Budget 2021: Reactions Pour in From Industry Leaders
Finance Minister Nirmala Sitharaman today presented Union Budget 2021. The announcement had many initiatives, measures and policies for different sectors. With major focus on reviving the country’s economy, FM Sitharaman made crucial announcements, some of which were Rs.1,500 crore scheme for promoting digital payments, Rs.64,180 crore scheme for healthcare infrastructure upgrade, and more. The government is also incentivizing incorporation of one person companies for boosting startups. She also mentioned that the government will increase FDI from 49 percent to 74 percent in insurance budget.
This year budget has something for every industry/sector. However, the major focus of the budget was Aatmanirbhar Bharat and how to infuse new life into the crumpling economy that is slowly standing up. As soon as the Finance Minister started her budget speech, reactions from across industries started pouring in.
Here we bring to you some of them:
CP Gurnani, MD & CEO, Tech Mahindra ~ “This budget is a step in the direction towards Atmanirbharta, clearly providing every opportunity that is required for a sustainable economic momentum and growth. The FM has provided for ample opportunity to boost and sustain the gig economy, digital payments and research and development taking place within the country. The focus on innovation and R&D (Research & Development) as an important pillar is a critical step in increasing the export income of Indian IT sector. Along with this, the ‘Atmanirbhar Bharat’ budget also outlines initiatives for gig economy, digital payments, human capital while also setting up fintech hub and National Natural Language Translation Missions. Therefore, with increased allocation towards infrastructure, financial inclusion and healthcare, Budget 2021 promises to provide the much-needed economic velocity to India’s growth cycle.”
Venkatraman Narayanan, MD & CFO, Happiest Minds ~ The budget has maintained continuity and consistency and in line with the themes of ease of doing business, simplification, transparency and manage effective delivery through digital channels. As a digital company hearing announcement around leveraging digital technologies like video conferencing, e-assessments, e-invoicing, AI and ML for governance, incentives for digital transaction are heartening.
Honorable FM has maintained the course on simplification and consolidation of laws with specific focus on rewarding the honest. The aspect of supporting the economy with increased spends on Infra, health, farming and education are welcome. Inclusion and women empowerment into the larger Aatmanirbhar objectives of the government are laudable. I see lots of support for the economy and a V shaped recovery for the economy.
From the IT industry perspective, quite a few relaxations on compliance, laws and also support came from the Government during the Pandemic. Hope this approach will continue.
Manish Sharma, President & CEO, Panasonic India & SA ~ “The Budget presented by the Honorable FM in the background of five mini budgets is continuum of reformative measures to boost the economy to drive – Job, Demand and Spending. I believe the methodical approach of identifying six focus areas where Health and Infrastructure, with significant increase in allocations, sit on the top is in the right direction to revitalize the economy and invest in well-being of people.
For manufacturers, Govt re-iterated its commitment to reforms like introduction of Production Linked Incentive (PLI) scheme with a budget outlay of Rs 1.97 lakh crores across 13 sectors which reaffirms their intent to provide impetus to domestic manufacturing, while elevating India's position as a global manufacturing champion. We look forward to implementation details here to participate. The increased spending on infrastructure to improve roads and public transport is also a positive move and will provide easy access to raw material.
From common man perspective, the Govt ensured no new taxes on corporates or individuals but further simplified the norms on Direct Taxes.
To ensure fiscal deficit at 6.8%, the Govt. announced a slew of expenditure and measures along with a clear roadmap to raise funds from strategic disinvestment, tax compliance and borrowing. This is re-imagination of a New World Order post pandemic and now key will be in implementation that will define the results.”
Rajiv Bhalla, MD, Barco India ~ The budget is a major step in the right direction. It outlays a strong focus on infrastructure, healthcare, capital spending, disinvestment, monetization, job creation and digitization. These measures are not only progressive and recovery-led, if implemented correctly would ease the burden on the economy and lead India towards the projected v-shaped growth and development. The budget talks about structural reforms in banking, enhancing debt financing and credit limits for businesses and asset monetization. This will lead to an increase in government spending, which, in turn will spur demand, therefore net positive for the industry. The several initiatives around job-creation, startups, reskilling, rural development and better quality of services to people are positive as a Nation cannot progress without care for the environment and inclusive all-round transformation.
