Budget 2020: Key takeaways for IT sector

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On Saturday, Finance Minister Nirmala Sitharaman presented the Union Budget for the financial year 2020-21. The budget had several policies for each sector; with IT sector getting its much-needed emphasis. Sitharaman said that the Indian economy is driven by technologies, and allocated Rs. 6000 crores for the expansion of Bharatnet to 100,000 Gram Panchayats.

Data centres in private sector

In her second budget speech, Nirmala Sitharaman emphasised the importance of new-age technologies such as artificial intelligence (AI), internet of things (IoT), 3D printing, drones, data storage, etc., saying that the Indian economy was driven by these technologies.

Furthermore, the Finance Minister announced that the government was planning to roll out a new policy to build data centres under the private sector. This will enable private entities to set up data centre parks across India. She echoed the thoughts of tech gurus by saying, “Data is the new oil.”

Expanding rural broadband connections

There is a Rs. 6,000 crore allocation for the expansion of Bharatnet Broadband Network, an initiative to provide broadband connections to rural areas. The government expects to use Bharatnet internet connections to expand Fibre to The Home (FTTH) to 100,000 Gram Panchayats before the next financial year. Bharatnet is expected to boost regional language content streaming, audio and video in rural areas.

Boost in mobile phone manufacturing

Under the ‘Make in India’ initiative, the government is going to unveil a new policy to encourage manufacturing of electronics and semiconductors in India. This will, in turn, accelerate production of mobile phones and other electronic equipment and will, in the process, create plenty of employment opportunities in the country.

Tax relaxation, early-stage fund for start-ups

The budget proposed relaxation in Employee Stock Ownership Plans (ESOPs). Also, fresh tax rebates for start-ups based on their turnover has been proposed. The Finance Minister has announced a dedicated early-stage fund to support the ideation and development of early stage start-ups.

The government plans to roll out two national-level Science Schemes to create a comprehensive database that will help map India’s genetic landscape, which will in turn support the start-ups. There was also a proposal to start Knowledge Translation Clusters across new and emerging technology areas.

Other budget proposals for the IT sector

  • To ease the registration and capturing process for Intellectual Property Rights (IPR), the budget proposed to set up a digital platform which will help entrepreneurs and start-ups.
  • Budget 2020 proposed to establish Technology Clusters and small-scale manufacturing facilities for designing, fabrication and validation of proof of concept.
  • An outlay of Rs. 8,000 crores over a period five years for the National Mission on Quantum Technologies and Applications.
  • NABARD to map and geo-tag agri-warehouses, cold storages, reefer van facilities, etc.
  • AI and machine learning will be used to set up a preventive regime in targeting diseases.
  • For skill development, the Urban Local Bodies will provide up to one-year internship for fresh engineers.
  • 150 educational institutions will commence apprenticeship-embedded degree/diploma programmes by March 2021.
  • Financing on Negotiable Warehousing Receipts (e-NWR) to be integrated with the National Agriculture Market (e-NAM).

Following the trends in last years, this Budget 2020 has included these proposals to IT sector, which aim to usher economic growth in India. This indicates that IT is emerging as a major sector in Indian economy.

Employability is key

The employability of graduates has been addressed in the budget by introducing new apprenticeship-embedded courses and by ensuring that Urban Local Bodies provide internship to fresh graduates. Increased domestic innovation and production is key for meeting the growing demand for technologies. Establishing technology clusters, small-scale manufacturing facilities for designing and fabrication and allocation for NMQTA will indeed herald the required innovation and production. The government has realised that the integration of new-age technologies in the economic process is imperative for holistic development.