Union Budget 2020 Announced: This Is How Businesses, Entrepreneurs, SMEs Reacted
Finance Minister Nirmala Sitharaman has announced the Union Budget 2020, which is the 2nd budget of the PM Modi led BJP Govt’s second term, and 2nd budget of FM as well.
The motto of this budget was: “Aspirational India, Economic development, A Caring Society.”
There has been mixed reactions from the business community and entrepreneurs, even as sensex dropped by almost 1000 points.
Here are some reactions:
CP Gurnani, MD & CEO, Tech Mahindra, said,
“With a thrust on talent, technology and entrepreneurship, Budget 2020-21 is a promising budget in support of making India’s $5 trillion economy dream come true. It is heartening to see initiatives that are aimed at enhancing digital penetration in the country by making Fibre to the home (FTTH) accessible to 100,000 Gram Panchayats via Bharat Net, which will go a long way in bridging the digital divide. Also, the decision to build data centre parks for the private sector is another step towards making India a data economy superpower. Furthermore, strategic initiatives aimed at leveraging new-age technologies like the Internet-of-Things, machine learning, robotics, bioinformatics, quantum computing and artificial intelligence across sectors will further help in laying the foundation of a robust, digital economy.”
Rajiv Bhalla, Managing Director, Barco India said,
“The 2020 Budget has been drafted around the key themes of talent, technology, entrepreneurship and sustainability and we applaud the Centre’s efforts at boosting the economy. The Hon’ble Finance Minister has maintained focus on tourism by announcing that iconic destinations will be connected by “corporate” trains like Tejas and with the plan to develop 5 archaeological sites into iconic sites. Five new smart cities have also been proposed and Barco looks forward to partnering with the Government in this direction.”
Manish Lunia – Co-Founder at FlexiLoans.com said,
“The budget has taken many positive announcements for the Economy and Start-upsFew prominent ones include:
1. Solid acknowledgement of the role of Entrepreneurs and the support to them via measures like Entrepreneurship Cell, ESOP tax reliefs
2. Fintech initiatives like the enhanced used of Data science, Cloud computing, Working with Treds, CGTMSE for Loans to MSMEs etc can be a path breaker for many
3. Enhanced enablers like income tax benefits to individuals, added securitization benefits to NBFCs, etc. are good enablers for the ecosystem.
Mr. Nishant Pitti, Co-Founder & CEO, EaseMyTrip said,
“In tune with the present government vision to encourage Indian travellers to travel more and contribute towards the nation’s growth, this budget takes it a step ahead. The budget has focused on promoting tourism & travel with an overall budget of Rs. 2500 crores in year 2020-21. Government aims to develop 100 more domestic airports under the UDAN scheme. To promote travel via railways, government will focus on more Tejas type trains that will connect tourist destinations in India.
The Finance Minister has also laid stress on the development of archaeological sites into iconic sites with on-site museums. Five such sites are- Rakhigarhi, Hastinapur, Shivsagar, Dholavira and Adichanallur. Government has also announced renovation of 4 key museums. Rs,150 crore have been allocated for the ministry of culture in 2020-21.
We are hopeful that this budget will open new avenues for the travel industry.”
Mr. Viram Shah, CEO and Co Founder, Vested Finance said,
“A 5% TCS was introduced on total transactions done beyond INR 7 lakhs or approximately $10,000 per year under the Liberalised Remittance Scheme (LRS). The LRS is typically used to pay for overseas education, travel or investments. It is important to note that this is not TDS, it is TCS which means that the tax collected will be available as credit to the payer. While it increases the upfront cost of education, travel and investments abroad, since the credit is available, the overall cost for the end user does not increase. It basically becomes a way for the government to to ensure advance tax gets paid. For individuals who are transferring funds for investments, they can utilize the 5% to offset any capital gain taxes they need to pay in India for their investments. Further, any gains earned from investments will be in foreign currency and will not be subject to the 5%, so these gains can then be utilised for travel or paying for education. One of the challenges will be that the government will have to work with the Authorised Dealers to institute a system that allows these foreign exchange dealers to check when the transaction value for each PAN card holder exceeds 7 lakhs.”