Dr. Keshab Panda, CEO & MD, L&T Technology Services ~ The move to provide greater impetus to India’s manufacturing sector with outlay of almost Rs 2 trillion over the next five years is indeed a welcome move. We are hopeful, this will pave the way for enhanced adoption of digital engineering capabilities by domestic players, especially in the Industry 4.0 segment, to give them a global edge. With patents and innovations being at the core of our proposition as a pure-play engineering services provider, it was encouraging to know that Innovation and R&D was classified under the six pillars of focus for this year’s union budget. Unlike last year where explicit mention to initiatives such as National Mission on Quantum Computing and Technology were announced, one would have hoped that this year’s budget would have made provision for further focus.
George Alexander Muthoot, MD, Muthoot Finance ~ “The 2021-22 budget has laid clear emphasis on economic growth and the financial services sector will play a crucial role in achieving the development goals of the government. Among the several business friendly announcements, some that stood out for us include net rationalisation of customs duty on gold by 2.5% which should bring more gold into the country through official channels and incentivising purchase of affordable homes by extending eligibility period for claiming additional deduction of interest paid of Rs. 1.5 lakh to 31st March 2022. Increasing FDI limit in insurance to 74% from 49% is another progressive announcement that will bring more investments and activity in this sector. Lastly, reflective of the importance of the MSME sector, the government has provided Rs. 15,700 cr for it, double of last year’s budgeted estimate and we stand steadfast with the MSMEs, individuals and entrepreneurs of India in financing and enabling their Atmanirbhar Bharat ambitions.”
Leo Joseph, Managing Director, Xerox India ~ “As expected, the core needs of the economy, coming out of a pandemic-hit year, take prominence in the Union Budget 2021. However, long-term, the budget focuses on the D in India – standing for both development and digitization. The progressive budget lays the roadmap for greater digitization in governance. A budget presented and disseminated in a digital format for the first time to a digital census will pave the way for the government to serve citizens through technology and data more seamlessly. The promise of ‘minimum government, maximum governance’ can only be realized through greater investments in technology and focus on greater R&D and innovation – which the budget does.”
Saurabh Srivastava, Co-founder, Indian Angel Network ~ Budget’s focus on health, hygiene, clean air, water: will need innovative solutions, great opportunity for startups! Easing for one person companies and size of small businesses boost for startups. Margin money for stand up India 25 to 15% is a welcome move. One Nation- One Ration vision is an aspirational project benefitting 86% beneficiaries. Incentivising digital payments will help Fintech players. Measures to facilitate contract disputes will help investors.
Ajai Chowdhary, Founder HCL, Board member IAN & IC member IAN Fund ~ Budget focus to move India into global supply chain: welcome move towards Atmanirbhar India. Big boost for startups with re configuring of OPCs, redefinition of small businesses: brings ease of business under Atmanirbhar Bharat. The budget allocated for the agricultural sector will lead to infrastructural development and create opportunities for startups in the sector leading towards self-reliant India vision.
Randhir Chauhan, Managing Director, Netafim India and Senior Vice President, Netafim Ltd ~ “The Union Budget clearly highlights the Government’s continued focus to modernize the Agri sector. We welcome the announcement of additional allocation of Rs. 5,000 cr to the Micro Irrigation Fund (MIF) under NABARD which now totals Rs. 10,000 cr. This is in line with the Government’s vision of ‘per drop more crop’, and will help move closer to the target of micro irrigation coverage across 1 crore ha in five years, across the country. In order to improve the fund utilization, we request policymakers to remove the condition of disbursement (which is only against additional subsidy) and consider to make it available for the mandatory state share as well. The additional fund could keep the momentum up in states like Tamil Nadu, Maharashtra, Gujarat and Karnataka which are already in favour of the scheme, help restart in states like Andhra Pradesh and Telangana and bring newer states like Uttar Pradesh, Bihar, Jharkhand, etc. under its gamut."
