By Krishna Raghavan
Finance Minister Nirmala Sitharaman presented a budget for FY24 that prioritises growth while continuing the fiscal consolidation process. One of the most notable aspects of the proposed budget was the emphasis on growth as well as capital and infrastructure expansion. The budget’s influence on the Indian economy will be determined by its impact on the particular sectors that drive our country. Let us now have a look at the budget impact on sectors like Agri tech, EVs, AI, and Electronics and how this will affect the shares of Unlisted companies. Unlisted shares or corporations are securities that aren’t listed on stock exchanges; as a result, unlisted corporations enter the stock market through an initial public offering (IPO).
Agritech
The Indian government is setting up an agriculture-focused digital public infrastructure as an open-source, open-standard, and interoperable platform. The objective is to aid farmers-focused solutions leveraging information services for crop planning and health, better access to farm inputs, credit, and insurance, crop estimate, and ultimately propel agritech startups, and the overall industry. This is an accelerator for companies in the IT sector, Insurance sector, and lending sector as well. Retail investors backing the companies that are rapidly changing how farming is done have already seen a huge upside. Companies like Cropin have changed the way farming is done, and in the process made comfortable profits. Backing these has a huge upside due to the efficiency such companies bring in Agritech.
Electric Vehicles (EVs)
With electronic vehicles taking off in India, the government has extended customs duty exemption on importing capital goods and machinery used to manufacture lithium-ion cells for EV batteries. This drop in cost is expected to aid the growth of electric vehicles in India. There are about 400 popular startups in this space. This is a big boost for EV Companies that are scaling rapidly and changing the mobility space. Retail investors are betting here on the rapidly changing mobility, and this is a fundamental shift from the Gas/Fuel based mobility companies. The adoption of EVs has been faster than it was of Gas/Fuel in the last century. Green Hydrogen and similar initiatives have also started, which is going to push EV adoption faster.
Artificial intelligence
The ‘Make in India’ push is now being extended to artificial intelligence. The government has planned to set up as many as three centres of excellence for AI under a campaign titled ‘Make AI in India and Make AI work for India’. This is a major push for the IT space. There are close to 70 AI popular startups in India. But with a theme such as building for the world, we could dictate many groundbreaking adoptions using technology. For Eg. Airport Security scrutiny, National security & Intelligence, Agricultural tech adoption, Disease management, etc. The innovations in the AI space are endless.
Electronics (mobile phones, TVs)
Building on aspirations to push India as an electronics manufacturing hub, the government has announced relief in customs duty on the import of certain parts and inputs, such as camera lenses, and extended the concessional duty on lithium-ion cells for batteries for another year. Companies like Lava, and Micromax are building phones that are competitive with their international peers, and are rapidly growing. For instance, a company like Lava whose shares are traded in the Unlisted market, has moved up by 50% in the past 6 months. Investors who entered the past year have already made considerable upside more than nifty returns of 12-14% even before the company freezes its IPO listing date.
The Union Budget 2023-24, presented by Finance Minister Nirmala Sitharaman on February 1, proposes to increase the tax rebate to Rs 7 lakh from the existing Rs 5 lakh as part of a slew of changes in the way the government taxes the salaried class. This will help in attracting more retail investors to the market as the disposable income will be high in the hands of the individuals and we can see a lot more DEMAT accounts being created.
Union budget of 2023 has sought to largely uplift and create a new generation of workforce, entrepreneurs, skill/upskill a large pool of below-poverty/middle-income people. This is a welcoming sight, as India currently is in its huge transition stage from emerging countries to developed countries. During the coming decade, consistent push to Startups/Entrepreneurial spirit and the support provided from resources/tools/funding has a direct impact on how the market will back capital markets. This is a great sign for retail investors, as more participation will happen due to the approach of the govt to uplift lives in general.
(Krishna Raghavan is Founder at Unlistedkart. The views expressed in the article are of the author and do not reflect the official position or policy of FinancialExpress.com.)