Mr. Bhavesh Gupta, CEO, Clix Capital said,
“Reduced NBFC eligibility for SARFAESI Act is a well thought move that will help the sector to grow. Allowing NBFCs to be a part of TReDS will improve MSME access to credit, coupled with reduction in personal income tax slabs should spur consumption leading to growth.”
Mr. Sharad Malhotra, President – Automotive Refinishes and Wood Coatings, Nippon Paint India said,
“We find Union Budget 2020 to be a reasonable one with strong measures and good intent. Tax benefit for the middle class makes life easier for the common man and leaves more money in the hands of the consumer. Decriminalization in the Companies Act is a major positive that Corporate India will welcome. No reduction in GST rate for vehicles is a dampener for us.”
Mr. Agendra Kumar, President, Esri India said,
“The budget has some very positive proposals for the GIS (Geographic Information System) market. There are several areas where the hon’ble Finance Minister has announced allocations of funds which will directly benefit from the use of GIS.
It is heartening to see the allocation of Rs 11,500 Crores in 2020-21 for Jal Jeevan Scheme, this will certainly help in improvement in water resources and providing 24×7 water to households. Also Rs 12,300 allocated to Swatchh Bharat Mission for 2020-21 will help in roll out of initiatives for disposal and processing of solid waste and waste water. These two schemes are very important for the country and GIS can help in the management of water resources, water distribution and in achieving the objectives of Swatchh Bharat mission.
5 new Smart Cities have been announced in collaboration with states, apart from the allocation of Rs 103 lakh Cr for infrastructure in the form of 6500 projects for housing, supply of safe drinking water, clean energy, health care for all. GIS has been supporting the growth of Smart communities and in improvement of liveability of the cities.
GIS was the heart of R-APDRP program that aimed to reduce the power distribution losses by various electric utilities in the country. Now the announcement to make smart metering mandatory by all DISCOMs in the country will bring-in an important reform, the installation and management of smart meters can easily be handled through GIS based systems.
Mapping on land on both sides of railway tracks for generation of solar energy is driven by GIS and so are the other areas like expansion of sea ports, development of Inland Waterway and 100 more airports. It has been announced that the National Gas grid will be expanded from16200Kms to 27000 Kms. GIS is already been used in installation and management of Gas pipelines and distribution; the expansion of Gas grid will create more opportunities for the use of GIS and other geospatial technologies.”
Dr. Pulkit Mathur, CEO, Queppelin said,
“It was heartening to see FM Sitharaman recognise the importance of Deep Tech is driving the next wave of growth in India. From AI in Ayushman Bharat to Data Centre Parks to allocation of Quantum Tech….there was enough in that Budget for the Technology sector to be enthused about.”
Mr. Tim Nicolle, Founder, PrimaDollar, said,
“The Finance Minister’s announcements under Union Budget 2020 introducing new schemes will help the small players in the export sector in a big way. The new Nirvik scheme introduces high insurance cover for exporters at a reduced premium. Simplified processes for faster claim settlements will be beneficial for both the exporters and the general insurers.It will lead to providing high insurance cover, reduction in premium for small exporters and simplified procedures for claim settlements,this will encourage export finance. This will boost exports. Coming to the MSMEs, the announcement for the subordinate debt for entrepreneurs is a big positive and will help the MSME sector benefit in a massive way. These seem to be sound measures that can stimulate profitable activities for players in the trade and finance sector.”
Mr. Harsh Jain, Co-founder and COO, Groww, said
“Making policy for data center parks for digital resources like fintech, AI, aggregator platforms along with the connection of 1 lakh villages via optical fiber internet is great news for digital India. This will definitely increase digital penetration into India that was unthinkable before.”
