The Union Budget 2019-20: How the industry has reacted

Rajoo Goel, secretary general, Electronic Industries Association of India (ELCINA)
“To promote local manufacturing of electronic products, the finance minister has enhanced custom duty on split ACs, CCTV cameras, IP cameras, DVRs, NVRs as well as their chargers. This is a major boost for local manufacturers of these products. This will really benefit domestic manufacturing if the industry increases value addition, and the components as well as sub-assemblies of these products are manufactured in the country. Import duties have also been enhanced on some auto electronic parts and signalling equipment, which will give additional protection to this industry segment.

Relief under Section 35AD of the Income Tax Act to manufacturers of solar photovoltaic cells, lithium ion batteries, servers, laptops and solar charging equipment for EVs is an important positive step. However, the electronics industry had requested that the entire sector be covered under 35AD, which has not been done. The FM must consider this request, and at least provide this benefit to all ICT products and their inputs covered under ITA-1 and allowed for import at zero duty.

Reduction of GST and import duty on inputs for EVs is a positive step and will give a much needed boost to this product category, which is the future of mobility.
Accompanied with FAME 2, the EV sector should see the required positive movement the industry has been waiting for. The Union Budget will provide a boost to electronics manufacturing and, combined with the effective implementation of the National Policy on Electronics 2.0, ELCINA expects an improvement in the industry’s fortunes.”

Saurabh Kumar, MD, EESL
“EVs are the future for mobility and it is a very welcome step that the GST on these will be reduced to 5 per cent. In addition, there are custom duty reductions on certain EV parts, giving a thrust to domestic manufacturing. The subsidy under FAME is another step that has been taken. All this will reduce the capital cost of EVs, which is one of the biggest barriers to their adoption, currently. The announcements in the Budget will create a huge demand for EVs, and this is a welcome step.”

Rajan S. Mathews, director general, Cellular Operators Association of India (COAI)
“We laud the government for a progressive and forward looking budget that has provided the building blocks for a US$ 5 trillion economy.

It is also heartening to note that the Budget has focused on evolving technologies like artificial intelligence, Big Data, robotics, etc, and acknowledges their critical role in the Indian economy in the coming years. We are hopeful that the government will also roll out specific measures to harness these technologies of the future so that Digital India reaches every segment of the economy.

The telecom industry has been a significant engine for GDP growth, rural inclusion, women empowerment, affordable communication services and ubiquitous connectivity. As such, the industry hoped the Union Budget would provide relief from the high taxes and fees on this industry. Given the importance of the industry in driving inclusive growth, we remain optimistic the government will provide the much needed financial relief and impetus to the industry in a post-Budget review.”

Pankaj Mohindroo, chairman, India Cellular and Electronics Association
“The Budget has put an emphasis on protecting the domestic industry and promoting manufacturing. The government now must ensure that the electronics manufacturing industry is covered under the sunrise and advance technology category, since an ecosystem for manufacturing will come about only through the proper linkages in it. While we have seen green shoots in mobile phone and component manufacturing, there is a long distance to travel before we become truly competitive and turn into a global hub for mobile phone and electronics manufacturing.”

Abhishek Kumar, regional director, South Asia, Oncam
“The government has earmarked ₹ 50 trillion for the development of railway infrastructure. A sizeable part of it will be diverted towards avant-garde surveillance solutions for smart management across railway stations as well as various nodes in the railway network. The Union government’s focus is also on rural infrastructure expansion, and we believe that surveillance will be an integral element in this development. Another key takeaway for the surveillance industry is that the government also has a positive view towards artificial intelligence technology and will be promoting indigenous R&D around AI, Big Data and robotics. It has also taken a slew of measures aimed at the Indian startup ecosystem, which will be looking towards AI technology and security to develop high-end products and ensuring seamless processes. We appreciate the finance minister and her team for meticulously balancing all dynamics to bring about favourable market results.”

Faisal Kawoosa, research analyst, TechArc
“For the tech domain, the expectations from the Budget were that there would be some real out-of-the-box solutions to issues that the industry is grappling with. We need manufacturing to go to the next level; we have to set the stage for connected consumer electronics (CE) and at the same time, in line with NPE ‘19, an enabling environment to boost exports is also required.

While it’s great to see the government suggesting measures that could bring forward India’s entry into the EV space to an earlier stage, the benefits can only be seen around a decade from now. There is also a need to have something for the immediate to medium timeframe, which is completely missing from the Budget.

I don’t see anything that helps domestic CE firms, including makers of mobile phones and their accessories, to give their best for the next wave of electronics manufacturing in India. Tweaking the customs duty structure is a short term tactical approach and does not strengthen the fundamentals of the industry.”

