Budget 2024 Highlights: What do business leaders expect from FM Sitharaman?

"This is going to be an interim budget but at least there may be some indications of full-budget benefits. There may be some concession to be offered to individual taxpayers under section 87A under which the overall tax exemption limit may be increased to ₹8 lakh from now ₹7 lakh, inclusive of rebates," All India Federation of Tax Practitioners national president Narayan Jain said.

Gaurav Jalan, Founder & CEO, mPokket

“In India’s dynamic fintech landscape, 2024 promises a revival of business growth and steadfast support for advanced technologies. As the interim Budget for the fiscal year 2024-25 approaches, scheduled to be presented by Union Finance Minister Nirmala Sitharaman on February 1, 2024, we anticipate that the Interim Budget will align with the industry’s expectation for continued momentum in financial inclusion and innovative lending solutions for MSMEs and the Indian youth.

Whether it was improving business fundamentals, adapting to revised regulatory norms, or braving the funding winter, fintechs have displayed tremendous agility and fortitude in managing these challenges. We are optimistic about the measures that will propel the growth of India’s fintech segment. Our primary hope revolves around a strategic focus on fostering financial inclusion, particularly in Tier 2, 3, and 4 cities, underpinned by the establishment of a robust trust-based lending ecosystem. We also await initiatives that will standardize lending practices and encourage collaboration between banks, notably Public Sector Banks and fintech firms.

The Budget is expected to highlight the importance of expanding digital public infrastructure, such as Account Aggregator and OCEN, to facilitate broader financial inclusion and unlock more data for intelligent lending practices.

Given the pivotal role of fintechs in driving the start-up ecosystem’s growth in the country, we look forward to a supportive fiscal policy approach that enhances the attractiveness of investments in this segment. Moreover, the Budget could create an enabling environment for sustained innovation and the digital delivery of services by the fintech industry, positioning it for the predicted dominance over traditional bank lending by 2030. Finally, we also anticipate a nuanced, supportive approach towards ESOP taxation and fostering talent retention.”

Santosh Iyer, managing director & CEO, Mercedes-Benz India.

“We expect capex on infrastructural projects to continue, aiding the automotive sector. The policy push for green mobility should remain a key focus for the government, encouraging faster adoption of electric vehicles. The luxury car industry has significant value contribution to the GDP and our wish for a rationalized duty structure and GST stays on priority. Overall, we expect consistency in various policies and no surprises in the upcoming budget.”

Shreya Sabharwal, Founder and CEO, Squarefork

Digital marketing startups anticipate Budget 2024 to foster innovation and ease regulatory burdens. They seek tax incentives and grants to fuel research and development in cutting-edge technologies like AI-driven analytics and personalized marketing tools. Startups hope for streamlined policies that encourage foreign investments and collaborations, facilitating access to global markets. Additionally, they aspire for initiatives promoting digital literacy and skill development to address the talent gap. Simplified compliance procedures and subsidies for digital infrastructure upgrades are also on their wishlist. Overall, they aim for a conducive ecosystem that nurtures growth, fosters competitiveness, and positions India as a hub for digital marketing innovation.

Zaiba Sarang, Co-founder of iThink Logistics.

As India's logistics sector gears up for another year of growth, the 2024 budget stands as a pivotal opportunity to bolster its potential. We expect several key steps aimed at driving the sector's advancement. A greater focus on sustained investment in multi-modal infrastructure development is expected, with emphasis on dedicated freight corridors, inland waterways, and intelligent logistics parks to enhance efficiency and reduce costs. We also expect the upcoming budget to incentivize green initiatives, such as electric vehicles, green warehousing, and renewable energy adoption, aiming to reduce the carbon footprint and attract sustainable investments.

Since the logistics sector has long suffered from a skill gap, it is high time that this issue is addressed as well, through targeted training programs and promoting digitization with AI-powered logistics platforms, paving the way for transparency and competitiveness. Streamlining regulations, simplifying GST processes, and providing tax breaks for logistics startups can also contribute to an improved ease of doing business. Moreover, special schemes and subsidies for MSMEs operating in the logistics sector can empower them to compete effectively, fostering overall sector growth.

Sanjay Gupta, chairperson of IESA

We have high hopes from the upcoming budget. This year should mark the next phase of growth for the semiconductor industry in India, focusing on unleashing the untapped potential of Indian entrepreneurs who are keen to pursue semiconductors and embedded ESDM sector. They face four major entry barriers: high employee cost, high EDA cost, high fabrication cost, and high validation cost. These barriers hinder the exploration of the true potential of entrepreneurs in the semiconductor design space. Although the design-linked incentives launched last year were a welcome step, there is a need for a massive focus on providing risk capital to deserving startups, either through VC partnerships or direct government support. This will accelerate the semiconductor startup journey from India and enable them to compete globally and make a name for themselves and the country in the semiconductor design fab lab space.

Saloni Verma, co-founder and chairperson , Sunshine Corporate Creches

The Maternity Act 2017 made it mandatory for companies with 50+ employees to provide creche services to their employees, 6 months of paid maternity leave also became the law at the same time. While intentions in both clauses are good, it would help if the Government came up with some financial incentives for companies of smaller size to help them pay salaries of those on maternity leave and then set up creches for them. Thus, the risk of married young women not getting hired would go away as it can adversely affect the already skewed female ratio in most companies. Initial trends already show that smaller companies are wary of hiring those who are likely to get married soon or those who have been recently married because they cannot simply afford the 6 months of paid leave and then bear the cost of creche services. Anticipation for the Union Budget 2024 includes hopes for increased allocation to education, prioritizing technology integration, and enhancing infrastructure. Stakeholders expect measures to address skill development, promote research, and reduce the digital divide. Calls for incentivizing innovation, boosting online learning resources, and ensuring affordable education resonate. Transparent policies and sustainable funding are key expectations.

