Budget Highlights
- Budget took dramatic bet on CAPEX
- Sustained focus on infra will push steel and other demands
- Budget has strong sense of fiscal discipline
- Big tax change for middle class
- Sustainable planning and energy transition
- Inclusive growth through a tech enabled economy
- Impetus to EV sector
- Exempting Lithium-ion cells from paying custom duty
- Viability gap funding to support Battery Energy Storage Systems
- Demand creating provisions will boost auto sales
- large outlay for Indian Railways
- Budget will stimulate green growth across sectors
Finance Minister Nirmala Sitharaman unveiled the Union Budget 2023 in Parliament on 1st day of Feb 2023. The Minister disclosed new plans for the technology and electronics industry. The budget has allocated Rs 16,549 crore for the Ministry of Electronics and Information Technology, which is nearly 40% higher on year.
Of this, the government has allocated Rs 3,000 crore for the Indian Semiconductor Mission which is likely to kickstart the development of the semiconductor and display manufacturing ecosystem in India. Out of Rs 3000 crore corpus, Rs 1,799 crore has been allocated for the modified scheme for setting up compound semiconductors, silicon photonics, sensors fab, discrete semiconductors fab and semiconductor assembly, testing, marking and packaging (ATMP), outsourced semiconductor assembly and test (OSAT) facilities in India.
The budget has allocated Rs 1,000 crore for the modified scheme for setting up of semiconductor fabs in India. The budget has allocated Rs 200 crore for the design-linked incentive scheme to provide impetus to companies to design semiconductor chips and wafers in India.
The budget has allocated Rs 4,499 crore for the production-linked incentive (PLI) scheme for large-scale electronics manufacturing. The scheme envisages incentives between 3% and 6% on incremental sales of goods manufactured in India.
While some may argue that the Budget 2023 was populist, FM Sitharaman stuck to the path of fiscal prudence. Here’s a detailed analysis of Union Budget 2023 through expert lances.
Hitesh Garg, India Country Manager, NXP Semiconductors: “The government has brought a progressive budget that will support green mobility and innovation in the automobile sector. Major steps like National Green Hydrogen Mission and extending the subsidy on EV batteries will help the country to have a seamless transition towards a low carbon intensive and fossil fuel dependent economy, empowering the country to achieve its net zero goals.
The three centers of excellence for artificial intelligence to enable ‘Make AI for India’ and ‘Make AI work for India’ will stimulate an effective AI ecosystem and nurture quality human resources in the field of technology. It will also boost the Public-private partnership in conducting research and developing cutting-edge applications and scalable solutions across industries.
In line with the government’s vision of digital India, all these initiatives will help us transform into a digitally empowered society and knowledge economy.”
Naveen Munjal, Managing Director, Hero Electric: We welcome the Union Budget 2023 presented by the Hon’ble Finance Minister, with sustainability and green growth across sectors at its core. It encourages the implementation of programmes across sectors to reduce carbon intensity and create green jobs through unique initiatives like ‘Green Credit’, PM Pranam Yojna, Green Hydrogen Mission, etc. Fronting the ‘Net Zero Emission’ mission, it focuses on the promotion of battery energy storage systems to aid in fueling the electric mobility revolution. The Budget 2023 reflects the government’s inclination to support the EV transition, enabling the creation of a carbon-free nation that thrives on sustainable, futuristic, and alternative fuel technology. We are confident that initiatives under green growth and sustainability will build awareness and help everyone contribute towards a clean and green future.
Venkatram Mamillapalle, Country CEO & Managing Director, Renault India: “Union Budget brings cheers to the automobile industry as it will positively give push to sales.
The budget has laid special emphasis on the Vehicle Scrappage Policy which will not only boost the sales but will also enable in achieving clean and green environment for overall sustainable development. Additional, funds infusion in the scrappage policy is a remarkable step and is in the right direction to achieve India’s goal of being carbon neutral by 2070. This policy would eventually help the entire eco-system of automotive industry as this will translate into growing orderbooks of OEMs, increased output and job creation.
Another significant announcement made by the government on the customs duty exemption being extended to capital goods and machinery required for the manufacturing of lithium-ion batteries used in EVs. This step is a boost for companies that are / would be manufacturing electric vehicles locally as it will help reduce the cost of EVs.
The automobile industry will witness an increase in sales with the introduction of new tax rebate limit on personal income which has been raised from INR 5 lacs per annum to INR 7lacs per annum. This step is likely to help the sector as more disposable income with salaried customers may give supplementary push to demand for personal vehicles.”
Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles: “After passing through a difficult period of lack of good quality” Made in India” EV components for the last 2 years, the local supply chains are beginning to take shape and the increase in customs duty on SKD/CBU is therefore timely as it will further incentivise the local suppliers because of the relative price advantage. There are still many a parts of EV componentry such as lithium cells, permanent magnets for electric motors, semiconductors etc that will need to be imported and we expected rationalisation of customs duty on such essential imports help keep the EV prices in check. The continuation of the customs duty-free status for machinery used to produce lithium-ion batteries could result in some stabilisation in battery pricing.
A “Green Credit Programme” to promote behaviour change has been announced as another intriguing proposal. We are awaiting the fine print and anticipate that it will support the creation and uptake of EVs.
Promoting Hydrogen as a fuel for future is another great idea specially as India is having abundance of sunshine most part of the year and majority of our goods are transported in heavy duty trucks that cannot run on lithium batteries efficiently and in a cost effective manner. We believe both Hydrogen and Lithium batteries can co-exist as great clean fuels for the energy and transportation needs of the next few decades.”
Anil Chaudhry, Zone President, India and CEO & MD, Schneider Electric India Pvt. Ltd: “The FY24 budget lays a strong foundation for sustainable development of India in the Amrit Kaal. With the goal of achieving net-zero emissions by 2070, it focuses on energy transition and decarbonization of the economy with a sizeable allocation of ₹35,000 crore. The vision for ‘LiFE – Lifestyle for Environment’, is deeply ingrained in the budget and reaffirms the government’s commitment to tackle the climate crisis. Globally, India ranks fourth in installed renewable energy capacity and the budget will give a further fillip to the addition of capacities in areas like wind and solar. Key measures are being taken to support green growth, including viability gap funding for battery storage, renewable energy evacuation, National Green Hydrogen Mission, and green credit policy. With an investment of Rs. 10,000 crore, the budget also underlines the need for embracing a circular economy through the GOBARdhan scheme. Furthermore, setting up three centers of excellence for Artificial Intelligence is a welcome step from the government as it bridges the skill gap in the AI space and nurtures talent to develop tech of the future”
Sudarshan Venu, MD, TVS Motor Company: “The increase in capex on infrastructure and the emphasis on green growth will help the mobility sector. This budget gives something to everyone – from rural India, start-up India, middle class India, to digital India – it is about inclusive growth and building on the recovery we are seeing after the pandemic. It strikes a fine balance between growth and fiscal prudence.”
Santosh Iyer, Managing Director & CEO, Mercedes-Benz India: “The Union Budget 2023 should drive demand as it focuses on boosting consumption by increasing the disposable income of taxpayers. Further, an increased capital expenditure on infrastructure, particularly roads, should also create demand for the automotive sector. The change in basic custom duties is however going to impact the pricing of some of our select cars like the S-Class Maybach and select CBUs like GLB and EQB, making them dearer. However as we locally manufacture most of our models, this will not affect 95% of our portfolio.”
“The focus on sustainability in the budget is commendable and initiatives like extending customs duty exemption of capital goods and machinery to manufacture lithium-ion cells for EVs is a step in the right direction, as it will consistently drive green mobility in the country.”
Dheeraj Hinduja, Executive Chairman, Ashok Leyland: “Union Budget 2023-24 is aligned with the Prime Minister’s vision of building a competitive and resilient India, with inclusive growth. The budget emphasises comprehensive national infrastructure development and expands on the digitization of the economy. The road transportation sector plays an important role in national development and would have an even more impactful role, going forward, in supporting the Government’s vision. The announcement that old vehicles owned by the central government and state governments will be replaced as part of the vehicle scrapping policy presents a significant opportunity for fleet modernisation. This budget also echoes our sentiment and commitment to clean energy vehicles for a cleaner and greener future, as part of a national mission to achieve the net zero carbon emission goal.”
Rajeev Sharma, Chief Strategy Officer, Mitsubishi Electric India: “The budget 2023 is oriented to economic growth of the country. I am sure that 33% growth in capital expenditure will result in balanced development. This is a smart move since it will help the country achieve its goal of becoming a 5 trillion-dollar economy and a global powerhouse. I believe that the announcement of setting up 100 labs to effectively develop 5G services and the vision to promote Artificial Intelligence in overall industries is a strong step by the government. This will further lead to automation in the industries which will help in propelling India’s growth and promoting smart cities. The union budget 2023 has come up with positive announcements for different sectors to support the Make in India initiative and can result in balanced growth in the near future.
Thompson P. Gnanam, MD & Global CEO, 3i Infotech: “The first Amrit Kaal budget is certainly a progressive direction by the Government of India to give a boost to the overall technology-driven and knowledge-based economy within the country. The government’s focus on AI and 5G in the Union Budget 2023 will help India’s aspirations of being a global powerhouse of technology, innovation, and digital transformation. The budget comes with a strong promise for development towards the creation and promotion of the vision ‘Make AI in India’ and ‘Make AI Work for India’. This will indeed enable and establish a strong AI ecosystem in India.
