Fintech
Quote by Tanul Mishra, CEO, Afthonia Lab -“For me, the fintech industry has only touched the tip of the infrastructure transformation iceberg. In the years to come, we are likely to see that transformation journey evolve and go deeper into the tier 2/3/4 cities and semi-urban and rural spaces to create true impact. This is only possible with the continued support extended by the government, in terms of reforms, flexible regulatory environments, and budgetary allocations towards state and regional sandboxes that help create structural and foundational changes to India’s complex financial services industry. According to a report by CLSA, it is said that the value of digital payments in India will grow 3x to touch $1 trillion by the financial year 2026 compared to $300 billion in the financial year 2021, and for that to happen, better infrastructure and connectivity along with the support to propel the industry “forward is the need of the hour”
Blockchain
Quote by Wilson Bright, Co-Founder, Blocksurvey – “ In 2022, countries across the globe would be battling on how to combat the rising inflation and the response to Fed’s tightening stance. India would be no exception to this. The Government has to be prudent on fiscal deficit and, at the same time, need to keep up the momentum on growth. It would be worthwhile to see if the Government considers special allocations/benefits to the sectors most affected by the pandemic. The Government would continue to drive their agenda on ease of doing business. We could therefore expect some concessions/tax breaks for start-up companies. With Governments’ push for digital disruptions, it needs to be seen whether they would make bold initiatives in simplifying the tax laws, lowering the barriers for the compliance functions such as assessments, litigation proceedings, etc. The Government looks to be very committed to achieving zero-emission targets and would make way for investments in sustainable energy sectors. Ramping the infrastructure in and around the electric vehicles sector is a good case. Furthermore, since the crypto bill is still in its draft stage, I feel crypto and blockchain may not get the attention or support it needs in India. Crypto and Blockchain start-ups may look to migrate offshore for operations where the environment is more favorable. Hopefully, this gets addressed soon so that India doesn’t miss the crypto and blockchain wave.”
Quote by Darsh Goleccha, Founder and CEO, Monech:- “Focus areas of the current budget will be the EV & Green energy initiatives will be of high focus point with schemes to facilitate the same to be promoted: focus on offshore energy storage. Indian Mobility will be one of the highlights of this government policy, with tax breaks on manufacturing, consumption to be extended and new schemes may be launched. There will be clarity on creator taxations and gains from creator purchases and digital assets likely be announced. Spending on digital infrastructure will increase, whereas physical infrastructure may continue to have a standard budget allocation and hike with Technology Media Telecommunications being the major focus.FinTech policy and regulations may get stricter, however, some extensions and initiatives may be announced to promote cooperation between banks and FinTechs. Account Aggregator ecosystem to pick up post the budget. Expect a policy around international, startup IPOs to be released and startup index launch. Govt. regulations around Cryptocurrencies might be light however some policies might be floated for testing purposes.”
Tarrakki
Quote by Saumya Shah, Founder, Tarrakki
1) No taxation in switching from Regular to Direct plans: Income tax (LTCG or STCG) is being applied if a investor switches from regular plan to direct plans or switches from Growth to Divided or vice versa. Given the underlying assets of all the schemes are the same, I’d hope in this years budget we see taxation only being applied when the units are sold and not when the user switches the plan.
2)Launch DLSS – Debt Linked Savings Scheme – Just like ELSS, DLSS can be very beneficial to investors who are looking to invest in low risk assets. This will also help the overall growth of debt/bond markets in India. We can expect a lock in of 3 to 5years under 80C if DLSS is implemented.
Insurtech
Symbo
Quote by Anik Jain, CEO & Co-founder, Symbo
“Last few years have seen innovation in delivery of sachet or small sized products to customers leading to a large base of first time insurance buyers. Given the key role that micro insurance products play in increasing insurance penetration, all policies valued less than Rs. 1000/- should be exempt from taxes or taxed at the lowest possible slab. Even large ticket insurance policies serves the public at the time of severe stress and has to be treated as an essential commodity hence a revision of tax slab from current 18% would help increase protection layers for all Indians.”
