A year down and less than a month to go, scores of millions of people, will anxiously await the analysis of the tone, tenor, text and subtext of the finance minister’s budget document. This time, the February 1st speech by Nirmala Sitharaman is likely to drive even the dourest domain dons of the corporate world to tune in. Reason: The changing dynamics of global trade, constant concerns on the crucial trade deal with the US, slippages in foreign direct investments and foreign portfolio investments into India and an investment rate that still needs a growth fillip. But this time, the budget is to be presented in the backdrop of a renewed faith in the India’s consumption story (both urban and rural). There has been low inflation rate on top of India remaining the fastest growing large economy on the planet. There are governments both at the centre and with the Indian states that are today eager to promote pro-growth and pro-market policies. The Union government has in place the Anusandhan National Research Foundation (ANRF) and the Rs 1 lakh crore Research, Development and Innovation (RDI). Both meant to boost a research and innovation-led growth.
Nonetheless, India is still facing the challenges of increasing the domestic investment rate.
But conversations with some of the industry leaders, economists and images that conjure out of the murmur within the official circles, the expectation now seems to suggest a budget that is likely to be beyond worthy schemes and more about readiness for global competition. While all the right words around deep-tech, research focus are sprayed across the verbiage online and in print on budget expectations, the pointers to watch would be the extent to which the pronouncements will be India’s recipe to spicing up options for the private sector to invest in artificial intelligence (AI), stay aligned to the rise of deep-tech, pursue the interests in creating and protecting intellectual property, build product companies and doggedly pursue the beloved goal of becoming the factory to the world.
Here are the expectations from the budget by some of the leading minds of India Inc.,:
Kris Gopalakrishnan: Tax breaks that support spending on research & aid scope for patient capital.
A longtime believer in increased spending on research, the co-founder of Infosys and philanthropist who has backed basic research for several years, says, “I do not see any alternative to tax breaks. Industry has cash reserves, but spending on research is not happening. May be because they get punished by the markets in the short term since profits decline as R&D spending increases.” He has for several years now maintained that a sharper focus on boosting research spending was the only mantra to accelerate Indian economy.
He now also feels, “we need to incentivize investments in deep-tech startup where the gestation period is long – 8-10 years at least. We can look at reducing the capital gains tax to nil if the investments are held for 8 years or more.” There are examples of these, he says, in other countries.
Kiran Mazumdar-Shaw: Allocation for bio-manufacturing & scientific capacity building
In an era of weight-loss medication and the rising challenge of diabetes, it is the more-growth and less-girth that India may want to promote. According to Kiran Mazumdar-Shaw, founder and chairperson of leading biopharmaceutical company from India, the hope is to see budgetary allocation being made to support bio-manufacturing and for scientific capacity building and for talent training. Coupled with these, she feels steps to hasten regulatory reforms are needed and they would also be crucially linked to regulatory science capacity building. She is also keen to see a good start to the Anusandhan National Research Foundation (ANRF) that aims to seed, grow and promote research and development (R&D) and foster a culture of research and innovation throughout India’s universities, colleges, research institutions, and R&D laboratories.
Keki Mistry: Continued focus on job-creation and income generation
Veteran from the finance arena, Keki M Mistry, the former vice chairman and CEO of HDFC Limited (amalgamated into the HDFC Bank in 2023), and now on the board of the bank and several other leading companies, feels the focus in the coming budget could well be on continuation of what has been the case last year, which was essentially about staying with creating jobs and on ensuring people get more income to spend. Linked to this, he sees, is a fillip to housing, which he calls a major job creator. In keeping with these inevitable imperatives, he hopes to see a budget that could be largely about thrust on housing, infrastructure, job creation and consumption. The housing story, he reminds, is not about the few eye-popping, highly visible, high-value properties that usually tend to draw attention but is more about heightened focus on supporting middle and low-income housing. A boost to these could be ensured with enabling incentives like an interest subvention, with perhaps better controls to check its misuse and reintroduced for certain home buyers. This, he feels, could ensure lowering of costs and encourage affordable housing.