Mr. Archit Gupta, Founder, and CEO, Cleartax, said,
“Firstly the deferment of ESOP taxation at the time of exercise is a very welcome move. This will help motivate and hire high quality resources. The amendments to section 80IAC on relief to startups is lacklustre. This section has several conditions that need to be fulfilled and a lot of approvals built into it as eligibility criteria. The government needs to relax this more. Reduced compliances via single window for multiple compliances, reduced applicability of various Acts could really ease doing business in India and this will be more impactful.”
Ms. Meghna Suryakumar, Founder & CEO, Crediwatch
“The focus on enabling growth for MSMEs in today’s Union Budget is encouraging. Enabling NBFCs to extend invoice financing to MSMEs through TReDS, should enhance opportunity to fuel the Indian economy and widen the acceptability and trust by the BFSI sector. The extension of GEM e-marketplace as a unified procurement channel should bring more vendors (from the current 3.2 lac) onto the platform. Additionally, amendments to Factor Regulation Act 2011 should boost the MSME sector. On the Debt Recovery side for lenders, the allowance to smallers NBFCs to approach the DRT for smaller ticket size loans, would be beneficial in lowering NPAs & improving the asset quality. However, we expected to hear more clarity on the scheme to provide subordinate debt to be provided by banks for entrepreneurs of MSMEs since less than 15 % of the 50+ million Indian Small businesses have access to formal credit and there is a debt financing gap of the SME is over $1 Trillion.By allowing data centre parks in the country, the government has set a positive sentiment for the industry. While this will allow better infrastructure in storing and dissemination of data, we were expecting the government to touch upon incentives for setting up data centres which will allow Fintechs to scale faster at an economical cost. This coupled with the extension of Bharat Net (FTH) to 1 lac gram panchayats would add a significant boost to the Digital push in the country.Given that several steps have been taken in the past to drive the Corporate Bond market in India, the increase of FPI limits from 9% to 15% is a positive push to increase international participation in high quality borrowers via the debt route. This coupled with easy access to credit from banks & NBFCs should bring down credit costs in the medium term.
For start-ups, considering the fact that in the initial years, one may not have adequate profit to avail this deduction, extension to avail the claim of deduction from the 7 years to 10 years is a breather. Deferral of tax on ESOP plans for start-ups should also help bring quality corporate talent to this industry.”
Mr. Sandipan Mitra, Founder, Hungerbox, said,
“India has embraced the shared economy and welcomed the digital revolution with open arms. The Union Budget provides some important benefits for emerging entrepreneurs. With the corporate tax being slashed to 22%, companies can now have a little more room to breathe and benefit from the assistance in funding through the investment clearance cell that has been proposed. This budget has certainly addressed some challenges that were faced by budding start-ups and has made it easier for them to receive funding from investors.
Mr. Ankur Choudhary, Co-Founder & CIO, Goalwise.com said,
“On the personal finance front, the 2020 budget has not lived up to the expectations of the taxpayers. While increasing the insurance cover for bank depositors from 1 lakh to 5 lakhs is a positive and much awaited step but on the income tax side, it has been a disappointment. Although a new tax regime with lower tax rates has been introduced, the removal of all exemptions including even 80C exemptions, will water down its benefits. On top of it, the option to choose the old or the new income tax regime will just complicate filing income tax returns which was already a complicated process for individual tax payers. Although the Dividend Distribution Tax has been abolished at the company level but now it will be taxable at the hands of the investor. For startups and MSMEs, the increase in turnover limit and number of years to avail tax exemptions benefits is a positive. Also, no audit for companies with up to Rs 5 crore turnover and amending the Companies Act to remove criminal liabilities for offences that are civil in nature will improve ease of doing business”.
Mr. Harsha Kadam, CEO & President Industrial Business, Schaeffler India said,
“With the Union Budget 2020, the government proved that it is committed to revitalize consumer spending. The focus on the personal tax regime will create the much-needed boost creating an increase in demand and supply hence improving the overall market sentiment. The government’s proposal on skill development will ensure job opportunities and we at Schaeffler India are also aligned with the same thought process. The government’s focus on better connectivity though roads and railways will have a rub off effect on the overall auto sales in the long run along with increasing the number of trains hence deepening the train connectivity within the country.”