India Seems to Be on the Cusp of a New Industrial Revolution

Official data confirms that India may turn out to be the world’s most populous country with more than 1.4 billion people. From an economic standpoint, India will still benefit a lot as 40% of its population is said to be between the 18-25 age group, which means a large population of the country is young and raring to go. Employment for all is certainly not going to be possible. In Central and State Government jobs the vacancies are way much lesser compared to the number of job-seekers. For a few thousand vacancies, there are often millions of applicants. So, it isn’t surprising that Indians are turning to entrepreneurship as a career choice. The success of India’s reality TV show Shark Tank, which is an American adaptation of the same invests in new companies and promotes new commercial innovations – making it evident that India is poised to become a frontrunner in global entrepreneurship. From semiconductor development initiatives to ed-tech and fintech, India is brimming with new advances in every business domain. This year’s Union Budget too has been designed in a way that keeps the country’s economy within the realm of ‘good fiscal discipline that strives towards a lower fiscal deficit. Also a high capital expenditure would result in a high growth rate industrially.

Gaurav Dahake, Founder & CEO, Bitbns, a crypto trading company says that this year’s budget has been encouraging for the startup community in terms of the government’s vision for the country over the next couple of years. A slew of programs like Startup India, Digital India in the past have championed the startup ecosystem and helped it become the third largest in the world. With this budget, the government has yet again reinforced its commitment towards the startup community through measures like budgetary support for public digital infrastructure to enhance digital payments, extension of Digilocker services for the fintech sector, setting up of a New Financial Repository, Income Tax benefits and extensions and a consultative approach to optimum regulation in the financial sector for making regulations are together going to boost the startup community.

Dahake further pointed out at another initiative to fuel India’s startup ecosystem, which is the initiative ‘Make AI in India’ and ‘Make AI work for India’. This clearly indicates that the country is committed to being a crucible to spur tech innovation by setting up three Centres of Excellences across the country and bringing the best of talent, industry and academia together. “Efforts to build 30 skill India international centers for skill development and bring in new age courses on Coding, Robotics, Soft Skills among others are equally worth appreciating as it powers the youth of the country to be ready for jobs of the future and makes our future tech talent the best in class across the globe. Moreover, the programs being initiated to increase sustainability and reduce carbon footprints will largely prove beneficial for a green economy in the future,” said Dahake.

Vishnu Prasath Devarajan, Founder of Supercluster Pi, a D2C Health & Wellness Brand says that India is the third largest startup ecosystem in the world and the front-runner in bringing some of the most accessible and affordable technology solutions like UPI to the world. Devarajan spoke at length about the PM Kaushal Vikas Yojana 4.0, which is a step in the direction to skill lakhs of youth within the next 3 years in new age courses like coding, AI, robotics, soft skills as well as the setting up of 30 skill India international centers across different states. This will definitely level up Indian tech talent. 

Other key initiatives like setting up of Agritech Accelerator to develop technology companies and support techpreneurs reinforce India’s commitment to building its startup ecosystem. The budget has also made considerable room for startups to carry forward losses from seven to 10 years, providing relief for the startup ecosystem that is still emerging from funding winter.

Raja Debnath, Co-founder and CEO of Veefin, a Digital Supply Chain Finance company asserted that the government has set the stage for India to take the next leap on the economic development front. As the first budget of Amrit Kaal, the government navigates the tightrope of balancing economic growth and addressing deficit fiscal concerns. Indian economy’s growth at 7% is the highest among major economies, a testament to the significant progress made across various sectors. The budget captures the goals of the government’s long-term blueprint for India@100 with continued emphasis on key areas such as inclusive development, reaching the last mile, infrastructure, green growth, and the booming financial sector. “Realising the importance of financial impetus, the overall CapEx outlay has been increased by 33% to Rs. 10 Lakhs Crore and will make up 3.3% of the GDP,” added Debnath.   

The importance of the announcement to extend the government digital certificate depository Digilocker services, is a huge boost for the FinTech sector. This will enable FinTechs to store and share their documents such as financial statements and IT returns. The move to create a one-stop solution for the reconciliation of IDs using Digilocker service and Aadhaar as a foundational identity along with using the PAN as a common business identifier will further enhance the ease of doing business. The KYC process will also be simplified by taking a risk-based approach. These are promising initiatives that will help aspiring FinTechs and the overall startup ecosystem to grow.  

Industries look forward to the comprehensive review of existing banking regulations which they hope are in line with strengthening the digital infrastructure and making FinTech innovation a key focus, both from an infrastructure and framework viewpoint. 

The industry appreciates the government’s decision to further the credit guarantee scheme support to the MSMEs. By infusing Rs. 9,000 Crore into the corpus, the revamped credit guarantee scheme for MSME (Micro, Small & Medium Enterprises) will help the cash-strapped sector to tide over challenging times. The measures to lower the cost of credit by 1% and enable an additional collateral-free credit guarantee of Rs. 2 Lakh Crore, will be a tremendous stimulus to this sector. The budget also proposed to set up the National Financial Information Registry in a bid to facilitate the efficient flow of credit and strengthen the financial stability of MSMEs. Additionally, as part of Vivad Se Vishwas (No Dispute but Trust Scheme), if MSMEs fail to execute their contract, 95% of performance security will be returned to small businesses—this will help in building a formidable MSME sector. 

