From agritech startups, to consumer electronics manufacturers, to AI and 5G technology, the last Union Budget for the current government, before the general election in 2024, had something for everyone.
Finance Minister Nirmala Sithraman presented the widely awaited Union Budget 2023, in the Parliament on Wednesday. This will be the last Union Budget for the current government in its second term as the next Lok Sabha election is due in April-May of 2024.
The minister covered startups and the technology sector in the budget and proposed new schemes and funds to boost its growth.
To enable agritech startups by young entrepreneurs in rural areas, the Union minister announced an agriculture accelerator fund, to encourage innovative and affordable solutions for challenges faced by farmers. The fund aims to bring in modern technologies to transform agricultural practices and increase productivity and profitability.
The fund will enable the growth of inclusive farmer-centric services relevant to crop protection in the country. Till now agritech startups have been relying on funds from investors and research grants from incubation centres, but India is yet to get its first agritech unicorn.
Dr Ankur Pandey, the founder of electronics-based agritech startup, Dhenutrack, that tracks the movement of stray cattle which destroy crops, welcomed the announcement. “Technology has to play a major role in the agriculture ecosystem and for that startups should be funded. This is very much required. We have had a lot of focus on fintech and retail chain startups but not much on agritech. This announcement has given a major boost to agritech startups,” he said.
Artificial Intelligence and 5G technology
The Union Minister announced that three centres of excellence (COE) for artificial intelligence (AI) would be set up in top educational institutions to develop AI solutions in India.
“To realise the vision of making AI in India and make AI work for India, three COEs will be set up in top educational institutions. Leading industry players will partner in conducting interdisciplinary research and developing cutting-edge applications and scalable problem solutions in areas of agriculture, health, and sustainable cities. This will galvanise an effective ecosystem and nurture quality human resources in the field,” said Sitharaman.
The National Informatics Centre (NIC) established the COE in AI in 2019, to explore more opportunities for AI applications in governance, with a focus on image & video analytics, speech synthesis & recognition, and natural language processing.
The minister also announced that the government would set up 100 labs to effectively develop 5G services in engineering institutes to cover applications such as smart classrooms, precision farming, intelligent transport systems and healthcare.
In her budget speech, Sitharaman said that “green growth” would be one of the seven priority sectors (Saptarishi) of the Union Budget 2023.
The minister announced that custom duty exemptions would be provided for the manufacturing of lithium-ion batteries, in a bid to promote green mobility.
“To avoid cascading of taxes on blended compressed natural gas, I propose to exempt excise duty on GST-paid compressed biogas contained in it. To further provide impetus to green mobility, customs duty exemption is being extended to import of capital goods and machinery, required for the manufacture of lithium-ion cells for batteries used in electric vehicles,” she said.
The minister announced an outlay of ₹19,700 crores for the recently launched National Green Hydrogen Mission, with a target of 500 MMT (million metric tonnes) of green hydrogen by 2030.
She added that this would facilitate the economy’s transition to low carbon intensity, reduce dependence on fossil fuel imports and make the country “assume technology and market leadership in this sunrise sector”.
Consumer Electronics and Appliances
To strengthen electronics manufacturing of goods such as mobile phones, the government has reduced the basic customs duty (BCD) on certain parts, such as camera lenses, while concessional duty will continue on lithium-ion cells for another year, a key ingredient for battery packs.
The government has also reduced BCD on certain parts of TV units such as open cells, to 2.5%. The BCD on electric kitchen chimneys has been ramped up from 7.5% to 15%. BCD on compounded rubbers would be increased from 10% to 25% or 30 kg, whichever is lower, the minister added.
Industry body India Cellular and Electronics Association (ICEA) has been demanding a reduction in customs duty on parts and components to make India a competitive manufacturing destination.
The move, to reduce customs duty, will further provide an impetus for companies to make in India, as getting the raw material has been made easy.
While the Union Budget managed to assuage most of the pressing issues in the electronics industry, what remains to be seen is how most of these figures will transcribe to action and enable the electronics industry in India.