The Union Budget 2024 has received widespread appreciation from various industry leaders for its initiatives aimed at strengthening Micro, Small, and Medium Enterprises (MSMEs). Some of the initiatives announced such as the budget’s alignment with industry 4.0 and smart manufacturing goals, and abolition of Angel tax have been particularly praised. However, while the industry has been largely commendatory about the budget, COAI has stated that there needs to be enhanced focus on the telecom sector.
Boosting MSMEs: A Strong Step Forward
Vishak Raman, VP of Sales for India, SAARC, SEA & ANZ at Fortinet, praised the budget for its holistic approach to economic growth: “The Union Budget 2024 is a push towards a holistic growth of India’s macroeconomics from the grassroot level. The key focus on productivity and resilience in agriculture will indirectly open up rural and non-metro markets with increased spending and consumption. Investment in skilling 20 Lakh youth over five years will bridge the skill gap that digital transformation has created across industries. Fortinet has also pledged to reduce the skill gap in cybersecurity and is offering free certifications to students in India. Incentives for MSME, manufacturing, and energy sector will see increased digitalization with growth of industry 4.0 and smart manufacturing. Fortinet aligns with this vision by providing advanced cybersecurity solutions that protect critical infrastructures and rugged OT environments. Overall, the budgets focus on Youth, Women, and Farmers is a significant step towards ‘Viksit Bharat’.”
Mohan Ramaswamy, CEO and Co-Founder of Rubix Data Sciences, echoed similar sentiments, commending the budget’s initiatives to improve MSMEs’ access to credit through a new credit assessment model based on digital footprint scoring: “We applaud the initiatives announced in Budget 2024 aimed at strengthening the backbone of the Indian economy – Micro, Small, and Medium Enterprises (MSMEs). These measures hold immense promise for improving MSMEs’ access to credit, a critical factor for their growth and sustainability. The new credit assessment model based on digital footprint scoring is particularly exciting. Traditional methods, relying solely on assets or turnover, often overlook the potential of promising MSMEs. A digital footprint-based model has the potential to be a game-changer, providing a more holistic view of an MSME’s creditworthiness and enabling fairer access to finance. The increased loan amount under the Mudra scheme (up to ₹20 lakh) and the credit guarantee scheme for purchasing machinery and equipment are welcome steps. These initiatives will ease the financial burden on MSMEs, allowing them to invest in critical equipment and fostering growth and innovation. Reducing the turnover threshold for mandatory onboarding on the TReDS platform will enhance access to faster payments for MSMEs, improving their cash flow and operational efficiency. Overall, Budget 2024 demonstrates a strong commitment to empowering MSMEs. Leveraging data-driven solutions can significantly contribute to this critical national agenda. We look forward to collaborating with the government, financial institutions, and MSMEs to build a more vibrant and credit-inclusive ecosystem that fuels the growth of the Indian economy.”
Continued Challenges for Telecom Sector
While the Union Budget 2024 has been well-received for its MSME initiatives, Lt Gen Dr SP Kochhar, Director General of COAI, expressed concerns about the telecom sector’s unaddressed needs: “COAI has always worked closely with the Government towards raising the level of telecom connectivity in the country and appreciates the Government’s rich initiatives and prudent steps undertaken in this regard. For the Budget 2024-25 though, our long-standing demands remain unaddressed, and we will continue to work with the Government for the same. The telecom sector maintains that the Universal Service Obligation Fund (USOF) levy be abolished/suspended considering the huge unutilized corpus in the USO Fund to the tune of nearly Rs. 80,000 crores. Till the utilisation of this fund, no USOF levy should be charged from the operators. Further, the License Fee needs to be reduced from 3% to 0.5%-1%, to cover the administrative costs of the Government only, and also clarifying the definition of Gross Revenue (GR) to exclude revenue from activities not requiring a license. The Government has also proposed to increase Basic Customs Duty from 10% to 15% on PCBA of certain specified telecom equipment. This will increase cost of providing services as the telcos are continuously upgrading their networks with the advent of the new technology. COAI has previously requested exemptions on customs duties for certain telecom equipment to alleviate the cost challenges associated with deploying this critical infrastructure. Over the past 5 to 6 years, the Government of India has gradually increased the customs duty on telecom equipment to 20%, posing a substantial financial burden and significantly impacting the rollout of 5G services in India. It is recommended that the customs duty be reduced to zero and then gradually increased depending on the creation of an ecosystem for manufacturing of telecom gear in India. Further, until high-quality equipment is available domestically at competitive prices, COAI urges the government to reduce customs duties for 4G and 5G network products, as well as other related items, to NIL.”
Encouraging Innovation and Skill Development
The Union Budget 2024’s emphasis on fostering innovation and entrepreneurship was lauded by Pankaj Jha, Managing Director of MAXHUB. “The abolition of Angel Tax is a significant relief and a crucial step towards fostering a supportive ecosystem for innovation and entrepreneurship. Additionally, the reduced corporate tax rate for foreign companies will enhance India’s appeal as a destination for international businesses and investors. This strategic move is anticipated to attract substantial global investment,” he said.
Atul Soneja, Chief Operating Officer of Tech Mahindra, praised the government’s sustained focus on skilling and employment in Union Budget 2024: “Employment and skilling are important pillars of a growing economy. The government’s sustained focus on prioritizing skilling and employment is a commendable step towards enhancing human capital and creating job opportunities for the youth. In today’s rapidly evolving world, skill development is critical, and the government’s commitment to training 20 lakh young people over the next five years will help them in the job market and foster job creation nationwide, beyond the Tier-1 cities. This initiative aligns with the industry’s increasing demand for a workforce equipped with contemporary skills. Further, the expansion of skill development programs to Tier-2 and Tier-3 cities resonates with the government’s vision of ‘Vikshit Bharat 2047’. These cities are emerging as talent hubs and will contribute to long-term growth and the creation of local employment opportunities. It will also strengthen the pace of infrastructure development and scale the R&D initiatives in the country.”
On a similar note, Sudhindra Holla, Director, Axis Communications, India & SAARC, said: “The ‘Viksit Bharat’ Budget 2024 charts an ambitious course for India’s future. The government’s strong focus on the 9 pillars of growth, especially, Manufacturing, Urban Development, Energy Security and Infrastructure will accelerate the creation of new opportunities for the nation’s growth. The substantial investment planned for the tourism sector could significantly boost our international tourism and, in turn, our economy. Also, the budget allocation for transport infrastructure showcases the groundwork for accelerated economic development and better connectivity across India. For the safety and surveillance industry this indicates an increased responsibility of making the tourism and transportation industry robust and safe.”
