BUDGET SERIES- Sector Focus on Digital
By Trisha Nagpal
By Subhodeep Jash, UKIBC
30 July 2024
In the first Budget presented following the results of General Elections, the Government of India included a thrust on digital public infrastructure (DPI) implementation as well as spurring innovation and R&D. There is a clear focus on leveraging technology for improving productivity and enhancing its adoption for greater digitisation in the Indian economy. For instance, an outlay of INR 1.16 trillion has been allocated for the IT and telecom sector.
The key announcements encompassing the digital economy are the following:
(a.) Operationalising the National Research Fund (NRF)
The National Research Fund has been operationalised for basic research and prototype development with a financing pool of INR 1 billion in line with the announcement made earlier during the interim Budget.
(b.) Augmenting the DPI ecosystem
The development of digital public infrastructure (DPI) applications at population scale in credit, ecommerce, education, healthcare, law & justice, MSMEs and corporate governance – is a key imperative for India’s transformative growth. The Budget proposes development of DPI applications by the private sector.
(c.) Building the space-tech sector
A venture capital fund of INR 10000 million will be established to drive innovation and growth of the space-tech economy with ambitions to grow the sector fivefold in the next 10 years.
(d.) Withdrawal of Equalisation Levy (EL)
The Budget proposes to withdraw the 2% equalisation levy on e-commerce supply of goods or services from 1st August 2024. This signals India’s commitment to the global tax reform efforts led by the OECD.
(e.) Abolition of Angel Tax
The budget proposes to abolish angel tax for all classes of investors that will provide a more enabling environment for start-ups, potentially helping increase investment, entrepreneurship and more innovation.
(f.) Reduction of Customs Duty on Mobile Phones
The custom duties on mobile phones, mobile printed circuit board assembly (PCBA) and mobile chargers have been reduced from 20% to 5%.
(g.) E-commerce export hubs- E-commerce export hubs will be established to enhance global market access to micro, small and medium enterprises (MSMEs) and traditional artisans. These hubs will be developed through a public-private partnership model.
UKIBCs welcome the continuing focus on growing the research and innovation ecosystem in the country, esp., as it reinforces deeper collaborations on science and technology.
The opportunities on strengthening the DPI ecosystem and driving innovation in the space-tech sector will allow businesses to adopt technologies more strongly as a ‘force for good’ and sharing of wider expertise between stakeholders.
With the recently announced UK-India Technology Security Initiative (TSI), we look forward to shaping the growth of sustainable partnerships across priority technology sectors with businesses and universities in the bilateral corridor
For Further details about Digital sector, please contact:
Subhodeep Jash, Associate Director