With the plan to establish 30 skill India international centres in different states, the government has also prioritised skills development and job creation. The initiative to further reduce 39,000 compliances will promote the ease of doing business. The decision by the government to increase the tax rebate to Rs 7 Lakh under the new tax regime and enhance the grievance redressal mechanism for direct taxpayers are welcomed moves. The proposal to introduce next-gen IT forms and the extension of tax benefits will further strengthen the business ecosystem of the country. The growth-oriented budget also announced the reduction of the basic customs duty rates on goods other than textile and agriculture from 21% to 13%. We also appreciate the government’s move to set up an agriculture accelerator fund for promoting agri-startups. 

To stimulate an effective AI ecosystem, the Union Government has announced that the government will create three centres of excellence for Artificial Intelligence (AI). The laser-sharp focus on digital technologies like AI, and Machine Learning will be a big step towards promoting financial inclusion in India. 

Overall, this fiscal year’s budget is progressive and forwarding-looking and focuses on a range of areas that have a direct influence on the health of the economy. The government of India has taken commendable initiatives to fuel the next level of growth of the economy. The Government is going in the right direction to position India as a technology-driven and knowledge-based economy.

Abhishek Banerjee, Founder & CEO of Lotusdew Wealth and Investment Advisors, a Hyderabad based wealth advisory firm said that ours is an inclusive and futuristic budget. With vision for Amrit Kaal (an auspicious time to start a project) which will focus on strong and stable macro-environment, financial sector has been included in the Saptarshi-7 priorities. Reforms in financial sector will lead to financial inclusion at scale, improve allied services and participation in financial markets. Disposable income will also rise as the income limit for rebate of income tax has been increased from Rs 5 Lac to Rs 7 Lac in the new regime reflecting a positive multiplier impact on discretionary spending. The tax exemption will directly benefit consumer discretionary sector and the confluence of focus on railways and tourism, we might see sectors like textiles, QSR, packaged foods, hotels etc benefiting directly. 

“This is also expected to increase participation in the capital market investment products. It is a welcome move that financial sector regulators are requested to carry out a comprehensive review of existing regulations to streamline operations which will help all the players in the eco-system at large,” says an optimistic Banerjee.

Nirav Choksi, CEO & CO-founder at CredAble, one of India’s largest NBFC providing working capital and related liquidity programs to supply chains using its trade finance & technology expertise says that the government has set the stage for India to take the next leap on the economic development front.  

“We also look forward to the comprehensive review of existing banking regulations which we hope are in line with strengthening the digital infrastructure and making FinTech innovation a key focus, both from an infrastructure and framework viewpoint,” pointed Choksi. 

The announcement to extend the government digital certificate depository Digilocker services will act as big boost for the FinTech sector. This will enable FinTechs to store and share their documents such as financial statements and IT returns. The move to create a one-stop solution for the reconciliation of IDs using Digilocker service and Aadhaar as a foundational identity along with using the PAN as a common business identifier will further enhance the ease of doing business. The KYC process will also be simplified by taking a risk-based approach. These are promising initiatives that will help aspiring FinTechs and the overall startup ecosystem to grow.  

The government’s decision to further the credit guarantee scheme support to the MSMEs is being applauded. By infusing Rs. 9,000 Crore into the corpus, the revamped credit guarantee scheme for MSMEs will help the cash-strapped sector to tide over challenging times. The measures to lower the cost of credit by 1% and enable an additional collateral-free credit guarantee of Rs. 2 Lakh Crore, will be a tremendous stimulus to this sector. The budget also proposed to set up the National Financial Information Registry in a bid to facilitate the efficient flow of credit and strengthen the financial stability of MSMEs. Additionally, as part of Vivad Se Vishwas(No Dispute but Trust Scheme), if MSMEs fail to execute their contract, 95% of performance security will be returned to small businesses—this will help in building a formidable MSME sector. 

With the plan to establish 30 skill India international centres in different states, the government has also prioritized skills development and job creation. The initiative to further reduce 39,000 compliances will promote the ease of doing business. The decision by the government to increase the tax rebate to Rs 7 Lakh under the new tax regime and enhance the grievance redressal mechanism for direct taxpayers are welcomed moves. The proposal to introduce next-gen IT forms and the extension of tax benefits will further strengthen the business ecosystem of the country. The growth-oriented budget also announced the reduction of the basic customs duty rates on goods other than textile and agriculture from 21% to 13%. We also appreciate the government’s move to set up an agriculture accelerator fund for promoting agri-startups. 

To stimulate an effective AI ecosystem, the Finance Ministry has announced that the government will create three centres of excellence for AI. The laser-sharp focus on digital technologies like AI, and Machine Learning will be a big step towards promoting financial inclusion in India. 

Overall, India’s Union Budget looks progressive and forwarding-looking and focuses on a range of areas that have a direct influence on the health of the economy. The government of India has taken numerous initiatives to fuel the next level of growth of the economy. Startups and the business community is happy to see that Budget 2023 has taken a stride in the right direction to position India as a technology-driven and knowledge-based economy. This growth will also create employment opportunities for the youth, which is the need of the hour. India is gradually turning out to be an ideal destination for business investment and trade. Though a large part of the population who live in smaller cities, also called Tier-I, 2 and 3 cities dream of a stable government job, but a gargantuan cultural paradigm shift is also happening as one can see. The success of the Shark Tank show may just be the sign of a new industrial revolution in the country.

[Representational image, by Gerd Altmann / Pixabay]

The views and opinions expressed in this article are those of the author.