“Any budget that publicly aspires to double the size of the India economy over the next five years is welcome and puts the onus on the government to try and deliver,” said B.J Arun, TiE Silicon Valley president reacting to India’s Union 2019-2020 budget.
Presented by Finance Minister Nirmala Sitharaman, the budget has been set to achieve Modi 2.0 government’s high expectations of making India a $3 trillion economy by the end of this year and $5 trillion economy by 2024.
“From $1.85 trillion in 2014, our economy has reached $2.7 trillion in just five years,” Sitharaman said during her first union budget speech. “Hence, it is well within our capacity to reach the $5 trillion in the next few years.”
California based Arun told indica that growth of this magnitude needs to come from all sectors and the Modi government’s continued support for various initiatives that attract global investments, making it easier to fund and scale start-ups in India is indeed very heartening.
The Startup India initiative was launched on January 16, 2016, and was welcomed by both Silicon Valley companies like Google and Oracle as well as Japan-based SoftBank. The VC circle though had a lukewarm response last year due to the government levied Angel Tax, though the present budget seems to have taken care of investors.
Sitharaman, during the Budget 2019 boost the Modi’s Startup initiative, also proposed starting an exclusive startup focused channel under the government-run Doordarshan TV channel, which would be managed by startups, which Arun says would create jobs since India’s unemployment is at 45-year-high.
Arun pointed out that while there are skeptics dismissing many of the government’s previously announced programs as all talk and no action, the continued focus on the sector as evidenced by new announcements such as a dedicated Doordarshan channel for startups will not only inspire and educate budding entrepreneurs but more importantly legitimize them as a recognized path to value and job creation.
Even NASSCOM (National Association of Software and Services Companies), a trade association of Indian Information Technology and Business Process Outsourcing industry, seemed to be not pleased with the budget but welcomed the Startup television initiative, saying in a statement, “A new television channel to allow start-ups to promote themselves as well as make critical connects with VC networks to raise funding, will further build the community.”
However, NASSCOM also stated that they applaud the government Digital India initiative which is the need of the hour, committing to training 10 million young professionals in emerging fields like AI, IoT, Big Data, Robotics and 3D printing. “We will work with the government to understand the implementation process for the roll-out,” NASSCOM said
But one key exclusion in the budget was a conducive policy for Special Economic Zones, leaving it as a missed opportunity for India as other countries continue to provide benefits to enterprises. The SEZ benefits will end in March 2020, but there is no clarity on the new SEZ policy or an indication of what is to come.
The Economic Survey had clearly called out the need to focus on large companies to achieve the US $5 trillion dreams, and NASSCOM believes that on this count the budget falls short. A consistent ask from the industry has been a forward-looking SEZ policy to strengthen India’s position as a global hub for IT Services. This sector contributes 7.9% to the GDP, one of its largest contributors that create around 4 million jobs, hence a lack of incentives will impact India’s image as a destination.