Budget 2024: Lower customs on phones, critical minerals will give major fillip to India’s tech sector

The Indian government unveiled its annual budget today, delivering substantial support to the tech industry, tech manufacturing, and startups.

To start with, the Finance Ministry, led by Minister Nirmala Sitharaman, reduced the customs imposed on mobile imports, the import of various components that go to manufacture a smartphone. Even more impressive is the reduction in customs on critical minerals that go into manufacturing various components of an electronic device, say smartphone, and even batteries for electronics and EVs.

This pivotal budget aims to propel India’s burgeoning tech sector to new heights, fostering innovation, job creation, and economic growth. With significant investments in research and development, incentives for startups, and a focus on digital transformation, the budget has garnered widespread praise from industry leaders.

They have expressed optimism, noting that these measures will enhance India’s global tech standing and stimulate sustained growth. The comprehensive approach of this budget is set to unlock new opportunities, making it a game-changer for the nation’s tech ecosystem.

Dilip Chenoy, Chairperson of Bharat Web3 Association, highlighted that the budget’s focus on digitization and the removal of the angel tax for all classes of investors will bolster the Indian startup ecosystem. He expressed optimism about the potential of Web3 technology in various sectors despite the absence of changes in the taxation framework for Virtual Digital Assets (VDAs). “The nine focus areas of Budget 2024 are key steps towards our goal of Viksit Bharat. The budget also lays out a clear framework for digitisation of various sectors, where Web3 technology could play a critical role,” Chenoy stated.

Shivam Thakral, CEO of BuyUcoin, appreciated the government’s focus on emerging technologies like blockchain and AI. He emphasized the importance of responsible use and collaboration between government and private players to address the challenges associated with these technologies. “The government highlighted the importance of technologies like blockchain and artificial intelligence. The deep-fake incidents that occurred recently call for responsible use of emerging technologies through constructive collaboration between government and private players,” Thakral noted.

Support for Deep Tech and Space Startups
Manoj Agarwal, Managing Partner at Seafund, lauded the announcement of the ₹1,000 crore venture capital fund for the space economy and the ₹1 lakh crore R&D fund. He noted that the removal of the angel tax would make it easier for early-stage startups to raise funding and attract more investors to the ecosystem. “This Budget has given attention to several demands of the industry which have been long-standing. Rationalising of LTCG to 12.5 per cent for all financial and non-financial assets is also a step to bring parity between listed and unlisted companies,” Agarwal said.

Skills and Education Initiatives
The budget also focuses on addressing the skills gap in the workforce. Rajeev Singh, Managing Director of BenQ India and South Asia, praised the upgrade of 1,000 Industrial Training Institutes (ITIs) through a hub-and-spoke model and the alignment of course content to industry needs. He highlighted the potential for tech companies to support educational advancements through interactive learning tools. “Such an emphasis on skill development and education bodes well for not only the emerging workforce but also interactive technology companies,” Singh mentioned.

Prerna Kalra, Co-founder and CEO of Daalchini Technologies, emphasized the budget’s focus on job creation and skill development. She welcomed the new centrally sponsored scheme to skill 20 lakh youth over the next five years and the upgrade of 1,000 ITIs to offer industry-relevant courses. “The Union Budget 2024 marks a significant and encouraging shift towards inclusive and equitable growth,” Kalra stated.

Tax Relief and Investment in Semiconductor Manufacturing
Avneet Singh Marwah, CEO of SPPL, noted the substantial allocation of ₹3,000 crore for the development of semiconductor and display manufacturing. The budget also introduces a credit guarantee scheme for MSMEs in the manufacturing sector and facilitates term loans for machinery purchases. “New and additional employment incentives across sectors will encourage workforce growth and bolster the Make in India initiative,” Marwah mentioned.

Encouragement for AI and Analytics
Pratap Daruka, Chief Financial Officer of Tredence, commended the ₹2 lakh crore package for skill development and employability. He emphasized the need for a focused approach to AI through R&D grants and tax credits to ensure India captures a larger share of global AI investments. “A concentrated effort on AI will ensure India not only keeps pace with global advancements but also becomes a frontrunner in the AI and analytics space,” Daruka highlighted.

Focus on Digital Transformation
Sarvagya Mishra, Co-founder and Director at Superbot, praised the allocation of 5% of the Universal Services Obligation Fund to telecom technology R&D and the rebranding of the fund to Digital Bharat Nidhi. He highlighted the importance of these measures in improving the ease of doing business and boosting India’s digital economy. “Superbot wholeheartedly supports these progressive policies and is committed to participating in and benefiting from these revolutionary efforts,” Mishra stated.

The Union Budget 2024 has garnered widespread praise from industry leaders, who believe it will enhance India’s global tech standing and stimulate sustained growth. The comprehensive approach of this budget, with its significant investments in research and development, incentives for startups, and focus on digital transformation, is set to unlock new opportunities and make a substantial impact on the nation’s tech ecosystem.

As India continues to develop its tech industry, manufacturing capabilities, and startup ecosystem, the measures outlined in the Budget 2024 will play a crucial role in driving innovation, creating jobs, and fostering economic growth.