Here are industry leaders who share their insightful expectations message for the Hon'ble Finance Minister Smt Nirmala Sitharaman ahead of her Interim Budget 2024 Speech.
Stay tuned to SMEStreet for live updates about the Interim Union Budget 2024 on 1st Feb 2024 at 11 Am and also Decoding the Union Budget from the perspective of Indian MSMEs as the post Budget activity.
Mr. Tejas Goenka, Managing Director, Tally Solutions shared his expectations with dual aspects: MSME and Software Industry. He says:
MSMEs are the backbone of the Indian economy, and despite the difficulty and uncertainty in the last few years, they have bounced back and remain optimistic about the potential of the future. There has been tremendous digitisation in this sector that has helped, but the sector remains starved of capital, and overly diligent on compliance. Unlocking growth for the MSME sector is a key priority, and creating a fertile ground to allow for greater access to capital and simplification of compliances can achieve new heights.
The MSME sector faces a critical challenge in accessing affordable funding due to heavy reliance on informal sources which is having a high interest rate. The government should prioritize formal lending, introduce an interest subvention scheme amid rising interest rates, and incentivize investments to boost the sector.
Further, it is also recommended to extend the deadline to opt for beneficial income tax rate of 15% for new manufacturing companies under section 115BAB for two more years, i.e., till 31st March 2026.
Software Product Industry
Access to technology at the grassroots level is a fundamental element in line with the vision of “Amrit Kaal” outlined by the Honorable Prime Minister. To achieve widespread technology access across our nation, it is imperative to promote and foster a mindset centered on product development, facilitating the creation of technology solutions on a large scale. While we stand as the world's leading IT services exporter, there remains a gap in establishing noteworthy companies in the product sector. As we strive to actualize our vision for 2047, it is essential to focus on building the world's largest and most innovative technology firms originating from India.
To initiate this process, the government should distinctly differentiate between software products and services, recognizing their inherent distinctions, thereby establishing a conducive environment that encourages the creation of products. Incentivizing sustained and uncertain research and development endeavors is crucial for promoting innovation, the foundation of any successful product-oriented company. Furthermore, supporting grassroot initiatives aimed at instilling knowledge and fostering entrepreneurial aspirations among young Indians is essential for nurturing large-scale businesses outside the country.
Further, as software products are categorized as goods, it is highly advisable to align withholding tax rates with those applicable to the sale of physical goods, specifically at 0.1%. This measure aims to prevent the tie-up of working capital in the form of TDS and contribute to the overall advancement of the industry.
Sudarshan Chari, Executive Director and Head of SME Banking, DBS Bank India says:
“In the upcoming budget, we anticipate a continued emphasis on supporting MSMEs in India, building upon the momentum initiated last year. Concerted efforts to include all MSMEs on Udyam will be crucial, enabling them to access government schemes, incentives, and formal credit channels. In 2023, the CGTMSE cap saw an upward revision, bringing more businesses into the fold of formal financial services.
Additionally, the Open Network for Digital Commerce (ONDC) has proven instrumental in integrating SMEs from Tier 2 and 3 cities into the digital marketplace. The upcoming budget can strengthen this foundation by introducing new avenues for SMEs to expand and enhance e-commerce integration.”
Several emerging economies are already adopting this approach, drawing on technology from Indian talent and products. India has the technology, know-how, and competency to do it through innovative startups with many novel and niche products well-positioned to lead in this domain. Urging the government to invest in establishing data hubs and to give opportunities to innovative AI companies to make an impact through AI-driven growth, governance, development, and compliance."
Mr. Dhananjaya Bharadwaj - Co-founder & CEO at ParkMate
As pioneers in AI-powered parking solutions, ParkMate anticipates robust backing from the upcoming Union Budget 2024-25. Recognizing parking challenges as a hurdle to India’s economic progress, we advocate for comprehensive support to auto-tech startups, real estate entities, and OEMs through strategic incentives. Collaborative efforts among stakeholders in parking management can transform Indian roads into smart and safe spaces. As the role of artificial intelligence in boosting the auto sector is paramount, we also call for budgetary backing for AI-focused upskilling programs. Building on past successes like the establishment of three AI Centers of Excellence, there's a pressing need for upskilling initiatives to meet industry demands, aligning with the government's vision of 'Make AI in India' and 'Make AI Work for India.’ In addition, facilitating startup growth through streamlined regulations, simplified funding processes, and enhanced access to investors can catalyze job creation, GDP growth, and overall sector dynamism. Moreover, we hope for sustained support in streamlining compliance, further improving the ease, cost, and speed of doing business in the auto sector.