Saurav Kasera, Co-Founder, Clirnet said, “The Union Budget holds the potential to revolutionize healthcare accessibility in India's remote areas. Ongoing training and upgradation for all healthcare professionals are vital to a patient-centric system. A blend of incentives to make healthcare training more affordable and accessible can hold the key. These could include bringing healthcare education under a special GST category with lower or nil rates (currently no set off available as medical services carry Nil GST), offering deductions in direct taxes for healthcare training expenses, and providing financial benefits/grants to institutions offering such training. Moreover, enhancing budget allocations for digital health infrastructure and telemedicine will ensure that quality healthcare reaches every corner of the country.

Together, these initiatives promise to build a more robust, inclusive, and skilled healthcare workforce in India, ultimately leading to improved patient care and health outcomes across the nation.”

Amit Prasad, Founder and CEO, SatNav

The IT sector foresees the 2024 Union Budget emphasizing digital infrastructure investments and providing incentives for research, skill enhancement, and nurturing innovation hubs. Hopes encompass augmented funding for cybersecurity, backing for cutting-edge technologies such as AI, IoT, and 5G, and revisions in tax policies to stimulate IT exports. Streamlined regulations for startups and increased focus on digital education initiatives are also expected. The industry aims for a favourable climate supporting growth, emphasizing improved business processes and global competitiveness, intending to solidify India's standing as a leading force in the global tech arena.

With the IT Services business taking a hit due to varying market conditions and the imminent impact of Artificial Intelligence on low-end programming, hiring has been significantly down for Software Engineers this year, unfortunately, this is expected to continue. For almost 3 decades the Indian education system has been focused on producing Engineers who go and take up jobs in the IT industry. The Government should proactively promote incentives for Educational institutions to diversify their programs and for IT Product companies that can fill the imminent gap that will arise. Also, the accounting laws for IPR valuation can be further clarified to help companies show that investment in the balance sheet rather than the practice for all investments to be written off without any benefit, showing up as accumulated losses. Valuing IPR can also help to raise funding and loans from banks as the network and reserves would then be favourable.

Amit Relan, Co-Founder and CEO, mFilterIt said, “Last year’s Union Budget had a significant mention of the advancements in technology and fostering the digital economy. For the upcoming budget announcement, we are expecting a significant share of focus on critical issues concerning data protection, cybersecurity, and digital infrastructure.

With the introduction of the data protection bill, we are expecting to see stride movements in the regulation of data privacy aligning with global standards, a cohesive policy framework to protect user privacy and also stimulate innovation in the digital economy. Alongside privacy and protection, we expect to see some wave movement around emerging technologies like AI and the nation’s take on leveraging its power to empower further digital advancements.

Focus on innovation and protection will strike the ideal balance to foster the digital infrastructure of the nation.”

MSMEs in sectors such as automotive, electronics, industrial, and electrical machinery, and chemicals, require the reduction of risks in capital flows, according to consultancy firm Deloitte.

Manhar Garegrat, Country Head, India & Global Partnerships at Liminal Custody Solutions, says that the 1% Tax Deducted at Source (TDS) must be removed, as it has ‘affected policies that disincentivise domestic participation in the digital asset market.’

Speaking to Mint, Rahul Ahluwalia, co-founder, Foundation for Economic Development, says he feels that ‘India’s path to growth lies in prioritising exports to global markets, which are vast compared to the domestic Indian market.’

“As this will be a vote on account, it is unlikely to have any big announcements. Still, reduction of import duties are well within the government's ambits,” Ahluwalia says.

Besides FM Sitharaman, the team includes TV Somanathan (finance secretary), Ajay Seth (secretary, department of economic affairs), Tuhin Kanta Pandey (secretary, DIPAM), Sanjay Malhotra (revenue secretary), Vivek Joshi (secretary, department of financial services) and V Anantha Nageswaran (chief economic advisor).

Morarji Desai presented six consecutive budgets – five regular and one interim – between 1959 and 1964.

Some of Sitharaman's predecessors (Dr Manmohan Singh, Arun Jaitley, P Chidambaram, and Yashwant Sinha) presented five budgets in a row.

“Key expectations include a continued focus on fiscal consolidation to maintain investor confidence and long-term economic stability. Support for critical sectors like infrastructure, agriculture, and healthcare is anticipated to boost these areas and create jobs. Additionally, measures to address inflation and rationalise tax policies could stimulate investments and incentivize businesses, setting a positive tone for the year,” Sonam Srivastava, Founder and Fund Manager, Wright Research, to Mint.

As per Gyanendra Tripathi, Partner & Leader, Western Region, Indirect Tax, BDO India, the EV industry has been sending representations seeking a reduction in the GST rate on parts/ components used in EV manufacturing (18/28% GST), and on batteries (18% GST) to 5%.

“The industry is also looking for an extension of FAME subsidies, clarity of tax treatment on EV charging, eligibility of ITC on setting up of the charging stations, and a GST rate reduction on entry-level two-wheelers,” Tripathi tells Mint.

On February 1, Union finance minister Nirmala Sitharaman will unveil the final budget of the Narendra Modi government's second term. This will also be her sixth budget, the first five coming in July 2019, February 2020, 2021, 2022, and 2023.