Expectations for Union Budget

18th July 2024- Finance Minister Nirmala Sitharaman is gearing up to present the first full Union Budget of the Narendra Modi 3.0 government on July 23. Anticipation is high among economists and industry leaders, who expect significant announcements on the income tax front. With the economy recovering from the pandemic’s impact, experts foresee the government continuing its emphasis on capital expenditure, particularly through infrastructure development. This strategy aims to stimulate GDP growth and bolster economic recovery.

Industry experts have expressed optimism about the Budget’s potential to provide much-needed impetus to key sectors, fostering a conducive environment for sustainable growth and employment generation. They emphasize the importance of policies that support investment and innovation, essential for India’s economic resurgence in the post-pandemic era.

Comments From Industry Experts:

Mr. AK Tyagi, Founder, Chairman & Managing Director of Nuberg Engineering Ltd.

As we approach Union Budget 2024-25, Nuberg EPC welcomes and commends the government’s visionary approach towards accelerating India’s shift to Green Hydrogen. This strategy demonstrates India’s commitment to sustainable energy solutions that would position our country as a world leader in renewable technologies.

Green Hydrogen is integral to minimizing carbon footprints across sectors like transport and manufacturing, ensuring power autonomy through renewable sources of energy such as sun and wind.

The recent Rs 600 crore budget increase for the National Green Hydrogen Mission to scale production to 5 million metric tonnes annually by 2030, supported by over ₹8 lakh crore in renewable energy infrastructure investments was a good step. This initiative is expected to create 600,000 jobs, decrease fossil fuel dependence, and cut greenhouse gas emissions by nearly 50 million metric tonnes annually.

However, challenges abound on this transformative journey. Advancing technology in electrolysis, developing robust storage and distribution networks, and streamlining regulatory frameworks are critical imperatives that demand immediate attention. Additionally, reducing GST and import duties on essential equipment will be crucial to enhancing cost-effectiveness and competitiveness in the global market.

Beyond advancing technology and building infrastructure, a critical challenge for scaling the Green Hydrogen sector is the shortage of skilled manpower proficient in areas like electrolysis, hydrogen storage, and energy grid integration. Addressing this gap requires bolstering vocational training and educational programs focused on renewable energy and hydrogen technologies. By investing in human capital development alongside technological progress, India can cultivate a skilled workforce essential for innovation and sustained growth in the Green Hydrogen industry.

We recommend that to hasten progress and move towards sustainability, resources should be invested in research and development (R&D) for advanced electrolysis technologies while creating public-private partnerships that promote innovation and scalability. Our pioneering role in setting up India’s First Commercial-Scale Hydrogen Fuelling Station for IOCL followed by numerous other Hydrogen initiatives in the country makes us anticipant of India’s hydrogen future.

Our objective is to make India greener with Green Hydrogen by working alongside governments and industries. The budget must propose significant measures that can help achieve this energy independence, reduce environmental impacts, and create a resilient energy system for future generations in a double-quick time frame.

Mr. Manish Mehan, CEO and MD of TK Elevator

“As we approach the 2024 Union Budget, the real estate industry anticipates reforms and incentives to spur growth and innovation. With new metro projects enhancing urban connectivity, there’s a significant opportunity to stimulate residential and commercial real estate markets. Additionally, the elevator industry, which plays a crucial role in high-rise developments, anticipates policies that support modernization and sustainability. In particular, we hope for GST reforms that reduce the tax burden on construction materials and elevator installations, making development projects more economically viable. Streamlining regulatory approvals, providing tax benefits for sustainable and green buildings, and incentivizing modernization efforts in the elevator sector will be crucial. A budget that aligns real estate growth with elevator industry advancements can enhance urban infrastructure, improve quality of life, and drive sustainable economic development.”

Mr Nirav Choksi, CEO & Co-founder of CredAble

“We believe India’s forthcoming Union Budget will prioritise sustaining growth over the medium term, encouraging capital investments, and achieving fiscal consolidation.

India’s journey to become a US$5 trillion economy will be marked by digital advancements, a resilient MSME sector, and a thriving trade ecosystem. Proactive trade agreements coupled with extensions of the concessional corporate tax rate for new manufacturing units are expected to attract investments, unlock new market opportunities, and empower businesses to navigate global challenges.