Alok Bansal, Country Head, Visionet India ~ "Budget 2021 looks hopeful and empowering as it focuses on the revival of the economy with a “minimum Government, maximum governance” approach. With a targeted fiscal deficit of 6.8% of GDP, the government has attempted to bring the economy back on its pre-Covid-time impressive growth path by boosting public expenditure on infrastructure, healthcare systems, and financial institutions. This will have positive long-term effects on economic growth. The new policy changes will boost entrepreneurial spirits and a digital-first economy as these focus on start-ups and ‘one-person’ companies providing them no restrictions on paid-up capitals.
The allocation of a sizable amount of Rs. 15,700 crore to MSME sector, more than double of last year, is a great motivation for mid-sized companies. The allocations for Covid vaccine aims at an immediate fiscal support to the sector and it will have significant effects on reviving demand in other sectors".
Bhaskar Majumdar, Managing Partner, Unicorn India Ventures ~ The Union Budget 2021 delivered on many parameters like healthcare, infrastructure, education, banking reforms but the distant cousin — startups — were more or less left out of the key announcements. The tax holiday and LTCG exemption are definitive positive initiatives but their impact remains limited to DPIIT recognised startups (tax break exemption). The funding in the startup sectors currently comes from foreign funds, so while LTCG will give boost to domestic money finding its way into the sector, the numbers still won’t match up to the scale where impact can be made. However, we can’t ignore the fact that the govt has rolled out many positive initiatives outside the Budget like Rs 1,000 crore seed fund announced recently and even setting up OPC will give a boost to new startups getting launched. It will also give them credibility in raising seed or angel money.
The simplification of zero return GST and filled tax returns is overall good for the small entrepreneur. The digitisation of the Census is in the right direction of overall digitising all government processes as this would enable census within months and not years as it takes now. Overall, a good budget but not much for the startup community.
Karthikeyan Natarajan, President & COO, Cyient ~ “Coming out of the pandemic year, the Finance Minister has laid down a well-rounded Budget.
Focus on setting up of Fintech Hub at Gift City, enhancing digital payments and use of AI in governance – all provide a strong platform for Digital India. Allocation of Rs 50,000 crore towards National Research Foundation will work towards boosting India’s Innovation Quotient on the global map and is a welcome move. Allocation of funds as incentives for promoting digital payments is also a step in the right direction and a significant step in ease of doing business. Lastly, increase in allocation for highways and railways will lead to employment generation and boost the economic growth of the nation.”
Seema Prem, CEO and Co-Founder, FIA Global ~ The budget this year has given a significant support to startup ecosystem that will help turbocharge their growth. The concept of OPCs with an option to convert into any other type of company at any time, reducing residency limit for an Indian citizen to set up an OPC from 182 days to 120 days, and allow also non-resident Indians to incorporate OPCs in India will certainly boost innovation. Collateral free loans and fund of funds for MSMEs will stimulate growth and provide solace to MSMEs hit by the pandemic.
The portability of One nation, one ration card will be a boon for migrant workers and speedy implementation will ensure that migrants can move across boundaries without worrying about access to ration. The additional allocation to MNREGS will provide substantial relief to workers whose livelihood has been impacted by the pandemic.
Yogita Tulsiani, Director and Co-founder iXceed Solutions ~ "The year 2020 has seen a lot of ups and downs. The budget for 2021 has included various ways to bring the scattered businesses back on track. The Union Budget 2021 has focused on skill development by tieing up with countries like Japan and UAE. This would help in overall development of the Human Resource sector. With everything going digital, the launch of an online platform for gig workers will definitely ease the process of work. Startup sector is gifted with the Tax Holiday with the extension in eligibility for one more year till 2021. The tax exemption on capital gains till March 2022 will push more investments."
