Union Budget 2022-23: Introduction of easier norms for SEZ units, simplification of regulations for remote working and streamlining labour laws is the call of the day
Indian Union Budget 2022: High time to incentivise IT sector
The prologue to the Union Budget is always filled with expectations, nervousness, and excitement about what’s to arrive. This year is no different, but the stakes are much higher due to the disruptions caused by the pandemic.
The IT sector has been a key driver of India’s economic growth during the pandemic and gained high prominence. According to India Brand Equity Foundation India’s IT industry contributed around 7.7 percent to the country’s GDP and is expected to contribute 10 percent to India’s GDP by 2025.”
Like every other industry, the IT sector is also looking forward to some favourable announcements in the Budget. With the upcoming Budget, the government must accelerate the IT sector’s growth trajectory as the sector’s progress is crucial for India to achieve its goal of a $5 trillion economy by 2024.
Taking into account these factors, here are the key expectations of the IT industry from the Union Budget 2022-23:
Boost digital services
The pandemic has necessitated the need to accelerate digital initiatives in the government sector. Government institutions must stress digital transformation to enable remote operations and provide seamless citizen services online. Promoting services like digital payments, e-citizen services in rural areas, and access to public information and records will further boost digital initiatives.
Today, governments across countries are adopting artificial intelligence (AI) to enable digital services and enhance citizen experience. The government must introduce policy interventions under its National Artificial Intelligence Mission to promote AI-related solutions, thereby unlocking innovation and fostering a digital economy.
Streamlining startup initiatives
The government has successfully planned and executed the startup India program. Consequently, today the country is witnessing an increase in the number of tech startups. However, there are still a few bottlenecks that must be addressed to further capitalise on this initiative.
First, closing a non-performing startup remains a challenge. Secondly, many startups are still facing trouble in receiving funds from the banks. Thirdly, government procurement remains a challenge. The government must bring policy interventions to remove these bottlenecks and accelerate the progress of tech start-ups in India to facilitate innovation and reap the fruits of demographic dividends.
Provide incentives, tax SOPs
Tax-related incentives and SOPs play a crucial role in guiding business activity across sectors. The introduction of new SOPs under SEZ, extension of corporate tax benefits across the board, and simplification of the GST regime will facilitate smoother business operations. Government must also provide tax exemptions on IT exports to enhance the competitiveness of the Indian IT sector in the global market.
Incentivise activity in Special Economic Zones
SEZs have long played a pivotal role in driving India’s economy. The government must incentivize SEZ units to boost business activity further and put the economy back on track. Indian software companies, regardless of their size or segment, must receive additional benefits under the ‘Make in India’ initiative to offer tougher competition to their western counterparts. Introducing easier norms associated with SEZ units, simplifying regulations for remote working, and streamlining labour laws will facilitate a conducive business environment for the IT sector.
To conclude, the IT sector is a strong pillar in India’s growth story and will continue to remain so. The government needs to stay mindful of the disruptions in the IT sector caused by the pandemic and the global business uncertainty. The Union Budget 2022-23 must bring bold policy initiatives to incentivize the IT sector and accelerate its growth.
The writer is Senior VP, Software Development, Newgen Software. Views are personal.
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