Strategic reforms to address tax challenges, ensure the ease of paying taxes, and improve the overall compliance framework are essential for fostering a conducive business environment for startups in the country. We look forward to measures that support responsible innovation in financial services, foster partnerships, enhance the digital lending ecosystem, and catalyze innovation in the FinTech sector to deepen last-mile financial inclusion.

Overall, we are optimistic about transformative reforms like improved credit access, clarity regarding the 45-day payment rule for MSMEs, and lower interest rates, which will in turn enhance the competitiveness of MSMEs on a global scale and significantly contribute to India’s trajectory towards becoming an economic superpower.”

Arun Kumar Nayyar, CEO and Managing Director, NeoGrowth Credit

“The government’s strong commitment to the MSME sector is evident through its multiple initiatives to foster growth and resilience. This year, we are confident of further support in improving access to credit, strengthening digital public infrastructure, and enhancing liquidity measures.

Timely access to credit remains a significant challenge for MSMEs. Non-Banking Financial Companies (NBFCs) play a crucial role in reaching underserved and unserved segments. Therefore, creating an enabling environment through increased funding and regulatory reforms is essential.

According to the recent NeoInsight Study by NeoGrowth, titled ‘MSME Business Confidence Study 2024’, 82% of MSMEs plan to adopt new digital tools this year. Government-led skilling programs can further aid in helping them upgrade digitally and enhance their operations.These initiatives will address challenges, drive growth, and ensure resilience in the MSME sector, contributing to the nation’s economic stability and progress.”

Anil Joshi, Managing Partner, Unicorn India Ventures

“The venture capital industry is very young and has certain expectations from the Honourable Financial Minister. Removal of Angel Tax has been a long standing demand of the industry. Stakeholders of the ecosystem have made representation to the Govt with an aim to find a solution for the same. In most cases, the investments at early stages are made to young companies and with limited resources. It becomes tedious and non productive for everyone, more so it also discourages potential investors to invest because of fear of coming under tax authorities scrutiny. It’s a long pending demand and we wish Hon. FM takes it up in the upcoming Budget. The solution will encourage many potential tax payers to open up to the investment of this asset class.

Additionally some of the demands are long pending like favourable consideration to GST on management fee and adjustment of management fee toward expenses while calculating income or gains. The industry also demands in the current budget bringing long term gain at par with listed entities. The VC community would prefer speedier approval on overseas investment as the current process takes too long.”

Manoj Agarwal, Co- founder and Managing Partner, Seafund

“I have high hopes for the upcoming budget to strengthen the deep tech ecosystem in India. The government has made encouraging statements about supporting this sector, and I believe it is crucial to provide more backing at the seed stage. Deep tech startups often require significant research and development, which may not attract early-stage investment from the private sector. A dedicated fund of funds to support investors who are willing to take the plunge into deep tech is vital.

Additionally, simplifying the taxation framework for startups, ESOPs,and investors is essential. In many European countries, investors receive tax benefits for investing in startups, either directly or through funds. Similar provisions in India could stimulate more domestic investment. Moreover, we need to address the issue of ‘reverse flipping’ for businesses built in India but headquartered abroad. Facilitating an efficient and tax-effective way for these businesses to return to India could significantly benefit our economy and the government’s revenue in the long run. As we address these concerns, a simplified GST tax regime for the funds and doing away with angel tax will free up a lot of domestic capital towards early stage funding, which is needed today more than ever as we see funding winter thawing at a snail’s pace.”

Mr. Vinod Sood, MD, Hughes Systique Corporation :

The upcoming Budget 2024 holds immense promise for companies specializing in full-cycle engineering for products and R&D services, encompassing programming, testing, verification, technical support, design, and technology consultancy. The industry anticipates increased funding for R&D projects through larger grants and tax breaks, which could spur significant technical innovation. A reduction in the corporation tax rate would also be highly beneficial, fostering a more favorable environment for investment and expansion, particularly for startups and IT enterprises.

