Budget 2021-22: Funds Allocation For Consumer Tech


The Union budget 2021 was welcomed by the consumer tech industry particularly with the government’s ‘pro-growth’ vision to be self-sustaining and self-reliant in the days to come.

Let us have a look at the measures and announcements aiding growth in the sector:  

Boost to tech manufacturing: Production-linked incentive (PLI) scheme, ‘Make in India’

The finance minister announced that the government aims to spend Rs 1.97 lakh crore on various PLI schemes over the next 5 years. This will be an addition to the Rs 40,951 crore announced for the PLI for electronic manufacturing schemes. Under the scheme, eligible players will receive incentives ranging from 4% to 6% of production value for five years, after they achieve their investment and production value target for each year. The move is likely to attract global players in the manufacturing sector and make India globally competitive by attracting investment. The scheme also aims to encourage local companies to set up or expand existing manufacturing units in the country.

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There is a strong focus on Digital India which will provide a solid foundation for a forward-looking data-economy besides giving a much-needed boost to MSMEs and start-ups.

Digital Infrastructure 

The government increased the outlay for Digital India programme by 42% to Rs 6806.33 crore for 2021-22. There is a strong focus on Digital India be it through setting a fintech hub at GIFT city, enhancing digital payments and use of AI, ML etc in governance, or making tax appellate faceless and tech enabled – all provide a solid foundation for a forward-looking data-economy besides giving a much-needed boost to MSMEs and start-ups. The suggestion to introduce AI-based features in MCA 21 3.0 to address compliance needs of start-ups is another thoughtful step in creating a conducive business environment for entrepreneurs in the consumer tech segment. 

National Language Translation Mission 

The government announced the National Language Translation Mission (NTLM) to make governance-and-policy related knowledge available in major Indian languages. The announcement is important to enhance access to digital content to millions of Indian users who are witnessing a spurt in smartphone and Internet usage. An enhanced app store ecosystem, tech companies, especially start-ups, will break linguistic barriers and add more value to the next half a billion Indian customers.

Custom Duties 

The budget announced an increase in customs duty (import duty) on mobile phones and power bank sub-parts for FY 2021. The aim is to promote local manufacturing in the country, the rebate on all parts of mobile phones and parts of chargers is being withdrawn. Parts of mobile phones and chargers will now be subject to 2.5% customs duty. Till now, there was no duty on these parts. Increasing custom duty will certainly make it expensive for the companies to procure these mobile parts. 

Research and Development 

Allocation of Rs 50,000 crore for the National Research Fund for the next five years is a definite step towards boosting the research ecosystem in a coordinated way.

The government also allocated Rs 8,000 crores for National Mission on Quantum Computing & technology and building data centre parks.

Naina Sood
Naina Sood
Naina was former staff at Dutch Uncles, she writes on business-life-cycle, funding, small businesses and start-ups.

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