What India’s Budget 2019 means for the Digital Sector?

By Meghna Misra-Elder

India’s 2019 Budget made it clear that "Digital India reaching every sector of the economy" is one of the Government’s ten highest priorities in its vision for India.

We are happy that the Government has acknowledged the pivotal role of digital technology in India’s evolution to a USD five trillion economy over the next five years. Budget proposals focused on evolving technologies like artificial intelligence, big data, and robotics which will not only fuel entrepreneurship, but also open enormous job opportunities, and transform interactions with Government services from tax returns to payments. The Government also acknowledged the skills gap and is taking steps towards bridging them.

Indeed, through the implementation of the ‘Pradhan Mantri Kaushal Vikas Yojana’ (PMKVY) scheme, the Government aims to ensure 10 million young people take up industry-relevant training with a significant focus on new-age, digital skills that are valued highly across the world and offer well-paid and quality employment.

This goes beyond training, with the Government’s Pradhan Mantri Gramin Digital program so far having increased core digital literacy skills for 20 million rural people bridging the rural-urban divide. ‘Bharat-Net’ is likewise targeting internet connectivity for rural areas across the country, amounting to what is a systematic and integrated push to build a truly accessible digital India.

Whilst the Indian budget was certainly positive overall, the Government could have done more for the Telecoms sector which is experiencing financial stress as the collection in the last fiscal fell short by over INR 9,000 crore (approx. GBP 1 billion). In this context, the increase in customs duties on IT and telecoms equipment combined with the lack of extension for the sunset on SEZ direct tax benefits beyond 31 March 2020, unfortunately do little to support the industry.

We agree that phasing out tax holidays in the long-term is the right thing to do. They were originally intended to provide a boost to the then fledgling ICT sector. However, as this has been one of the key considerations for foreign players investing in India, such a sudden withdrawal could have significant repercussions for the wider economy.

More widely, in order to truly harness India’s immense data cache to deliver its digital ambitions, intuitive, sector-agnostic, and innovation enhancing data protection regulation is an absolute necessity. As outlined in our recent report, ‘Data: The Foundation of Intelligent Economies’ the time is right for India to introduce comprehensive data protection.

If you would like to find out more about UKIBC’s work supporting the digital sector between the UK and India, including our engagement on India’s draft Personal Data Protection Bill, please get in touch with our Digital Sector Manager, Meghna Misra-Elder, at meghna.misra-elder@ukibc.com

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