Industry leaders are enthusiastic about advancements in digital infrastructure, such as the introduction of 5G and enhanced internet connectivity. These improvements are expected to boost productivity and enable companies to offer cutting-edge solutions to their clients. Policies supporting collaboration between businesses and academia could further accelerate the development of new products and technologies.

In summary, the Budget for 2024 can significantly impact the product design and R&D sectors by providing financial incentives, enhancing infrastructure, and encouraging innovation. These measures will not only benefit tech businesses but also drive the overall growth of the Indian IT sector. Notably, the government has reiterated its commitment to launching the Rs 10,000 crore IndiaAI Mission within the next two to three months, laying a solid foundation for future technological advancements. The government’s active efforts to establish this mission underscore its dedication to positioning India as a global leader in AI and technology.

Mr. Akash Gupta, Co-founder & CEO of Zypp Electric

To achieve net-zero carbon emissions, the government must focus on maintaining policy continuity. Inclusion in the priority lending scheme and reducing GST for EV services from 18% to 5% will accelerate EV-led delivery adoption. Recognizing last-mile delivery as a distinct sector under logistics policies is essential, given that one-third of shipments fall within this category. Establishing industry standards, supporting gig delivery partners with tailored schemes, and implementing standard operating procedures (SOPs) will enhance efficiency and foster growth in this vital but often overlooked segment of the logistics industry. An extension of the existing EMPS scheme will result in better stakeholder sentiment and investor confidence. With increased government support in driving localization to cut down costs, infrastructural advancements in terms of establishing a robust charging infrastructure, which will further aid in boosting customer awareness, and focusing on job creation will foster strong collaborations and necessitate substantive developments for the EV sector.

Mr. Niranjan Nayak, Managing Director, Delta Electronics India

As we look forward to the Union Budget 2024, our expectations focus on the critical need for transformative reforms in the auto sector, specifically aimed at fostering a green and sustainable energy segment. With a firm commitment to reducing pollution and addressing climate change, we anticipate the government will align its policies with the net-zero goal and sustainable development.

The implementation of PLI schemes specifically for EV charging companies is crucial. Expanding EV infrastructure is essential for promoting widespread EV adoption in India, and financial incentives will significantly boost the growth of our charging network. We also hope for tax reforms that support our industry and encourage consumers to transition to electric vehicles. Developing a robust EV charging ecosystem, particularly in Tier II and Tier III cities, is vital. Prioritizing open data standards and APIs for charging networks will ensure interoperability and enhance user experience. At Delta Electronics India, we are dedicated to contributing to this transformative journey by providing innovative, reliable, and efficient charging solutions. With supportive budget measures, we can strengthen our charging capacity more accessible for all, paving the way for a sustainable future.

Mr. Hyder Khan, Director & CEO of Godawari Electric Motors

With the Central & State government’s strong push towards a greener future, we have high expectations from the upcoming budget for the EV sector, particularly for those who believe in the ‘Make in India’ model. As we approach the 2024 budget, the electric vehicle industry stands at a pivotal juncture. We are looking for continued support and substantial policy enhancements to accelerate the transition to sustainable transportation.

We urge the government to consider increased subsidies for electric two-wheelers and three-wheelers, as well as incentives for domestic manufacturing and R&D initiatives. Additionally, investments in charging infrastructure and battery technology will be crucial to overcome existing barriers to widespread EV adoption. Our vision is to make clean and affordable mobility accessible to every citizen, and with the right fiscal measures, we can make significant strides toward achieving this goal. We are hopeful that the upcoming budget will reflect a strong commitment to fostering innovation and growth within the EV sector, ultimately contributing to a greener and more sustainable future for India.

Mr. Rajan Pental, Executive Director, YES BANK.

As we approach the Union Budget 2024, there is strong anticipation for comprehensive measures to empower the MSME sector, crucial to India’s economic growth. We expect the government to focus on expanding the ecosystem for new-to-credit borrowers, particularly through provisions under Informal Micro Enterprises (IME). Digital transformation remains a key priority. Investments in digital infrastructure and incentives for MSMEs to adopt modern technologies will improve operational efficiencies and market reach. Government schemes like PM Vishwakarma, PMJDY, and PMMY are essential in supporting MSMEs, particularly those finding it difficult to access credit.

