GR Exclusive: What IT Industry Expects From Upcoming Budget 2024?

India's IT industry has been a cornerstone of the country's economic success, contributing significantly to India's GDP, employment and exports. Given its pivotal role in the nation's economic growth, the Indian IT industry now expects certain measures to bolster its growth trajectory further. In an exclusive interaction with Goodreturns, One Point One Solutions MD, founder and chairman Akshay Chhabra threw light on they key expectations of the IT industry from the upcoming union budget 2024.

Tax Reforms and Incentives: While there have been reductions in corporate taxes in recent years, some more incentives or tax rebates for startups and MSMEs could provide a much-needed boost to the sector. Simplification of the GST structure, especially concerning software services, and easing the process of claiming input tax credit would help in the ease of doing business for the sector.

Innovation is key for surviving sustainably in this ever-changing world and the IT industry is particularly vulnerable to the fast developments in technological advancements, especially with the advent of Artificial Intelligence (AI). In this context, enhanced tax incentives for research and development in the upcoming Budget would encourage innovation in the sector, said Akshay Chhabra.

Support for startups and MSMEs: The Indian IT industry comprises many startups and Micro, Small and Medium Enterprises (MSME) and government support to these units could significantly help in their growth and, in turn, bolster the sector and add to the GDP.

Simplification of the regulatory processes and compliance requirements would help these companies focus more on innovation and spend less time on administrative procedures. In addition, startups and MSMEs often face funding constraints which hinder growth in their early stages. Enhanced access to venture capital and government-backed funding schemes would provide them with the necessary funding support while tax exemptions on investments in early-stage startups can attract more investors, added Akshay Chhabra.

Infrastructure Development and Support: Development of IT parks and incubation centres in Tier-II and Tier-III cities would help in supporting emerging tech hubs. In addition, India's data centre sector is set to grow exponentially due to digital expansion and regulatory requirements for data localization. Accordingly, robust infrastructure for data storage and security becomes crucial. Therefore, any incentives in the upcoming Union Budget for setting up data centuries, including tax holidays and subsidized land can potentially make India a global data hub.

As more and more data gets created, stored and transferred digitally, the need for a robust cybersecurity infrastructure becomes crucial. Incidentally, India witnessed a significant rise in cyber-attacks of various magnitudes, putting many companies and individuals at risk. So, fresh investment in cybersecurity infrastructure to protect digital assets and data integrity becomes paramount, emphasized Akshay Chhabra.

Support for Manufacturing: The Production-Linked Incentive (PLI) scheme has been instrumental in positioning India as a manufacturing hub. The latest version of the PLI scheme for electronics and IT hardware (laptops, tablets, servers, etc) has garnered some interest from manufacturers but companies are yet to fully benefit from it. The IT industry expects broader coverage of the PLI scheme such as incentivizing third-party manufacturers, to be announced in the Union Budget to further incentivize the sector, elevate the 'Make In India' objectives of the government and position India as a global manufacturing hub.

The upcoming Union Budget presents an opportunity for the government to further strengthen the IT sector, which has been a key driver of economic growth and employment in India. By addressing the above expectations from the IT industry, the government can not only boost the Indian IT industry but also pave the way for sustained economic development and innovation. In other words, the Indian IT industry awaits measures that foster innovation, strengthen manufacturing, and enhance data security. There is a shared hope that it will usher in a conducive environment for growth, innovation, and global competitiveness for the Indian IT industry. The upcoming Union Budget holds significant promise for shaping India's tech landscape.