In the old regime, an individual supporting a larger family & negligible savings was forced to pay higher tax compared to an individual supporting a smaller family or one with no dependents. This created disparity when it came to effective taxation for the former group. In the new regime, the disparity ends & also frees up income in hands of individuals to give a boost to consumption.
Ashwin Kumar, Director, Data Centre and Cloud Operations, Linode India: With a focus on technology and innovation, Budget 2020 sets the foundation for India’s future. The allocation of INR 3000 crore for skills development will help bridge a sizable technological skills gap in the country and enhance the global competitiveness of small and mid-size businesses throughout the country, which today employ 40 percent of India's total workforce and contribute nearly 30 percent to the India’s economy. We welcome all efforts that positively drive the key levers of modern business — innovation, growth and efficiency.
Sunil Sharma, managing director – sales, Sophos India & SAARC:The Government’s Union Budget 2020 is built on the bedrock of emerging technologies including Artifical Intelligence (AI), Machine Learning (ML), Internet of Things (IoT) and more. Initiatives such as building data center parks across India aiming to safeguard ‘data’, the most critical asset of organisations along with the digitisation of 100,000 Gram panchayat through its Bharatnet initiative will strengthen the digital fabric of the country. However, increased digital penetration brings along with it cybersecurity risks. We welcome the Governments proposed steps in strengthening the MSMEs that provide employment to millions of people, we need more impetus on building skilled cybersecurity professionals in the country. The government’s allocation of Rs. 3,000 crore towards skill development is a step in the right direction towards building India’s youth and economy.
Sandeep Bhambure, Vice President and MD, India & SAARC, Veeam Software: The government’s announcement of setting up a policy to build data centre parks throughout India for digital connectivity and the allocation of Rs 6,000 crores for BharatNet is a big step towards a successful Digital India initiative. This will increase the adoption of technologies such as IoT, Analytics and AI; leading to an unprecedented amount of data generation. Data management and protection will play a key role to safeguard the citizen’s data from cyber-breaches. Additionally, the implementation of intelligent data management platforms will help achieve positive outcomes from the data.
Mahesh Ramamoorthy, Managing Director, APMEA- Banking and Payments, FIS: The Government is determined to transform the country into a digitally empowered society. The acknowledgement of Artificial Intelligence, Data Analytics, Machine Learning, and Internet of Things will further boost Start-Ups in the country, and further aid FinTech innovation. This will encourage the financial institutions and banks to embrace newer technology for enhancing customer experience and operations. A proposed policy to enable private sector build data-center parks is expected to bring in technology, investment, and employment opportunity in the country, while providing platform for structured data storage and security. And, through leveraging economies of scale one can witness lower cost of data ownership, and cost per transaction. The government’s move to connect digitally all public institutions at Gram Panchayat levels will boost transparency, accountability and online transaction.
Shakir Ebrahim, Founder of GoBisbo Broadcasting Network Pvt. Ltd: The Budget 2020-21 has been disappointing indeed, lacking any resolve towards digital India. We had expected infrastructural support for Indian companies to come up to speed with the servers which support more substantial streaming services like Netflix and YouTube. Instead of looking at digital India and Modi's digital dream, the budget cuts custom duty on newsprint by half.
In my opinion, this budget will not help build our strengths and capabilities for $5 trillion. The gross under-reporting of the budget deficit at 3.8% of GDP instead, shows a polity still trying to hide systemic problems which have led us there. The imposition of higher duties on Chinese goods is also a virtual admission that we are not confident of competing with China
Harshil Mathur, CEO and Co-founder, Razorpay: The budget does meet some of the expectations from the FinTech industry and startups. The introduction of some sort of a tax relief on ESOPs was one of the biggest asks from the startup industry - this deferment of tax payment by five years, to me, is one of the biggest welcome moves by the government in this budget. This is a good start and I hope we see more focus on this going forward. Secondly, the reduction on corporate tax to 22% is an encouraging step. This is the lowest in the world and will be encouraging for Indian business's. Lastly, the changed income tax slabs and rates is not only a huge income tax relief for individuals but will also lead to an increase in disposable income, thereby giving a boost to consumer spending.
Archana Khosla Burman, Founder Partner, Vertices Partners: Realizing the fact that women empowerment is key to social development and economic progress, Budget 2020 rolled out key women-centric initiatives and policy measures. An allocation of Rs 35,600 crore for nutrition-related programs in FY21 will ensure nutrition security and increased intake of nutritious diet for pregnant and lactating women. The budget also focused on laying guidelines for lowering maternal mortality rates in the country. Reiterating the government’s commitment to ensure sustained access for the girl child to quality education, the Beti Bachao Beti Badhao initiative has resulted in higher gross enrolment of girls in schools than boys. The allocation of Rs 28,600 crore in FY21 for women-linked programs holds the potential to increase women participation across the social and economic spectrum. Moreover, the initiative to introduce the Investment Clearance Cell is a welcoming move that will assist the women entrepreneurs receiving investments in their companies.
