With the Union Budget 2023-24 around the corner, there is overall optimism in industry and various sectors that the economy will grow steadily in 2023 despite global headwinds and the Government will fuel the economy to remain resilient and continue to grow at a healthy pace, while balancing concerns around inflation and global risks. Voices from a cross section of stakeholders in industry, business and economy suggest a continuity in keeping the animal spirits alive as India strives to achieve the goal of a USD 5 trillion economy over the next few years.
Madan Sabnavis, Chief Economist, Bank of Baroda: We do expect the deficit to be managed without any undue pressure on market borrowings; and this is critical from the point of view of the financial markets which are concerned on the direction of bond yields at a time when liquidity is near neutral in the system. A combination of tax sops for the middle class and more directed assistance to the poor can be expected keeping in mind the elections in 2024, while the fiscal space will determine how much can be provided for capex. A lower growth rate in nominal GDP for FY24 will come in the way of making assumptions on tax collections for the year.
Sanjiv Bajaj, President, CII: A fresh look is needed at the capital gains tax with respect to its rates and holding period to remove complexities and inconsistencies. Moreover, the Government should contemplate a reduction in the rates of personal income tax in its next push for reform as this would increase disposable incomes and revive the demand cycle.
Prateek Agrawal, Executive Director, Business & Investment Strategy, Motilal Oswal AMC: Asset monetization could be the chosen route of the government. While many PSUs are slated to be sold and some work has been done in the past, that window may be rapidly closing, given the tight global liquidity which would make eliciting global interest or global fund raise by domestic companies more difficult. Securitization of stable revenue generating assets like roads could remain the focus.
Vikram Gulati, Country Head & Executive Vice-President, Toyota Kirloskar Motor: In the upcoming Union Budget, given the macro-economic scenario, our expectation is that the Government would continue to retain growth orientation. Further, continued economic reforms and infrastructure upgradation along with special thrust for the rural economy as well as keeping a check on rising interest rates would be important for sustaining good demand. The Government has also been pushing for greater self-reliance which includes incentives provided under various PLIs, policy support extended for electric mobility, alternate fuels like ethanol and bio-CNG as well as the hydrogen mission. We are hopeful that the policy initiatives will continue in order to accelerate rapid consumer adoption of green technologies.
Saket Dalmia, President, PHDCCI: Cost of doing business should also not be more than three top world manufacturing countries, namely, China, United States and Japan. The Government should focus on reducing the cost of doing business including the costs of capital. The banking sector should transmit the full effect of recent cut in repo rate and lower the lending rates immediately to reduce the cost of capital for the businesses. This will rejuvenate domestic demand and enhance the competitiveness of producers in the domestic market and exporters in international market. State of the art infrastructure becomes an imperitive to propels overall growth and development of the Indian economy especially to realize the vision to become Atmanirbhar Bharat and a developed economy by 2047. Though PM Gati Shakti National Master Plan and National Infrastructure Pipeline are contributing to this, infrastructure investment in the economy must not be less than 10 per cent of the GDP to achieve state of art infrastructure and to become a developed economy by 2047.
Rajiv Memani, Chairman Taxation Committee, CII: The Budget should provide a fillip to ease of paying taxes by promoting and ensuring swift functioning of important dispute resolution mechanisms like faceless appeals, advance pricing agreement mechanism, board for advance ruling and dispute resolution scheme. Government should also consider laying down a roadmap for rationalising the domestic TDS rates structure by having only two or three categories of payments and a small ‘negative list’ of payments which will not be liable to TDS. This will considerably ease the compliance burden on taxpayers, simplify the TDS provisions and avoid litigation on characterisation disputes.
Prashanth Doreswamy, President and CEO – Continental India: High GST rates are making vehicle unaffordable for buyers especially with increased prices of raw materials, fuel prices, and tougher regulations have already burdened the cost. Government should look at long-standing demand of automotive industry for lowering GST rates, which are currently taxed at 28 per cent with a cess levied depending on body and engine size. Therefore, I earnestly hope there is a reduction of GST on car safety devices and features to make them a lot more affordable and accessible.
Niraj Singh, Founder & CEO, Spinny: “There has been a huge surge in used car sales over the past 4-5 years, owing to the increased preference for personal mobility and over the past few years, the share of organized players has increased from 8% to 19%. The Government should evaluate incentives such as allowing people to claim depreciation on vehicles, liberalize tax benefits and enable lower interest rates on capital, as this would not only motivate people to buy and upgrade cars.
FICCI recommendations: A Food Inflation Response and Strategy Team (FIRST) be set-up to create an e-enabled, empowered coordination framework which can work with and across multiple key governmental agencies, to proactively address food inflation through logistical strategies in the short term. In the long-term learnings must be captured to form the basis of agricultural production and distribution planning for supply side management of inflation. Problems related to frequent checks at borders and multiple toll taxes hampers the quality of perishables and at times leads to complete wastage of consignment carrying perishables over long distances. Accord Special Green Permits for Perishables a special status for transport of perishables and special green permits can be given to move perishables swiftly across state borders with minimal inspections. Bank guarantees could be obtained from companies operating vehicles with green permits in order to ensure that green permits are not misused.
E-commerce exports can help MSMEs integrate into global value chains and also enhance exports. The export potential of e-commerce in India is yet to be realized completely due to issues related to costs of onboarding and compliance. Establishing dedicated customs clearance lanes will enable faster clearance of time sensitive e-commerce exports shipments. Anecdotal evidence suggests that on exports through air, it takes ~2 days and for exports through sea it takes ~4 days for customs clearance due to multiple issues including documentary compliance, congestion at cargo complexes, warehousing challenges and manual processes. A dedicated clearance lane for ecommerce exports will help improve efficiency.