Jatin Desai, Managing Partner, Inflexor Ventures ~ "While the devil will be in the details and implementation, there were few direct and indirect measures that were announced in the budget that are positive for the startup and VC ecosystem. Direct measures that will have a positive impact on the ecosystem include extension of tax holiday and capital gains tax exemption for startups by one more year, OPC (one-person company) reforms and setting up of a Fintech hub in GIFT city. Indirect measures like massive increase in healthcare spending, higher capex, infrastructure building and reducing some stress in the banking and financial system will also be a net positive for startups and VC ecosystem"
Nitin Potdar, Partner J. Sagar Associates ~ “An allocation of 3,002.21 crores to skill development ministry and its various programmes is a welcome step but not sure whether that's enough given the current pandemic and need to create a digital infrastructure for education. Higher Education Commission, an Umbrella body to regulate education, is a welcome step and hopefully would provide clarity and ease for educational institutions to introduce multiple academic programs. However, there is a disappointment due to no relief from the burdensome 18% GST on Edtech industry which is doing a massive job of educating our next generation”.
Ankur Bansal, Co-founder and Director, BlackSoil ~ "The biggest advantage of a one person company is that its identity is distinct from that of its owner. Therefore the owner will not be sued, only the company will.Another advantage is limited liability. Since the company is distinct from that of its owner, the personal assets of the shareholders and directors remain protected in case of a default. However, a proprietorship has unlimited liability .OPC is a combined package of a Sole Proprietorship business and a Company borrowing the best of both worlds. A proprietorship cannot raise equity funding which is possible for an OPC. Also an OPC will be eligible for government schemes such as those focused on MSME ones. Generally there is lesser compliance to setup and run an OPC v/s a normal company.
Also buget introduced NRIs allowed to operate One Person Companies or OPCs in India. This definitely a big positive to attract Indian talent overseas to come to India."
Anuj Mundra, Chairman & MD, Nandani Creation ~ "With focus on Aatmanirbhar Bharat, announcement of establishment of 7 textile parks by Modi government in Budget 2021 should be welcomed with open arms. It's a big boost for the local textile industry. And, this will help India become a world leader in textile sector.
Hon'ble Union Finance Minister Nirmala Sitharaman in her Union Budget 2021 has clearly conveyed a message that this government believes in giving a big shot in the arm of textiles and local manufacturing with special focus on Vocal for Local."
Prajodh Rajan, Co-Founder & Group CEO, EuroKids International ~ “The education sector has found a prominent place in this year’s Union Budget, given the large scale impact the pandemic has had on it. With an aim to move India towards an Atmanirbhar Bharat, this year the focus is on rolling out the NEP and its elements across schools. The Digital First Mindset will take blended learning further so that students can continue their learning paths. Teacher training and a toy based learning pedagogy will help strengthen the sector and take us ahead on the learning curve.”
Nikhil Das, Founder, Agdhi ~ The budget presented by Nirmala Sitharaman Ji today acknowledged the importance of agriculture in India’s economy as one of the central pillars employing 15% of the population. The central budget has shown confidence in the Minimum Support Price (MSP) regime and has upheld it for the farmer. The budget has promised 1.5 times MSP against the cost of production across all commodities. This is likely to bring in more innovation and adoption of technology in farming. Besides this, the budget has proposed an increase in agriculture credit.
The budget has realized the importance of start-ups in job creation and has extended the tax holiday for startups till March 2022. Already withering under the impact of the pandemic, the announcement has come as a big relief for startups that have become a critical employment generator with 4,70,000 jobs. Such measures are likely to boost sentiments across the board among potential entrepreneurs who are keen on entering the market with their business ideas.
These announcements in the budget were preceded by some welcome news for startups that included the broadening of the definition of startups and approval of the “Startup India Seed Fund Scheme” which comes with a corpus of Rs 945 crore. Overall, the budget has decided on supporting sectors that generate employment and seeks to revive an economy that has been severely hit by a global pandemic.
Anup Jain, Managing Partner, Orios Venture Partners ~ "Incorporation of 1 person company allowed without any restriction on paid up limit is a welcome move for startups as 2 directors were nec at a minimum and founders were forced to co opt others under the companies Act". "Flexibility to convert company to any form - LLP etc is another welcome step in ease of doing business".
