As the nation awaits Finance Minister Nirmala Sitharaman to announce the Interim Budget 2024 on February 1, the corridors of power are abuzz with speculation and industry leaders are on the edge of their seats. The upcoming budget will be an ‘interim’ one as the government faces a general election this year, in April-May. The full budget will be presented in July by the incoming government, whether a re-elected or new one.
Pre–Budget 2024 Expectations Highlights:-
- AI sector expecting significant share of focus on data protection, cyber security & digital infrastructure.
- Automotive sector seeks updates on potential FAME 3 schemes, GST reduction on Lithium-ion batteries production-linked Incentives (PLIs), and lower GST on entry-level ICE two-wheelers (currently 18%)
- In 2023, a total of 15,30,326 electric vehicles were registered across segments in India, compared to 10,25,134 units in 2022, which translates to a growth of 49.28 percent.
- Beyond financial allocations, manufacturers seek a comprehensive policy framework for EVs addressing licensing, safety standards and insurance norms.
- The current Government might aim to reduce the fiscal deficit to 4.5 per cent of GDP by FY26 showcasing a target to fetch a 5.9 per cent of GDP target for FY24.
In this article, we’ll take a look at some of the most prominent pre-budget quotes from industry leaders and experts, and consider what they might mean for the 2024 budget and the future of the Indian Electronics Sector.
Mr. Manoj Nair, Head of Global Delivery Centres, Fujitsu say, “Major economies across the world are seeing a challenging macroeconomic situation with slowdowns that have affected various industries. Amid this period, it is the tech industry that is leading the charge in recovery with a positive outlook. The demand for IT skills, especially in the new-age technologies – AI, ML, analytics, data science and other digital capabilities continues to surge presenting an opportune time to GCCs to further scale and usher in the next phase of digital revolution in India. India is a leading hub of Global Capability Centers (GCCs) with 1500+ GCCs housed in India that play a crucial role in growth of the tech industry. According to EY, the domestic GCC market size is expected to hit US$110b by 2030 with the number of GCCs expected to scale to 2400. Over the past few years, there has been a major shift in how GCCs operate – from delivering cutting-edge services to becoming powerful innovation hubs. These GCCs, with their vast trove of STEM talent and heavy investments in technology and upskilling are uniquely positioned to spearhead digital transformation for customers. Our technical capabilities across AI, ML, data science, cloud, automation, enterprise applications are crucial to powering deep research and product development. “ “Now, as GCCs continue to invest in reskilling talent in the face of evolving tech landscape, building demand-based and niche skills in relevant areas, they are playing a crucial role in employment generation for India. With GCCs being a major engine for economic growth, Budget 2024 can play a key role in facilitating growth and sustainable development. GCCs require support and investment for infrastructure and growth environment. The Budget 2024 can help GCCs further scale and accelerate innovation at a faster rate as India emerges as the world’s technology and services hub.”
Mr. Vivek Tyagi, Managing Director, Analog Devices Inc India
“As we approach the Union Budget 2024, we at Analog Devices Inc are hopeful for a forward-looking fiscal roadmap that steers the nation towards technological prowess and sustainable growth. We believe the upcoming budget will play a crucial role in shaping India’s economic development, particularly in emerging sectors like semiconductor, e-mobility, green hydrogen, and renewable energy. Recent commitments observed at the Vibrant Gujarat Global Summit 2024 underscore the industry’s collective dedication to Indian Government’s vision of a ‘Developed India @2047.’
In this dynamic landscape, we encourage policies that bolster indigenous semiconductor manufacturing ecosystem. The announcements by global players to invest in Gujarat highlight the sector’s potential and the need for a conducive policy environment. We believe that the budget should be a catalyst for nurturing innovation, research, and skill development, particularly in frontier technologies like artificial intelligence, 5G/6G networks and renewable energy.
As the world embraces the integration of 5G technologies, AI-enabled solutions and sustainable practices, we look to the budget to provide a strategic framework that not only navigates current challenges but also sets the stage for India’s emergence as a global technology and innovation hub. In essence, the forthcoming budget represents a pivotal opportunity for India to fortify its position on the global stage, and Analog Devices Inc remains committed to contributing to this transformative journey.”
Deepak Sharma, MD, CEO & Zone President, Schneider Electric
“India’s economy is projected to grow at 7.3% in the ongoing financial year, a testament to the country’s resilience amidst global uncertainties. The upbeat industry sentiment is fueled by strong domestic demand, robust capex cycle, and growing exports. As we await the upcoming budget, we are excited to see initiatives that bolster India’s sustainable development, with a key focus on laying the foundation for a new energy landscape. Continued focus on expanding Public Private Partnerships will further enable accelerating India’s infrastructure growth and ambitions,”
Mr. Raman Bhatia, Founder & Managing Director, Servotech Power Systems Ltd.