Suman Reddy Eadunuri, MD, Pegasystems India: This interim budget, has a fair impetus on the technology sector. We see acknowledgement of the role of AI, Analytics, IoT along with schemes to deploy these technologies in the public sector. The setting up of a digital platform for seamless application and capture of Intellectual Property Rights (IPR) moves us closer towards an era of enhanced public-private partnership where technology will play a decisive role.The implementation of a policy to build data centre parks throughout the country is another welcome move which will help immensely in data management. As the 5th largest economy of the world with a vibrant startup ecosystem, the announcement to create more opportunities for entrepreneurs and setting up of an Investment Clearance Cell which will offer assistance in funding will boost the industry
Gaurav Bali, Founder & CEO, AmyGB.ai: The Government has rightly and emphatically underlined the criticality of startups in the budget. By making things easier for startups, the Government is sending a strong signal to entrepreneurs to stay invested in India. The Push on data and knowledge centers, digital platforms for IPR and most importantly, support for early stage funding are key to creating a viable startup eco-system capable of competing with other markets. Acknowledgement of quantum computing and future technologies is a key step to promote start-ups working in nascent fields.
Chandrahas Panigrahi, CMO and Consumer Business Head, Acer India: This is positive budget overall from the technology focus point of view. We are pleased that the Government is allocating Rs. 8,000 crore for the National Mission on Quantum Computing and Technology. The government’s move on encouraging manufacturing of electronic equipment in India is also a big step as this would provide much needed impetus to technology and manufacturing sector, which has been developing capacities and generating employment opportunities. Also, more focus on technology such as Machine Learning, Robotics, AI will support the industry to grow and establish India as a robust ecosystem for technology and innovation
R N Iyer, Founder and CEO, Vayana Network: We welcome government’s focus on providing easier working capital to MSMEs. Access to easier working capital through digital means can be a great boost for MSMEs, details of the proposed mechanism need to be studied though. Enabling NBFCs to bid on the TReDS platforms can help by widening the number of supply chains accessing finance through these platforms. Specific sectors that could see growth revival include electronics manufacturing, healthcare and medical devices, and export driven sectors like pharma, auto-components, marine & fisheries, etc. We will continue to work closely with all institutions and stakeholders to take the fruits of these measures to the last mile MSMEs.
Srikanth Chintalapati, Partner at Mantra Capital (Cross-border venture fund):This is a welcome framework. India is an agrarian economy and 50% of the population lives in the rural sector and ours is a consumption-driven economy. Any support from Government to enhance income levels of small and marginal farmers to adopt new technologies, processes and higher credit availability is welcome and would encourage startups in this space to innovate and incubate. Also, exemption of ESOP tax will provide the much needed impetus to startups to retain talent and reward merit. One of the key pillars of successful startups is right team and ESOPs are the instruments that can help build world class teams if they are structured properly from a tax perspective. It will also allow startups to keep OPEX costs in check. This will also allow SOP framework to be introduced into ESOP program.
Deepthi Ravula, CEO of WE HUB (first state-led incubation centre for women entrepreneurs from across the country):A lot of early stage startups never make it to the next stage and most of them for a lack of funding to create a prototype even. So this is a welcome move to enable more innovators to become entrepreneurs and should see major uptick in the number of product based startups. IP filing and processes are usually considered to be expensive and time consuming. So creation of a digital platform for IP protection would enable more Nano MSME and startup entities to think of and apply for patents. ..So this budget has enabled more startups to focus on innovation to incorporate technology in to every new aspect within Government.
Ravi Narayan, CEO of T-Hub:The Budget 2020 has opened various opportunities for startups, adoption of technology and youth. The future is looking optimistic for India’s startup ecosystem, provided proper planning, execution, and governance are put in place. Also, these next steps should be carried by professionals that bring expertise from these fields. In my opinion, Union Budget 2020 offers these key benefits for the startup ecosystem this year:
Jay Krishnan, Partner at Mantra Capital:Being a part of India's growth story and looking forward to the budget every year is an experience in itself. As far as the 2020 budget for startups is concerned, I was hoping for relief from the government in the areas of TDS for startups and harmonising the tax rate on securities. That being said, the eventual playout from the 16 point action plan for Agri should help startups in this sector. The relief for taxation on ESOP deferment, the eventual extension of tax deduction up to 10 years for startups should come as a breather to early-stage startups. Depending on the details, hopefully, new foreign investments through debt should also be favourable for startups looking for debt as an instrument to stay capitalised in the growth story.
Devang Mehta, Partner at Anthill Ventures:Overall positive budget. Seed fund for startups and defraying payments on ESOPS a definite plus if implemented well. FM hitting the right note by saying that youth are job creators and not job seekers. Strong onus on government to maintain deficit at 3.8 % after DDT removal. LIC and Air India sale key”
Sumeet Jain, Co-founder, Yocket, an Edtech startup: There was too little for the education sector in the budget. FM did not reduce any GST cut yet. FM did emphasize on education ion and employability but no clarity on how it will achieve employability. But the fact that it was on mind is good but we need to see details on how well the funds get deployed. Development of online courses was good but that would be limited to only top 100 institutes. Should have focused more on the boost to online courses and infra to help smaller niche institutes to also enable online courses. Didn’t mention anything about the education abroad or loans.Did mention the development of IND-SAT an exam for international students wanting to study in India. This would be a good opportunity for Indian institutes. But again I feel the bigger problem has been the quality of institutes and research levels. Nothing about that. FM did mention about FDI in the education sector. If this opens up it could be a big game-changer in skill development.
Pushkar Singh, CEO of LetsTransport (one of the leading tech-logistics firms in India): As stated by the Finance Minister Nirmala Sitharaman, the government is likely to increase spendings on infrastructure and the National Logistics Policy will be revealed soon. Accelerated development of highways with 2,500 km access-controlled highways will be beneficial in terms of transportation and logistics service efficiency. In fact, Implementation of National Logistics Policy will surely position India as a prominent global logistics player, ensuring a boost in trade and enabling market access expansion across sectors.