Deepak MV, Co-founder & CEO, Etrio ~ "This budget definitely demonstrates the commitment by the government to boost demand and generate employment through investments in areas like infrastructure, finance, and healthcare. Also, the budget extends support to start-ups and MSMEs through tax exemptions and increase coverage of small companies threshold and, higher allocation towards MSME sector.
From an overall Auto industry standpoint, the soft step towards the introduction of a voluntary scrappage policy is a welcome move. However, driving implementation of the same through incentives/ disincentives and necessary infrastructure is going to be critical. Further, the allocation of Rs 1.97 lacs crore towards PLI along with custom duty increase on components should spur investments in domestic manufacturing. The infrastructure investment focus would definitely drive demand for M&HCVs and construction equipments specifically along with boosting demand for mobility at large.
For the EV industry, it's been a bit of disappointment with no direct mention of any EV focussed initiative or policy including FAME. There were a lot of expectations from the budget including ramping up of charging infrastructure, enablement of retail financing for EVs, and moderation of the inverted GST tax structure with lowering taxes on EV input components including battery."
Siddhant Wangdi, Founder, Meatigo.com. ~ The government has made some important changes for the start-up industry like extending tax holiday for another fiscal year and reducing margin money requirement from 25% to 15%. The industry was in apprehensions with their future and delayed plans. However, getting clarity from the budget, we will be able to revisit our plans and execute them. With the boost for the digital mode of payment, we are looking at a much faster adoption of digital platforms and expand our business to more cities. The budget also allocates a good amount to promote local animal husbandry business. This should help with the up gradation of quality of produce in the country. We are really excited to bring better quality products to market. Though the supply chain is working smoothly, however, as an industry, we were waiting for the simplification of policies to further streamline the supply network. Considering the challenges from last year, we are optimistic about our plans post the budget announcement.
Anup Jain, Managing Partner, Orios Venture Partners ~ “Big focus on Infra which is key to driving India's overall development. Also, means reviving construction industry which has a domino effect on employment and GDP per capita. This is extremely positive"
Pankaj Makkar, Managing Director, Bertelsmann India Investments ~ "The increase in FDI in insurance is a welcome step. Not only will it boost growth in fintech and insurance sectors, but also as more international companies come-in, overtime it will help build great products in India."
"The extension of tax holiday is a welcome step. The amount saved will help startups focus on building products & services and also pass on a part of this value to the end consumer."
Dr. Dishan Kamdar, Vice-Chancellor, FLAME University ~ “The Government’s decision to allocate Rs.50,000 crores over 5 years will serve as a great shot in the arm for the country’s research ecosystem. Lack of adequate funding has been a constraint for several higher education institutions and this support will enable the institutions and the faculty to produce high quality, rigorous research output. The creation of the Higher Education Commission of India (HECI) as an umbrella structure having four separate bodies for standard-setting, accreditation, regulation, and funding under it will bring in synergies across higher education institutions. In addition, a regulatory mechanism to promote academic collaboration with foreign higher educational institutions will help pave the way for Indian higher education institutions to become truly global in the near future”.
Sashank Rishyasringa, Co-founder & MD, Capital Float ~ “The Union Budget 2021 is a positive one with a key necessary focus on rebuilding the Indian economy and a demonstration of strong commitment to a digital future. The lack of a Covid cess will ease tensions of rising tax levies. The finance minister’s proposal to facilitate the development of a world-class fintech hub in Gujarat International Finance Tec (GIFT) city will be appreciated by Fintechs locally as well as nationally. Allocation of Rs. 1500 Cr to promote digital modes of payment and an extension of capital gains exemption for investing in start-ups by one more year will be a growth accelerator for the Fintech industry. The new allowance for Startups and innovators to form 1-person companies without restrictions on paid-up capital or turnover norms will also prove a major boon.
Capital Float lauds the structural reforms put forth under the Aatmanirbhar Packages, allocating Rs.15,700 Cr toward MSMEs, a much-needed respite to an industry that was so brutally affected by the pandemic. This will not only aid those looking to restart their businesses but also support sustainable growth in the industry”.