As a company, we envisaged the potential of 5G and AI by setting-up COEs and tying-up with prestigious institutions like IIT Madras Research Park to establish FutureTech Business Labs focused on 5G and allied areas. Hence, the Government’s priority on setting-up 100 labs for developing 5G applications in engineering institutions, to realize new range of opportunities, business models & employment potential, is greatly appreciated and applauded.”
Arun Balasubramanian, Vice President & Managing Director, India & South Asia, UiPath: “We are glad that in this year’s budget, a greater focus has been given to Digital India where technology is an enabler for the economic and overall development of the nation. For India to adopt and implement emerging technologies, a robust skilled workforce is needed. And the provision of the Skill India Digital Platform is the right step in making a highly skilled workforce. It will unify and enable demand-based formal skilling, which has been much needed to bridge the gap between academia and industry. With the Skill India Digital Platform and the proposed National Digital Library, we are confident that young Indians will have the resources to upskill in areas like AI, automation, and robotics, which will in turn make Digital India a reality. With the launch of The National Data Governance Policy, Indian users and companies can now access anonymized data, which will provide greater opportunities for innovation. These are exciting times for a tech-enabled India, and soon the country will become a talent powerhouse for the world.”
Vishal Agrawal, MD, Avaya: “We appreciate the government’s continuous focus on the technology sector with the Budget 2023-24. The introduction of three centres of excellence for artificial intelligence to enable ‘Make AI for India’ and ‘Make AI work for India’ is something to look forward to for the upcoming digital nation.
The initiatives outlined for skill development and research in cutting-edge fields like artificial intelligence (AI), robotics, and 5G, among others are encouraging for the IT industry.
In line with the GoI’s initiative to strengthen the MSMEs, we look forward to supporting them in creating a user-friendly space and helping them further to scale up with the help of our robust and collaborative solutions.
The government’s initiative to set up 100 labs for 5G solutions across engineering colleges and the announcement around the National data governance framework will further empower the students, Indian start-ups, and researchers that will collectively help us achieve our collective vision for the 5 trillion economy.”
Yogesh Mudras, Managing Director, Informa Markets: “Finance Minister Nirmala Sitharaman delivered the Union Budget 2023 today with a long-term focus and has rightly supported and tabled many enablers for several industries. It has infused new energy to the middle class as the tax structure has been eased under a new tax regime. Budget 2023 is a big boost for domestic manufacturing, job creation and ease of doing business. With a clear focus on inclusive development, infrastructure and investment, green growth, youth power and the financial sector, the Government has increased the capital investment outlay by 33% to 10 lakh crores. Sustainable growth in each sector is the Government’s top priority in this year’s budget. There is a big relief for the MSME sector, as the Credit Guarantee Scheme for MSMEs will be extended with an infusion of 9000 crore. New units that commence manufacturing till March 2024 to get a lower tax rate of 15%. With an emphasis on shifting to green fuels, green hydrogen is another paramount of budget 2023; therefore, the announcement of an outlay of Rs 35,000 crores for energy transition investment will help the nation to touch green hydrogen production of 5 million tonnes by 2030. The proposal to set aside Rs 10,000 crore per annum for Rural Infrastructure Development Fund (RIDF) and Urban Infrastructure Development Fund will further boost the infrastructure sector. States are also being incentivised to spend more on infrastructure, and 2.40 lakh crore has also been allocated for Indian Railways. For the further development of state infrastructure, the budget has taken the right step with respect to the continuation of 50 years of interest-free loans to states and easing access to credits, leading to the overall development of the nation. We welcome the Union Budget 2023, hoping for a positive impact on the overall development of the country.”
Vishak Raman, Vice President of Sales, India, SAARC and Southeast Asia at Fortinet: “A steep increase of 33% in capital investments to 10 Lakh Crore almost three times the outlay made in 2019 shows why India is one of the most buoyant economies in the world. While Investments and development programs are all tech-driven the budget realises the potential of 5G by setting up 100 labs in engineering institution to develop Apps to assists in all verticals including smart classroom, precision farming, smart transport systems and healthcare.
The capital flowing into AI-Startups last year was $2.7 billion globally. The race in AI is heating up after the success of ChatGPT and the budget has realised this potential with the vision of Make AI in India and Make AI Work for India. The setting up of 3 centers of excellence for artificial intelligence in top educational institutions will combine tech and computing power with some of the best engineering brain power in our country.
