Opinion

Budget lays the foundation for India’s ‘techade’

Debjani Ghosh | Updated on February 02, 2020 Published on February 01, 2020

The focus on building a strong digital infrastructure is welcome   -  istock/liulolo

The Finance Minister set the right tone by calling out the importance of deep-tech like AI, IoT, 3D-printing, drones, DNA data storage, quantum computing, etc, and how they are bringing about the new world order

As NASSCOM, we had called out the importance of making the new decade the #techade of smart-tech adoption across every key segment, to build the foundation for becoming a $5-trillion economy. The best thing about this Budget is that it has made deep-tech a key integral enabler of the three prominent threads of ‘Aspirational India’, economic development for all and being ‘a caring society’.

The Finance Minister set the right tone by calling out the importance of deep-tech like AI, IoT, 3D-printing, drones, DNA data storage, quantum computing, etc, and how they are bringing about the new world order. The direct benefit transfers and the sharing economy’s scale are all great examples of what emerging technologies can do to expand the boundaries of possibility.

Digital infrastructure

The announcement of an ₹8000-crore boost announcement for quantum technologies and applications is a positive step. Quantum computing basically enables us solve problems that would have taken a normal computer thousands of years to solve,and it is not surprise that countries and companies are investing billions of dollars to build their quantum capabilities.

The focus on building a strong digital infrastructure, including data centre parks, is also welcome.

Leading in the digital economy will require us to foster an environment which protects and promotes IPR. That said, the announcement of a digital platform for IPRs, knowledge translation clusters and the Institute of Excellence is again a step in the right direction. Innovation can only be spawned if we continually strengthen the infrastructure that supports it.

Towards inclusion, 1,00,000 gram panchayats are now going to be linked through Bharatnet’s Fibre to the Home Network. This will broaden outreach to include public institutions like anganwadis, health and wellness centres, government schools, etc.

Encouraging talent

All this will only come through if we get the talent piece right. Towards this, there’s an outlay of ₹99,300 crore in education and ₹3000 crore in skill development. A new education policy is on the anvil and there’s a thrust to promote online degree courses, particularly in top-rung institutions. In addition, by next year, 150 higher educational institutions will embed apprenticeship in their course curricula.

The ‘ease of doing business’ finds significant mention too. Earlier, start-ups having a turnover up to ₹25 crore could claim a deduction of 100 per cent of its profit for three consecutive assessment years out of seven. The threshold has now been extended to include start-ups with turnover up to ₹100 crore and the period increased to 10 years.

Giving away ESOPs is a common enough way to reward talented employees in start-ups. To arrest the cash-flow due to its earlier tax treatment, the government now proposes to ease the burden on employees by deferring the tax payment by five years or till they leave the company or sell their shares, whichever is earliest.

We’ve been arguing in favour of abolishing the Dividend Distribution Tax and its cascading effect increases the tax burden on investors for a while now. Though its removal comes at a cost (revenue forgone by the government) it’s announcement is commendable and it should put the country several notches ahead in terms of attractiveness as an investment destination. With appeals now also being faceless, it adds to the existing repertoire of other I-T functions such as filing and processing of returns.

There were a few misses too. R&D investment in India is low compared to the other leading nations. It was an opportunity missed towards fostering R&D investments. The other angle is about the SEZ extension clause – some clarity was required. We had also recommended that the government extend a 15 per cent tax rate for new companies in SEZ. IT Services is a major forex earner and an employment generator; SEZs are prominent growth engines. We need to consider these recommendations to remain globally competitive.

Nonetheless, it gives me great happiness that the influence of technology and the sheer benefits that it can bring for new India cuts right across. And as we await the details in the fine print, we must emphasise that good intent needs to translate into efficient action.

The wrieter is President, NASSCOM

Published on February 01, 2020
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