For EV Industry
The announcement of Budget 2024 is coming closer and various industries have their own set of expectations from the upcoming budget including the EV industry. The EV Industry holds a strong potential to revolutionize India’s transportation sector and for the EV industry to flourish there should be a strong push for upskilling and reskilling through centrally sponsored schemes to build a skilled workforce in the evolving EV industry. Sustainable growth in the EV sector is contingent upon technological innovation aimed at reducing costs, extending range, and revolutionizing charging infrastructure. This evolution pivots on developing Battery Management Systems (BMS) and nurturing domestic capabilities for battery manufacturing. Significant government funding, directed specifically at charging infrastructure in Tier II and Tier III cities, emphasizes open data standards and APIs, fostering interoperability and a resilient software ecosystem. Proposals to reduce GST on lithium batteries from 18% to 5% represent a game-changer, significantly cutting down EV acquisition costs and enhancing overall attractiveness.
Strategic promotion of ICE+EV hybrid vehicles, especially in the smaller segment, is considered vital for achieving economies of scale. State policies, supported by the Central Government, are anticipated to incentivize this through investment policies and centrally sponsored schemes. The targeted implementation of Production-Linked Incentive (PLI) schemes for EV charging companies remains a key focus. Ongoing support, including tax deductions for EV purchasers and extension of FAME-II subsidies or the potential introduction of FAME-III, underscores the unwavering commitment to a green transition.
The automotive industry anxiously awaits insights into the GST landscape, particularly for entry-level two-wheelers. Expectations center around potential FAME 3 schemes and a revision of GST rates for electric two-wheelers. Calls for a uniform 5% GST on all EV spare parts, aligning with the 5% GST on vehicles, echo the industry’s aspiration for a more equitable tax structure. Advocacy for innovation-centric initiatives, coupled with capacity-building incentives, is paramount for widespread EV adoption. The recommendation to lower the GST rate on batteries from 18% to 5% aligns battery swapping and subscription services with EVs, representing a crucial step forward.
For Solar Industry
The upcoming Union Budget 2024-25 holds paramount importance for India’s green energy sector. Addressing concerns about solar panel imports, the budget should prioritize measures for indigenous development, technology transfer, and incentives for local manufacturing to curb foreign exchange outflow. The PLI scheme for renewable manufacturing and viability gap funding for battery storage is crucial for advancing India’s energy goals. A revision of GST rates for the renewable energy sector and increased budgetary allocation for batteries under PLI are pressing needs. Focusing on workforce development through AI-driven technology, bulk procurement, and energy storage solutions is essential for sector efficiency. Infrastructure strengthening, public-private partnerships, and streamlined regulations will pave the way for a sustainable energy future. Collaborations to include solar panels in new houses and green FDI initiatives are anticipated. Recommendations for reduced customs duties on solar imports, enhanced concessional finance availability, and a dedicated nodal agency for sector investments underscore the call for a conducive environment. Addressing state restrictions on installed transformer capacity, advocating for unrestricted net metering, and extending the ISTS waiver are critical steps. Reduction in customs duty on solar cells, an extension of ALMM, and shortening project implementation time are needed to support indigenous solar manufacturing, shaping the nation’s energy landscape and influence its global standing in sustainable practices.
Mr. Manideep Katepalli, Co–Founder, BikeWo
Despite last year’s commendable 33% surge in EV registrations, our industry encounters persistent challenges. Chief among these hurdles is the imperative need for robust charging infrastructure, pivotal in inspiring confidence among potential buyers and propelling the widespread adoption of electric vehicles (EVs) as a sustainable mode of transportation.
Another barrier remains the relatively higher initial cost of EVs, often deterring consumers. However, the promise of life tax subsidies for electric vehicles and the availability of accessible EV financing options hold immense potential to mitigate this challenge.
The integration of EV infrastructure into Priority Sector Lending (PSL) is poised to bolster credit flow into the sector by mandating financial institutions to provide support, thus promising a significant boon.
A supportive regulatory framework coupled with financial incentives aimed at fostering research and development within the EV sector stands as indispensable pillars. These measures not only drive innovation but also attract investments, creating an environment conducive to widespread EV adoption.