At YES BANK, we have grown significantly in our financing under CGTMSE and are committed to supporting financial inclusion for MSMEs. We are building an ecosystem where loans can be sanctioned and disbursed digitally to micro-entrepreneurs. Additionally, the surge in Udyam registrations, with nearly 25 million in the past year, highlights the growing support for smaller MSMEs. We believe that with the continued support from the government, MSMEs can drive India’s economic growth and resilience, significantly contributing to a vibrant and sustainable business ecosystem.

K. Anindith Reddy, Managing Director, Enliva

“India’s examination and disposable gloves market, poised to reach $760 million by 2025 vis-a-vis the global market size of $15 billion, presents a substantial opportunity to bolster the nation’s manufacturing prowess. Realizing the potential of the ‘Make-in-India’ initiative demands a paradigm shift in policy. By streamlining regulations, providing targeted incentives, and implementing a robust quality control framework, India can not only meet domestic demand but also emerge as a global leader in disposable glove production. There is a need for a Quality Control Order, introduction of minimum import price to counter dumping, reduction on utility costs to optimise production costs and introduction of performance linked incentives for the sector’s growth and competitiveness”

Ishaan Dodhiwala, Co-founder, MediJourn

“India’s medical tourism sector, a burgeoning industry valued at $9 billion, possesses immense potential to emerge as a global leader. While our world-class healthcare infrastructure and reputation for affordable, high-quality treatments provide a strong foundation, strategic interventions are crucial to fully harness this opportunity.

To propel India to the forefront of medical tourism, we advocate for a comprehensive approach. The upcoming budget should prioritize targeted financial incentives to stimulate growth. Additionally, streamlining visa processes and enhancing flight connectivity through attracting international airlines and incentivizing them with reduced fees will significantly boost patient influx. A global campaign on the lines of ‘Incredible India’ focused on ‘Heal in India’ is imperative to cultivate a strong international brand image.

Furthermore, organizing Indian Expos in key global markets will create platforms to showcase our medical capabilities. By fostering public-private partnerships and integrating alternative healthcare systems, we can elevate patient experiences and solidify India’s position as a holistic wellness destination.”

Sachin Alug, CEO, NLB Services

The interim budget of 2024 highlighted some major initiatives like Pradhan Mantri Kisan Sampada Yojana and Pradhan Mantri Matsya Sampada Yojana. Additionally, funds were allocated for research, innovation, and infrastructure development to stimulate job creation. Similarly, the Union Budget 2024, is going to be a further extension of the interim budget to focus on various aspects including employment generation which will be one of the most crucial aspects anticipated by industry leaders.

The current job market has been experiencing a fluctuation due to global economic changes and technological advancements. With the aim to become USD 7 trillion by 2030, employers and employees have strong hope from the union budget for 2024. We are also hopeful that the budget will focus on investments in human capital, infrastructure, sustainable employment generation, education, and increasing the participation of the women workforce to drive economic growth.

Apart from employment generation, upskilling will be another focus area of the upcoming Union Budget 2024 for the HR sector. We are anticipating an increase in budget allocation for skill development and entrepreneurship by 20-25%. Additionally, the budget is also expected to bridge the gap between industry requirements and the existing talent pool as the existing gap is 15-20% in the tech sector which is hampering both the employers and the employees. Moreover, the sector will look forward to support for structured skilling programs, vocational training, STEM education, and digital upskilling to align the workforce with emerging market demands.

In the education sphere, there would be more incentives and higher allocations in the upcoming Union Budget 2024. This is because of the continuation of National Education Policy 2020 (NEP) and skill training initiatives, the education sector is likely to be a key focus for Finance Minister Nirmala Sitharaman in the upcoming Budget. Additionally, the increased funding for new schools and teacher-training programs are essential to universalize education from preschool to secondary level with a 100% Gross Enrollment Ratio by 2030. Overall, the HR and education sector is expecting the budget to uplift the job market in order to execute its goal of achieving USD 7 trillion by 2030.

