The Union Budget 2021-22, presented by Indian Finance Minister Nirmala Sitharaman, may not have had many major tax announcements directly impacting tech companies, except the fact that there is an increase from 0 to 2.5 per cent on customs duty imposed on several parts of mobiles imported into the company. This has been done to incentivize domestic mobile production. Also, the much talked of PLI scheme, which is an impetus to electronics goods manufacturing in India, is set to get an increased budget allocation.
But a couple of projects announced in the Union Budget may help major tech companies to rake in the moolah in a big way.
The two projects are National Census project of 2021, which would be an all-digital affair, and the revamp of the ministry of corporate affairs (MCA) portal.
Both are big-ticket projects. In fact, the Census one is going to be humungous affair with the budget outlay pegged at over Rs 3700 crore. The MCA portal overhaul is expected to have a project outlay of around Rs 400 crore based on the fact that the existing project, handled by Infosys, had a budget of around Rs 360 crore.
The government is also setting up a pan-India healthcare portal for digital health management. This again will be a major shot in the arm for the digital ecosystem in the country.
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Digital Census 2021, a major windfall for tech companies
The forthcoming census could be the first digital census in the history of India. "For this monumental, milestone-marking task, I have allocated Rs 3,768 crore in the year 2021-22," Finance Minister Nirmala Sitharaman said in her Budget speech.
Census data will be collected through a mobile app. This is for the first time that the mobile app will be used for the census exercise. India will be moving from the pen and paper census to digital data, which will be a big revolution in the country's census exercise.
The entire exercise is expected to be a windfall for both hardware companies, which will likely see a surge in sales of laptops, tablets, smartphones and printers, as well as app and software companies that will build and run the tech backend.
There is also a mega plan for a pan-India healthcare portal for digital health management, as well as a Mission Poshan 2.0 for nutrition and diet programmes in rural districts. This is also expected to help tech companies by driving up their business in myriad ways.
MCA-21 3.0 revamp
The MCA revamp, named MCA-21 3.0, is equally crucial for the tech ecosystem. The portal shares crucial information with various stakeholders such as the regulators, investors and companies. All filings under the companies law are submitted to the ministry through this portal. It will now use AI, ML and data analytics to ensure no one required to fill in known details again and also interlink databases. Everything will be automated and regular filings can now be done 24×7 on autopilot basis.
The portal's previous project was handled by Infosys at a cost of around Rs 360 crore. Now this deal will be up for grabs in the latter half of this year.
PLI scheme gets more impetus
The PLI (production linked incentive) scheme has been a big success for the Indian government. It is because of which companies like Apple and Samsung have made India one of their production bases.
The Finance Minister said that the government aims to spend Rs 1.97 lakh crore on various PLI schemes over the next 5 years, starting from this fiscal. This will be an addition to the Rs 40,951 crore announced for the PLI for electronic manufacturing schemes.
As per the scheme, eligible manufacturers stand to receive incentives ranging from 4 per cent to 6 per cent of production value for five years, after they achieve their investment and production value target for each year.
Aside from consumer electronics, some of the sectors for which the PLI scheme is valid are: electric vehicles, renewable energy, electronic and technology products, automobiles and automobile components, pharmaceutical drugs, telecom and networking products, textile products; food products, solar PV modules, air conditioners, LEDs and specialty steel.
Imported mobiles to cost more
The Budget has also proposed to impose import duty on components of mobile phones and chargers, to enhance local value addition.
"For greater domestic value addition, we are withdrawing a few exemptions on part of chargers and sub-parts of mobiles. Further, some parts of mobile rate will move from nil rate to moderate 2.5%,” Nirmala Sitharaman said.
The custom duty policy must have twin objectives of promoting domestic manufacturing and helping India get on to global value chain and export better, she added.
This will obviously increase the cost of smartphones that are imported. But most industry analysts say that this won't lead to any major hike in smartphones cost per se as most of the brands operational in India now are reliant on domestic manufacture itself.
The Indian government has also allocated Rs 1,500 crore to boost the penetration of digital payments. The finance minister did not spell out how the funds would be deployed.