Ultimately, these strategic initiatives play a pivotal role in establishing an enduringly sustainable and eco-friendly transportation ecosystem.
Mr. Rajesh Gupta, Founder & Director, Recyclekaro
The upcoming budget holds a pivotal role in steering India towards a sustainable future by fostering the growth of battery recycling. The circular economy’s cornerstone, battery recycling, addresses mineral scarcity and reinforces our supply chains, paving the way for self-sufficiency in battery materials. While regulations like the Electronics Waste Management Rule and Batteries Management Rule have strengthened the recycling industry, persistent challenges call for solutions. To further empower this sector, streamlined recycling policies and incentives for pioneering waste management solutions are imperative.
The rapidly growing adoption of electric vehicles is a catalyst for the EV battery recycling industry. Initiatives such as FAME, PLI, and other incentives should be amplified to fuel this momentum. A tailored PLI scheme dedicated to lithium-ion battery recycling will be a game-changer, amplifying the sector’s growth while advancing India’s sustainability goals. As we approach the budget, investing in these strategic measures will not only invigorate the recycling industry but also cement India’s position as a global leader in sustainable practices.
Mr. Pankaj Jha, Country Head & Director of Sales, MAXHUB India
“As the country continues to evolve, it is imperative for the government to channel its efforts towards the digitalization of education, aligning with the visionary National Education Policy 2020. In addition, expanding the scope of smart city projects to include more cities will undoubtedly contribute to our nation’s growth. I strongly advocate for the simplification of custom duties and incentives for ‘Make in India’ initiatives, with a special focus on facilitating contract manufacturing. Furthermore, providing tax exemptions on smart classrooms for private education players is an essential step in fostering innovation and accessibility. These measures collectively pave the way for a technologically advanced and educationally empowered India.”
Dr. Darshan Rana, Chairman and Managing Director, Erisha E Mobility Private Limited
“Contributing significantly to the economy, the Electric Vehicle industry has demonstrated a sizeable potential to strengthen the economic growth and progress of the country. As we look towards the upcoming Interim Budget 2024, we expect the honourable Finance Minister Nirmala Sitharaman will revisit GST rates on the vital spare parts of the EVs besides extending the Faster Adoption and Manufacturing of Electric Vehicles (FAME) subsidy scheme for widespread adoption of EVs which offer environmentally friendly and sustainable transportation solutions. “
Mr. Imran Kagalwala, Co Founder at UNIX India
“We urge the government to consider elevating duties and taxes on imported cell phone accessories. With the existing 20% duty already in place, the addition of anti-dumping duties on all mobile phone accessories would be a game-changer. This move can enhance production and manufacturing within India. If we see more duties on these accessories it becomes a win-win for ‘Make in India.’
This not only helps us thrive but also gives a big boost to the market. As we look ahead to the 2024-2025 budget, we’re hopeful for policies that create an environment favoring local production, making India a powerhouse in mobile accessories manufacturing.”
Mr. Sushil Virmani, Managing Director, Best Power Equipments (BPE)
As we navigate the landscape of Union Budget 2024, it’s crucial for the government to accentuate and foster an environment for both local and global investments in semiconductor technology, AI, and digital platforms. This strategic focus aligns with our industry’s evolution. Simultaneously, we recognize the imperative to integrate these cutting-edge technologies into our educational curriculum, ensuring a skilled workforce. This synergy is pivotal for propelling our nation towards the coveted 7 trillion economy by 2030.
Mr Dushyant Chachra – CFO, SAEL
“In the recently announced budget, Finance Minister Smt. Nirmala Sitharaman stated in Budget 2024 that financial assistance would be provided to support the procurement of biomass aggregation, crucial for Bio-energy production. This move is highly encouraging for farmers to engage in the bioenergy supply chain, facilitating a sustainable and profitable model for agricultural waste management, creating a win-win situation for the biomass industry and farmers.
The extension of the time period for investments by SWFs in renewable energy, from March 31, 2024, to March 31, 2025, is expected to attract more global investment in the renewable space. This initiative could lead to numerous job opportunities, rapid sector expansion, and the growth of the sector and SAEL Group. Global SWFs, including Norfund (Norway) and DFC (USA), already having significant investments in SAEL renewable assets, will likely further boost the confidence of SWFs.
Through rooftop solarization, 1 crore households will have the opportunity to obtain up to 300 units of free electricity every month. New schemes/policies from the Government in the near future are anticipated in this context. This announcement is highly encouraging and is expected to expand the penetration of solar rooftop markets, resulting in efficient power supply for retail consumers in India.”