Chinmay Hegde, Co-Founder, CEO, and Managing Director of Astrikos.ai

“In the upcoming union budget, we would be happy to see the government prioritizing funding for AI-driven infrastructure management, particularly for command-control centers and ports. A dedicated budget allocation for Infra-AI is essential to foster innovation and efficiency. Tax incentives should be introduced to encourage the adoption of AI and machine learning solutions across organizations. Relaxation of tender norms will facilitate smoother implementation processes. Supporting organizations in building and upgrading next-generation data centers is imperative for scaling AI capabilities. Grants should be allocated for sustainable and green urban infrastructure projects leveraging AI technologies. Increased R&D funding for AI under DST grants will spur technological advancements. Enhanced funding for AI implementation in industrial sectors will drive smarter operations and economic growth.”

Mr. Prashant Kumar, MD & CEO, YES BANK

“The Union Budget 2024 is expected to play a crucial role in shaping India’s economic future. This is especially as the tax revenue collections have remained robust and the government is also armed with a bumper dividend from the RBI. The government is expected to remain committed to the reforms process and be focused on eight key areas: sustainable growth, financial sector, infrastructure and investment, women, youth & farmers, last-mile connectivity, inclusive development, and economic expansion – all essential towards achieving ‘Viksit Bharat’ by 2047.

The government has exhibited its commitment towards fiscal discipline, much necessary to signal economic stability and build investor confidence. However, the government is also expected to balance this objective together with the needs for economic growth and providing adequate outlays for key social sector programs, in an effort towards inclusive growth and ensure that the benefits of economic development reach all segments of society. In this context the government is likely to lay stress on ensuring skill developments, focus on enhancing the strength of the manufacturing sector via sharpening the PLI scheme and provide adequate support for small business to grow.

At YES BANK, we are prepared to support the government’s push for enhancing digital infrastructure and promoting financial inclusion. This aligns with our commitment to bringing advanced banking services to underserved regions and supporting initiatives in green mobility, affordable housing, healthcare, and education. These efforts will not only spur economic growth but also ensure holistic development.

We are particularly excited about growth in manufacturing and support for MSMEs, which are vital for job creation and economic dynamism. YES BANK stands ready to contribute to India’s journey towards becoming one of the world’s largest economies.”

Mr. Niranjan Banodkar, Group CFO and Head Sustainable Finance, YES BANK.

“As we look ahead to the Union Budget 2024, an emphasis on green financing and sustainability is crucial for achieving India’s climate goals and for driving sustainable growth. The interim Budget 2024 already demonstrated the government’s commitment and renewed impetus towards sustainable development, with enhanced allocations towards rooftop solarization, the National Green Hydrogen Scheme, and Blue Economy 2.0, along with a new scheme for bio-manufacturing. Sustained budgetary allocations for climate mitigation and adaptation, focus on digital public infrastructure and enhanced support for promoting indigenous manufacturing is crucial to provide the necessary economic stimulus to maintain India’s green growth momentum and achieve its net zero by 2070 target.”

Mr. Mahesh Ramamoorthy, Chief Information Officer, YES BANK.

“As we look forward to the Union Budget 2024, enhancing our technology infrastructure and fostering innovation remains crucial. The government’s groundwork with initiatives like the JAM Trinity and investments in digital infrastructure is commendable. Building on this, further support for technologies such as AI, blockchain, and IoT will be vital for driving digital transformation and improving efficiency. Establishing a continuum of cybersecurity measures is essential to improving an organisation security posture. Investments in advanced threat intelligence and robust encryption will protect our digital assets and build user trust. Additionally, improving data privacy and governance will ensure compliance with global standards and safeguard user information.

Promoting a culture of continuous learning and innovation is key to attracting and retaining top tech talent. The government can facilitate this by providing policy support, funding for technology initiatives, and creating an enabling environment for innovation. The private sector, including institutions like YES BANK, can then provide access to advanced tools and reskilling programmes to drive sustained growth and innovation. At YES BANK, we are committed to leveraging these advancements to support our customers and drive economic growth. We look forward to the government’s continued support in these critical areas to achieve a technologically advanced and sustainable future for India.”