The Union Finance Minister Nirmala Sitharaman made a slew of announcements, including introducing a digital rupee, defence R&D for startups, drones as a service, and digital universities in her Union Budget speech.
The minister announced the introduction of the Central Bank Digital Currency (CBDC) to boost the digital economy. Digital currency will lead to a more efficient and cheaper currency management system. The Reserve Bank of India will start issuing the digital rupee in a year.
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Virtual Digital Asset taxation
Cryptocurrencies and other “virtual digital assets” will be taxed at 30%. No deduction will be allowed while computing this except the cost of acquisition. Loss from such an acquisition cannot be set off against any such income. Gifts of these VDAs will also be taxed.
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DD Mishra, Senior Director Analyst, Gartner, said, “I welcome improving connectivity by focusing on 5G and fiber, reskilling from a digital perspective, SEZ-related changes, etc. However, we have missed the bus for investments in driving skill growth, which is one of the most significant pain points for the IT Industry. An opportunity to transform India into an innovation hub, the AI hub, etc., has been missing. The boundaries between business and technology no longer exist, and technology-led growth is the need of the hour.”
Jai Prakash, cofounder & CEO, VRXtream said, “It is wonderful to know that RBI will introduce the blockchain-powered Digital Currency. This would certainly give an impetus to the participation of institutional players in the blockchain space. Also, the announcement of 30% tax on the transfer gains of digital assets is most welcome as it establishes the legitimacy of crypto trading in India. Hoping to see as the new class of assets finds more traction with the people, cryptocurrencies are recognised and widely adopted as the alternative investment vehicles.”
Incentives for startups
Startups have emerged as growth engines for the economy. Eligible startups launched before March 31, 2022 have been provided a tax incentive for three consecutive years, out of ten years from incorporation. In view of the Covid pandemic, these startups have been granted tax incentive extension for another year, i.e., until March 31, 2023.
Akshat Jain, CTO & Co-founder, Cyware, said, “Tax incentives and relaxation for startups were one of the most awaited announcements. The extension of one more year of the current tax incentives comes as a welcome respite for startups.”
‘Kisan Drones’ will be promoted for crop assessment, digitisation of land records, spraying of insecticides, and nutrients. Startups will be encouraged to facilitate ‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS). The required courses for skilling will be started in select ITIs.
Mughilan Thiru Ramasamy, CEO & Co-founder Skylark Drones said, “The announcement to promote the use of ‘Kisan drones’ in the agricultural sector will enable the drone industry to collaborate with our farmers to improve operational efficiency and maximise profitability. This is a welcoming move and will make India’s agricultural sector future-ready.”
The finance minister said Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its ecosystem, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems have immense potential to assist sustainable development at scale to modernise the country. To encourage these ecosystems, the government will come up with supportive policies, light-touch regulations, facilitative actions to build domestic capacities, and promotion of research & development.
AtmaNirbharta in Defence
Defence R&D will be opened up for industry, startups and academia. Private industry will be encouraged to take up the design and development of military platforms and equipment in collaboration with DRDO and other organisations through the SPV model. In addition, an independent nodal umbrella body will be set up for meeting wide-ranging testing and certification requirements.
Foreign universities and institutions will be allowed in the GIFT City to offer courses in Financial Management, FinTech, Science, Technology, Engineering and Mathematics free from domestic regulations, except those by IFSCA to facilitate the availability of high-end human resources for financial services and technology.
A Digital University will be established to provide education with a personalised learning experience at their doorsteps. This will be made available in different Indian languages and ICT formats. The University will be built on a networked hub-spoke model, building cutting-edge ICT expertise. The best public universities and institutions in the country will collaborate as a network of hub-spokes.
AVGC Promotion Task Force
The animation, visual effects, gaming, and comic (AVGC) sector offers employment to the youth. An AVGC promotion task force with all stakeholders will build domestic capacity to serve our markets and the global demand.
Clean & sustainable mobility
Cleantech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles will be encouraged to promote public transport in urban areas. As space is a constraint in urban areas for setting up charging stations at scale, a battery swapping policy will be rolled out, and interoperability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service.
Akash Gupta, co-founder and CEO Zypp Electric, said, “The formulation of battery swapping standards and interoperability is a much-needed step in the right direction. There’s been a lot of confusion in the swapping companies, which has dampened EV adoption. Seamless and widespread charging infrastructure is the need of the hour to accelerate the EV revolution in the country.”
Data Centres and Energy Storage Systems including dense charging infrastructure and grid-scale battery systems will be included in the harmonised list of infrastructure. This will facilitate credit availability for digital infrastructure and clean energy storage.
Sachin Bhalla, VP and Country General Manager, Secure Power Division, Schneider Electric India and SAARC, said: “The growth and prowess witnessed in the data center market across the country presents enormous opportunities for businesses and industries alike to reap scalable benefits and drive growth and profit in tandem. To grant infrastructure status to data centers and energy storage systems in order to facilitate financing for the industry is a step in the right direction.”
e-Passport – The issuance of e-Passports using embedded chip and futuristic technology will be rolled out in 2022-23 to enhance convenience for the citizens in their overseas travel.