Healthcare & Medical Devices
Quote by Ankit Poddar, Director, Candle Partners:- “The bigger headline number that would be watched closely is the spending in healthcare – currently, India is spending around 1.8% of GDP and because of the vaccine spending and potential further outlay, this number is expected to go up substantially this year. The other major policy-level decision is to increase the health insurance penetration which is very low by global standards. Some tweaks in the standard tax deduction limit under Section 80D of the Income Tax Act can help in increasing the penetration. Healthcare (mainly hospitals) is one of the biggest beneficiaries of this change. The majority of the equity capital funding in the hospital sector over the last 3 years (ie mainly private equity funding / IPO capital) has been used for secondary stake sale and limited primary capital has been put to use for CAPEX and capacity additions. This sector has a long breakeven cycle & there has been substantial demand from the hospital industry leaders to incentivise private sector investment. We may see in this budget some specific tax sops for hospitals “
Pharmaceuticals
Quote by Ankit Poddar, Director, Candle Partners:- “Domestic pharmaceutical production will continue to be a key area of focus for the government as the sector has delivered extremely well during Covid times with the industry delivering on several critical drugs at great speed during the last 2 years. There is a case for the government to revisit specific segments of drugs and rationalise GST rates to encourage consumption. Example: healthcare supplements still attract 18% GST. The industry needs to be encouraged further by extending the PLI schemes for several critical APIs as there is a dire need for several API players to backward integrate. Similar incentives are required for specific excipients which are not being manufactured in India and are crucial to the supply chain. As CAPEX for APIs increases over the next few years so would intermediate backward integration production & thus pollution control CAPEX investment would be critical. To ensure and incentivise the industry to invest in green chemistry there is a desperate need to subsidise this CAPEX and give a sizable interest subsidy. Another area closely watched by the industry is the steps that the government takes in the budget for exports incentives for both APIs and Formulations. One of the biggest drivers of growth in the industry has been India’s pharma exports which currently stands at USD 24.4 billion
The sector’s R&D expenses as % of sales have consistently been declining in the last 3-4 years after peaking at around 9% +of sales in FY 2017 as per an internal Candle Partners study. One of the justified demands of the sector has been to bring back the 200% R&D tax deduction (from the current 100%) “
FMCG & Retail Sector
Quote by Sameer Shah, Director, Candle Partners:- “The last 4-6 quarters have seen sizeable price increases for most consumer products – discretionary and non-discretionary. Most price increases have been in the region of 12-15%; however, supply-side inflation has been much more and hence margins have been hit of most companies at the EBITDA level. In order to drive demand, most consumer companies would have limited options of price increases in the next 3-4 quarters. Majority of the industry demand in this budget is to rationalise taxes in the short term to ensure that demand can be addressed correctly. Also, consistent commentary from most FMCG companies and their leaders seem to suggest that maximum stress lies in tier 2 and tier 3 towns & rural economies where demand is still muted. The expectation is hence to fix tax slabs for the lower income so that the individual has more cash in his hands – expectations hence is that the standard deduction limit will get increased “
Chemicals / Speciality Chemical
Quote by Ankit Poddar, Director, Candle Partners:-“Contrary to some of the stock market movement of several chemical scrips, due to the sharp movement in several chemical prices (which are raw material to the speciality chemical sectors), the last two quarters have been bad for several speciality chemical companies. The recent surge in logistics prices and import restrictions have not helped the cause. The sector expects certain SOPs in the budget which could also come in the form of enlargement of the PLI schemes. While the PLI scheme mostly tends to benefit the larger players, the ripple effect also aids their SME chemical suppliers thus benefiting the overall ecosystem. We have seen several small / mid-sized speciality chemical companies undergoing capex programmes since 2018-2019 onwards (even pre Covid) as the demand was very robust as buyers across the world are evaluating India as an alternate speciality chemical player. However, several of this capex has gone over-budget due to time delays as well as the increase in commodity prices of metals / cement, etc. Any CAPEX-based incentive is crucial for this sector as currently, all chemical industry entrepreneurs are keen to invest however recent headwinds have made them sceptical “
Fintech
Quote by Funngro – “ Last couple of years have seen significant growth of online education and role of technology companies in this space needs to be strengthened further. Relook at the GST rates for online education, expanding the net of 80C and specific focus of government in growing financial literacy of citizens would be the primary expectations from the budget. These changes would greatly enable online education access for all Indians.”