In the Union Budget 2020 Nirmala Sitharaman, Finance Minister of India had unveiled a series of far-reaching reforms, aimed at energizing the Indian economy through a combination of short-term, medium-term, and long term measures. This is a growth oriented budget with a long term commitment towards Make in India, Digital India, Mission Smart Cities, Technology Empowerment, Structural Reforms and Entrepreneurship. It is clear that customs duties were hiked to push the ‘Make in India’ agenda. While keeping the long term commitment of Make in India especially in electronic industry, the government has moved a step further to pave the way for making India an electronic export hub. This will certainly increase the Indianization (localization) of key components in India by local manufacturing. The custom duty increase on certain electronic items, which can be produced domestically, has shown the government’s intent to safeguard the intent of ‘Make in India’ stakeholders. However, an announcement with regard to R&D in India was expected, as it’s a highly capital intensive affair for any business to develop the manufacturing sector in India.
The Finance Minister had given a reassuring statement that the policy of ‘Make in India’ has started reaping dividends. She also proposed a new scheme for promoting domestic electronics manufacturing. Under the ‘Make in India’ initiative, the minister further proposed to promote the manufacturing of electronics by setting up a new scheme that would incentivise mobile manufacturing, electronic equipment, and semiconductor packaging.
5 New Smart Cities
Moving forward on the ambitious scheme for urban transformation, the central government in its budget has proposed to set up five new smart cities in public private partnership (PPP) mode. The centre has allocated Rs.6,450 crore for Smart cities mission for 2020-2021. The development of smart cities in collaboration with states reaffirms the government’s commitment to smart city mission. We hope that the government will allocate sufficient funds to these newly announced smart cities while fast tracking the progress of 100 smart cities.
Focus on AI, IoT & ML
The Union Budget has clearly indicated a huge focus on Internet of things (IoT), machine learning (ML), artificial intelligence (AI) and analytics. We at Prama Hikvision believe that the budget will provide a boost to the country’s digital economy. The positive interest towards the use of artificial intelligence (AI) and machine learning (ML) also opens up the new era for surveillance and security industry at large to explore. The long pending demand for rationalization in the Goods and Service Tax (GST) rate on surveillance and security products has remained unfulfilled. The Finance Minister must consider a rate cut for security and surveillance products as they are the key components of the homeland security and the national security imperative.
Big Infrastructure Push
In Infrastructure sector Rs.100 lakh crore would be invested over the next 5 years. A national infrastructure pipeline was launched on 31 December 2019 of Rs.103 lakh crore. The infrastructure sector was given more priority in the budget through lucrative schemes and programs. The core themes of an aspirational India, economic development and caring society were delivered in a prudent manner. Infrastructure sector received a boost, with 100 more airports by 2024 to support Udaan scheme, and operation of 150 passenger trains to be done through PPP model. The government’s special thrust on infrastructure development across various sectors such as roads, railway, airports, ports, economic corridors, health, safety, sanitation, and education is praiseworthy. This Union Budget clearly provides essential impetus to the national infrastructure pipeline with the 6,500 infra projects under consideration and this indirectly helps each industry to grow. The security industry is also among the fastest growing sectors, which will get lots of business opportunities in the coming days once the financing process for projects gets started. The PPP model will also get a boost with the big announcements along with the formation of the investment protection cell. This will help to take care end to end investment grievances and enhance the investor confidence.
US$ 5 Trillion Economy
Overall the Budget 2020 is made with a clear roadmap to meet the target of US$5 trillion economy. It has provided a stimulus to various industry sectors by multiple schemes and programs. We can see that emphasis is more on the digital India by encouraging AI and ML through policy framework and government support. The effective implementation of all big announcements and core sector reforms will surely bolster the economic growth. It will further help the GDP to grow and reduce the fiscal deficit. We at Prama Hikvision wish to compliment the Government for showing long term commitment to ‘Make in India’ and smart city Mission. We will continue to strive to enable security solutions for a safe and secure smart cities.
Data Center Parks & FTTH Connectivity
On new economy, a policy to enable the private sector to build Data Centre parks throughout the country will be brought out soon. The government’s plan to set up data parks for data management in India will go a long way in ensuring data security awareness among the key stakeholders. These data parks (data centers) in India will help maintain the encrypted data banks in India. This will further help address data security concerns in a proactive manner. Fiber- to-the-home (FTTH) connections through Bharatnet will link 100,000 gram panchayats this year. It is proposed to provide Rs.6000 crore to Bharatnet programme in 2020-21. Measures proposed to benefit the Start-ups include a digital platform for seamless application and capture of IPRs, Knowledge translation clusters are to be set up across different technology sectors including new and emerging areas. For designing, fabrication and validation of proof of concept, and further scaling up technology clusters, harbouring test beds and small scale manufacturing facilities to be established. It is proposed to provide an outlay of Rs.8000 crore over a period five years for the National Mission on Quantum Technologies and Applications.
Boost to Exporters
For exporters, the Finance Minister had announced schemes such as Export Credit Insurance Scheme, NIRVIK etc., which will increase insurance cover for small exporters, and RODTEP (Remission of Duties or Taxes on Export Product) which will digitally refund local taxes to exporters will replace the current Merchandise Exports from India Scheme (MEIS). The NIRVIK scheme holds lots of promise for exporters with higher insurance cover (90% coverage in pre and post shipment credit against 60% pre-budget) to boost the exports from India. It is being planned to bring the ease in the lending process and enhance the availability of credit to exporters, relaxation of corporate tax on start-up, power business, etc. These are positive moves towards the generation of employment in India, the government is encouraging the youth to take the lead through entrepreneurship. The government has also shown the growth in Government e-marketplace portal, which depicts the transparency in procurement system, encouragement of Digital India. To keep pace with GST reforms, ‘National Logistics Policy’ will be released very soon to manage the industry logistics business needs.
Ashish P. Dhakan
MD & CEO, Prama Hikvision India