Pre-Budget Expectations 2021 for Technology and Startups
As far as the year of the pandemic was considered it was a roller coaster ride with unexpectedly high investments with a jump of 300% in the edtech sector but a slouch for the market as a whole. The 2020 budget was quite inclusive while considering technology as it had acknowledged the needs for modern businesses and society - local data storage, investment in modern technologies like analytics, machine learning, robotics, bioinformatics and Artificial Intelligence, ensuring high-quality standards; world-class logistics. The 2020 budget also shed light upon start-ups and MSMEs which have roared in the present market.
As far as the digital sector is concerned, the budget was focused on bringing in policies and reforms that help in, first, lifting the already debt-ridden telecom sector and enabling them to drive growth. Overall, the budget was positively accepted as it was said to be an inclusive approach towards technology and start-ups. “It is a progressive budget with a clear push towards the socio-economic growth of the country with a focus on consumption push, MSMEs and enhanced digital connectivity. The budget touched upon almost every stratum of society with the aim of bringing greater ease of living for the citizens. There is a visible thrust for a digital solution and emerging technologies such as AI, machine learning and data analytics, with the budget highlighting that India’s new economy is based on innovation. Further, we welcome the government’s proposal to provide digital connectivity to 1 lakh gram panchayats. We hope that the convenience, ease, and speed of digital transactions is extended to the remotest village. Such measures shall create germane ground for decentralization of innovation and democratization of data-led services.” stated Uday Somayajula, Co-Founder, ePayLater.
Union Budget 2021is now the centre of attention as the big expectation of how the Budget of 2021 will set the course for economic recovery after the Covid-19 pandemic’s destructive impact is a grave concern for all. Technology has been one of the few sectors to show resilience, and the Covid-19 pandemic has been a catalyst for technology and digital adoption across sectors. Given the role of the technology sector in the growth of Digital India, it is expected that the government may implement effective and favourable policies, in creating the digital infrastructure and the ecosystem to support innovation. The backbone of Digital India could well be the Data Centre and Cloud services, supporting the fast-growing digital economy. A few concerns along the way are the scope of levy and double taxation. Currently, terms like ‘digital facility’, ‘electronic facility’ ‘platform’ which are not clearly defined in the law lead to the EQL being applicable on even one-to-one transactions and intragroup services. And where taxes are concerned, the country of residence of the foreign entities paying EQL in India may not give credit for the EQL as it is not in the nature of income tax. A clarification that EQL is in the nature of additional income tax would be welcome as it would enable these foreign entities to claim a credit of the EQL against the tax paid in their country. Thereby eliminating double taxation. Hence, budget 2021 is expected to give a clarified explanation regarding these concepts.
The 2021 budget must focus on realising the significance of AI in transforming societies and businesses alike. Indian government must continue to show utmost commitment towards building a robust AI infrastructure in India. The fact that the government has recognised the need to move away from the socialist charter adopted in the 1950-1980 era and shown willingness to adopt successful global practices in socio-economic matters gives a ray of hope for the technology sector.