Ali Sait, Founder CEO — Tech Avant-Garde (Edutech): The Union Budget should prioritise creating an enabling environment for education by focusing on the sector’s digital transformation. While the primary goal of the NEP is to ensure everyone has access to education, it suffers from lack of infrastructure, especially digital, in rural and semi-urban areas. We believe that there should be dedicated funds to assist educational institutions in building and scaling digital infrastructure to become hybrid learning centres. Given that India is one of the world’s youngest and largest countries, hybrid learning is the best way to ensure that quality education reaches every corner of the country
Deloitte India survey: The recent push towards digitalisation has been advantageous for the sector, with GST portal as the most effective digital endeavour by the government. Increased focus on R&D as well as aggressively collaborating with the private sector to create and complete digital projects will boost digitisation efforts and transform India into a digital powerhouse. Promoting PPP through efforts to resolve disputes and risk management for private participants may be utilised to inject funds into the economy
Pulkit Khurana, Co-Founder, Battery Smart: “With India increasingly embracing electri-
fication and EV adoption continuing to receive major focus, it’s important to now bridge the gap between the GST on swappable batteries (currently at 18 per cent and the GST on fixed batteries (currently at 5 per cent). This will incentivize manufacturers to reduce their costs – leading to increased affordability and hence, more EVs on our roads. We also hope to see swappable batteries being brought under the umbrella of the FAME subsidy. Getting Li-ion batteries under these subsidies will enhance buyer confidence and do away with EV users’ apprehensions regarding the recurring investment involved in batteries.”
Avinash Sharma, CEO & Co-Founder, ElectricPe: The EV industry in India looks forward to favourable policies for charging infrastructure and the adoption of more green vehicles. We hope to see equal distribution of central and state subsidies by the Government pertaining to charging infrastructure to end customers by enabling OEM-agnostic charging and swapping technology platforms, helping end customers directly claim the full subsidy benefits provided by the Government.
Arun Sreyas, CEO & Co-Founder, RACEnergy: Battery-swapping technology has the potential to create massive growth in the EV industry, and it will be imperative for the government to provide incentives for swappable batteries as well. The GST rate for swappable batteries, which is currently at 18%, must be lowered to 5% (the current rate for fixed batteries). As the cost of the battery is removed from the total vehicle cost for the users, lower tax rates will push more end-users to invest in the technology.
Namit Jain, Founder and CEO, Zen Mobility: We believe that increasing the scope of FAME-II in terms of extended timelines and on vehicle categories instead of battery capacity will help in building a strong foundation for the commercial EV segment in India. Additionally, evaluating SEZ (special economic zone) for electric vehicles offering low cost land and building infrastructure is an impetus to stimulate the economy. We also believe that the ban on imports of CKD/SKD kits will only help in growth of Indian companies.
Sharad Mittal, Director & CEO, Motilal Oswal Real Estate Funds: The current capital gain structure is different for different classes with variations in even short and long-term capital gains. There needs to be a parity in the capital gain structure across asset classes. Due to unavailability of input tax credit in the hands of developer and high GST slabs (18% & 28%) on key raw-material items such as steel and cement, developers have to pass on these costs to the end-users. Any course correction in the GST shall improve the affordability of properties in the hands of the eventual buyer.
Mohan Lakhamraju- Founder & CEO, Great Learning: Allow edtech companies to formally partner with universities to offer online and hybrid degree programs in order to achieve the Gross Enrolment Ratio targets set by the government and 2. Remove GST on upskilling programs to make them more affordable for people. Apart from improving the overall employability of the workforce, these measures will lead to more innovation and technological advancement in our country.”
Rajesh Sharma, Managing Director, Capri Global Capital: Special budgetary assistance for MSME women entrepreneurs. Despite having limited resources and lesser opportunities, women entrepreneurs from rural areas have shown immense potential to add value to the Indian economy by entering the MSME sector. Finance scheme targeted towards women MSME entrepreneurs like PMAY, for ticket sizes above INR 1 million, will encourage inclusivity and accelerate their entrepreneurial journey.
Varun Gupta, Founder & CEO, Boult Audio: As a homegrown brand which has contributed 1.5 million units crafted in India, we would like the government to continue the Aatmanirbhar Bharat expedition by increasing the strategic investment and boosting the companies that are strengthening the most significant campaign of the government. The consumer electronics tech sector has significantly fostered the Indian economy even during the pandemic. To continue doing so, the government needs to rationalize taxes, promote R&D and provide incentives to ramp up manufacturing in line with the Make in India campaign. Another crucial factor that the government must consider in the upcoming
budget is the focus on cost management in the logistics industry. Currently, the logistics costs in India are around 14% of its GDP, we are expecting an 8-10% reduction in the same.
Aarul Malviya, Founder of Zamit (Edtech): The pandemic has accelerated a shift from a predominantly offline learning system to one of hybrid learning for not only school students but also for university students and career professionals. A host of new-age edtech start-ups are offering tailored courses and existing educational institutions have incorporated digital mediums and formats in their everyday operations and practices. First, the foundational infrastructure for digital learning must receive adequate impetus in the Budget in the form of financial and policy incentives, including tax support and subsidies for private players who have taken the initiative to invest and contribute to this direction. The budget should ensure that digital technologies are utilized to the fullest and for those students dropping out in the middle of their studies due to financial constraints, especially at higher levels, the Budget should make provisions for them to continue their educational journeys.