Union Budget 2023: What's in it for the Technology Industry?
The Indian government just unveiled the Union Budget 2023, which has many beneficial effects for the nation. Reports suggest that the global technology sector will shift into a new phase in 2023. The IT sector is currently going through a phase of consolidation after years of enthusiasm, especially in the last two years in the immediate aftermath of Covid. As a result of high inflation and interest rate increases in western economies, 2022 saw corrections across all industries.
Technology businesses cut down on riskier investments and concentrated on corporate-level reorganizations, staff simplification, and increased focus toward achieving near-term operational efficiencies as investors closely scrutinized the growth plans and profitability measurements. This change is frequently referred to as the funding winter in the private markets, particularly for late-stage businesses that share a similar focus on profitability. The budget announced for this year will help India towards a bright future because the Indian economy is headed in the right direction. The three main goals of the economic agenda are to provide adequate opportunity for people, particularly young people, to stimulate growth and job creation, and to stabilize the macro economy.
Let us look into the Major announcements of the 2023 Budget that directly concern the IT industry.
Numerous new policies for the tech sector have been announced to the tech sector in the budget. These include promoting digital payments throughout the nation, establishing 100 labs to create 5G apps, and making PAN the common identity for all digital systems of the designated government institutions. With the announcement of 100 labs to be set up to create 5G applications across smart classrooms, precision farming, Intelligent Transport Systems, and healthcare applications, 5G enterprise use cases will gain momentum.
According to experts, this will propel the enterprise use case and assist in designing and unlocking new user experiences for 5G. The two telecoms, Bharti Airtel and Reliance Jio, who began the staggered launch of their 5G services in October 2022, will benefit from this. According to analyst projections, up to 40 percent of 5G income might come from deploying enterprise use cases, which is projected to be the main source of revenue for telcos in the future. The variety of use cases created for enterprise objectives thus far and the scalability of the same moving forward were among the problems experts had predicted.
Telcos have already begun implementing enterprise use cases in industry 4.0 and healthcare. For instance, at Mahindra's Chakan production site, Airtel and Tech Mahindra deployed India's first 5G-enabled vehicle manufacturing unit.
Digital Public Infrastructure (DPI) for Agriculture
The government has proposed a significant expansion for DigiLocker and announced a new digital public infrastructure (DPI) for agriculture, which will further broaden the scope of digital public goods and ease the burden of individual and organizational compliance as well as know-your-customer (KYC) processes. DigiLocker, a secure cloud-based platform for document and certificate storage, sharing, and verification, was introduced in 2015. 5.62 billion documents have been stored and distributed by DigiLocker so far, which has been utilized by 145.95 million individuals.
Customs duties on the import of several components used in the production of mobile phones would be reduced, according to Finance Minister Nirmala Sitharaman
Green Credit Program
The decision to launch a Green Credit program, which will be announced in accordance with the Environmental Protection Act, would undoubtedly change the game in terms of motivating corporate organizations and individuals to embrace sustainable activities, such as recycling and refurbishing E-waste. The new policy to replace obsolete, environmentally damaging cars will pave the path for formal recycling and effective waste management of auto parts while also creating jobs.
The Union budget is quite important for the Fintech industry since it lays out the path for future expansion and development. Measures to prevent potential financial crimes will align with the risks identified with the help of recommendations on adopting a risk-based approach for KYC and a system that can accommodate Digital India's needs. The country's entrepreneurs will be encouraged if incorporation privileges are extended to 10 years for new businesses. According to Kommu, this will also make startups more appealing to investors because higher revenues and better returns on investment result from lower tax burdens.
Cut in Customs Duty on the Imports
Customs duties on the import of several components used in the production of mobile phones would be reduced, according to Finance Minister Nirmala Sitharaman. Her declaration comes as international players search for a China-plus-one approach, and India has aggressively positioned itself as a global electronics powerhouse. In fact, because of the Center's enabling policies, numerous incentive programs, and determination to create a competitive environment for the industry, India has become the second-largest mobile phone maker in the world.
Additionally, the finance minister stated that custom charges on cells in TV panels would be reduced to 2.5 percent. In comparison, the duty on electric kitchen chimneys has been raised from 7.5 percent to 15 percent. The government wants to raise the thresholds for presumed taxes for some professions and MSMEs to Rs. 75 lakh and three crore, respectively.
Cost savings come from every hassle-free digital invention that makes life simple for everyone. For instance, the price of SIMS has decreased thanks to computerized KYC for mobile connections. Similarly, it has made creating bank accounts less expensive, which is why we established millions of accounts during the JAM (Jan Dhan, Aadhar, and Mobile) push.