Dr Keshab Panda, CEO and MD, L&T Technology Services
“The government’s focus on positioning India as the top destination for research and innovation augurs well with the interests of the ER&D industry. Moreover, the announcement on providing support to the skills development initiatives related to AI, IoT, 3D printing, VR and robotics has the potential to establish India as a global talent hub for digital technologies. Lastly, earmarking ₹ 100 billion over a three-year period towards building a wider ecosystem of electric vehicles is a welcome move. It is now for the value chain players to come together and replicate the success achieved by Indian ER&D players for global auto majors on the EV front.”

Arijit Biswas, co-founder, EnrichAI
“We feel that Budget 2019 will foster the startup ecosystem in the country by encouraging different stakeholders including entrepreneurs, investors, talent and consumers to participate in a more spirited manner. While the government’s push to skill India’s youth in cognitive technologies will help startups and global R&D teams with deep pockets to source talent easily, the setting up of a dedicated TV channel for and by startup founders will provide a cost-effective medium for entrepreneurs to demonstrate innovative ideas and gain mind share of the masses. Overall, we feel that the Budget will encourage the youth of the country to consider entrepreneurship as a very serious and viable career option, after their academic pursuits.”

Rajan Navani, vice chairman and MD, JetSynthesys
“The introduction of an e-verification mechanism gives an impetus to companies by improving the ease of doing business, driving efficiencies for investors, and bolstering the startup ecosystem in India. To deliver on the country’s Digital India vision, we believe that an increased focus on initiatives for new-age skills in artificial intelligence, Big Data, robotics, etc, will further bridge the gap between technology and talent. This sets the tone for the industry to move from Start-up India to Scale-up India.”

Rahul Sharma, managing director-India, LogMeIn
“We would like to congratulate India’s first woman finance minister, Nirmala Sitharaman, for presenting an admirable budget. The Union Budget is a step in the right direction by strengthening the ICT infrastructure and the digital penetration in rural geographies. The finance minister has introduced the PPP model for BharatNet, and has set up a committee to rationalise the tax structure, as well as to review USOF and the spectrum usage charges. This will considerably improve the industry dynamics as revenues continue to fade in the market. The honourable minister has further proposed several schemes to build skills, infrastructure, and conduct R&D around cutting-edge technologies including artificial intelligence and Big Data, which is another key takeaway.”

Sudhir Singh, managing director, Marg ERP Ltd
“SMEs and MSMEs will play the most significant role in achieving India’s ambitious target of becoming a US$ 5 trillion economy by 2025. To give a boost to this segment, there is a need for an ideal environment for ease of doing business, for nurturing demand based skilled manpower, and to ensure wider adoption of technological advancements in the SME and MSME sector. An allotment of ₹ 3.5 billion for 2 per cent interest subvention for all GST-registered MSMEs under the Interest Subvention Scheme is a step in the right direction.

The Budget has also given a boost to the nation’s entrepreneurial spirit by extending the Stand-Up India scheme till 2025, the setting up of 80 livelihood business incubators and 20 technology business incubators to develop 75,000 skilled entrepreneurs in agro-rural industries, and by encouraging women entrepreneurs. There are several other measures to streamline labour laws, education, and the rental housing segment, which will have a direct impact on startups in the country.”

Tarun Bhalla, founder and CEO, Avishkaar
“When I started Avishkaar, there were quite a few hurdles that I had to navigate through. This initiative of the government to have a dedicated channel for startups for information dissemination could prove to be immense for budding entrepreneurs. The focus on job creation in the MSMEs sector and a dedicated payment platform will help give a much needed boost to the industry. Also, teaching skills such as AI, Big Data, IoT and robotics will help create a skilled workforce in the near future.”

Anil Chaudhry, zone president and MD, Schneider Electric-India
“We are glad to see the direction given by the government by outlining the key areas as a part of the broader vision for the future – with ‘Energy for All’ at its very core. It is a well balanced budget with a clear push towards the socio-economic growth and development of the country. The focus given to provide access to energy to each and every household in rural and urban areas is very progressive.

There is a visible push for new age technologies and digital solutions as the Budget specifically mentioned the importance given to artificial intelligence, the Internet of Things, Big Data and Digital India – which are an integral part of the long term vision. With an eye to boost economic growth and Make in India, the proposal to launch a scheme to invite global companies to set up mega-manufacturing plants is laudable. All in all, it is encouraging to see the government’s continued focus on the following programmes – UJALA, Saubhagya and UDAY Yojana—as key initiatives for the nation’s economic growth, with an even greater focus on digitisation to boost the rural economy.”

Anil Gupta, CMD, KEI Industries Ltd
“The power sector has seen phenomenal growth, achieving the electrification of almost 96 per cent of all households in the last five years. This large growth in the sector can be attributed to the infrastructure boom in India, which has created more avenues for companies like ours. Investments in railways, housing and farming are paramount to overall infra-growth for our company. The government is also planning to invest ₹ 50 trillion on railways which will further boost the demand, resulting in expansion of our business. The government has also shed light on its plan of ‘One nation, one grid’, and the Pradhan Mantri Gram Sadak Yojna will be a standalone element in ensuring power connectivity at affordable rates.”