A robust financial sector, expanding the scope of Digilocker to allow more documents to be made available and setting up of e-courts will all go hand in hand with maintaining data privacy. There simply cannot be any data privacy without data protection and cybersecurity will require an entire system of people and technology working together to protect data and networks.”
Anil Valluri, MD & Regional VP – India & SAARC, Palo Alto Networks: It is heartening to see the continued focus of the government on technology and its efforts toward realizing its vision for a truly digital India.
Digital Public Infrastructure for the country’s agricultural, fintech, manufacturing, and healthcare industries, including their Information Technology (IT) & Operational Technology (OT) capabilities, will help usher in a new age for the sectors. This will be characterized by cutting-edge solutions that will deliver advanced farmer-centric solutions, exhaustive market intelligence, evolved Agri-firms & start-ups, and more. The provision of 5G labs across India’s top engineering institutions will help power new applications, innovations, and opportunities that will further boost the development of the high-speed network service in India. Enterprise and academia collaboration to “Make AI in India and Make AI work for India” will be instrumental in bringing the technology and its innumerable applications into the mainstream and fostering an unprecedented AI ecosystem that will benefit both organizations and individuals. This ecosystem will flourish thanks to the newly announced youth-focused skilling initiatives for AI, Industry 4.0., coding, robotics, and more.
Competent cybersecurity will be crucial to the success of these initiatives, considering our digitally transformed populace. With ransomware attacks seeing alarming highs and national critical infrastructures becoming regular targets, any further transformations may render us more vulnerable to attack. A strong focus on data governance – reflected in the Union budget’s plans to set up a National Data Governance Policy – and cybersecurity skilling, combined with a cybersecurity-first approach powered by AI & ML for devices, networks, and applications will be essential for digital India to become a reality.
Satya Vyas, Founder & CEO, projecthero: The government’s continued push for infrastructure development is gratifying. The government aims to establish an Urban Infrastructure Development Fund (UIDF) with an expected budget allocation of ₹10,000 crore per annum to create urban infrastructure in Tier 2 and Tier 3 cities. They also plan to incentivize private investment in infrastructure development. These are welcome moves that should prove to be a huge boost to the real estate and construction sectors and will massively aid job creation.
Raman Bhatia, Founder & Managing Director, Servotech Power Systems Ltd: The Budget 2023 has put a reinstated focus on Green Growth. With the FM allocating Rs 35,000 crore towards this sector, prioritising India’s net zero goals and energy transition, this presents players in this space a unique opportunity to make clean energy solutions like solar and EV charging both accessible and affordable for the people, unlocking mass consumerization. This extensive budgetary allocation for the sector coupled with additional production linked incentives for manufacturing high-efficiency solar photovoltaic modules, will lead to significant advances in the country’s decarbonization initiatives. In addition, quicker approvals for new storage systems, flexible policies allowing storage structure changes after project commissioning without affecting current initiatives, and capacity building efforts for operators are other areas for consideration that will aid India’s accelerated transition to renewable energy. The Union Budget 2023 has hinted that all efforts at decarbonization will need supportive policies that incentivize both finance and technology. Developing large-scale carbon markets and green financing through budgetary allocations will shape up the framework empowering energy producers and providers.
Manikanth Challa, CEO & Founder, Workruit: “Budget 2023 aims to fulfill youth aspirations, job creation, and macroeconomic stability. From an economic standpoint, this budget is focused on job creation and youth upliftment. What is also motivating is the announcement of the National Digital Library and three AI centres of excellence to enable ‘Make AI for India’ and ‘Make AI work for India,’ which will encourage youth from diverse backgrounds to learn comprehensively. The government’s increased emphasis on developing e-content in all Indian languages and launching a “digital university” will benefit the country’s literacy rate”.
Bimal Khandelwal, CFO, STT GDC India: “The recently announced budget by our Finance Minister Nirmala Sitharaman is a significant step towards a more sustainable future with a focus on green growth and a goal of reaching net zero carbon emissions by 2070. The government’s dedication to lowering carbon intensity and fostering prospects for green employment is demonstrated by the allocation of Rs 35,000 crore toward attaining this objective and the energy transition. The emphasis on infrastructure incentives for green energy and the allocation of funds towards the National Green Hydrogen Mission, with an outlay of 19,700 crores, will facilitate the transition to low carbon intensity and reduce dependence on fossil fuels. A priority investment fund for the energy transition is also provided in the budget, with an emphasis on green hydrogen production to reach 5 MMT by 2030 which is an important step in encouraging the use of clean energy and lowering the nation’s reliance on fossil fuels. Additionally, the viability gap funding for battery storage is a good step because it will promote the creation of a strong and trustworthy energy storage infrastructure.”
