Union budget 2019: analysis, wish list of SMEs in the IT sector

The startup ecosystem is eyeing the Union Budget 2019, set to be revealed on July 5th

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India is going through a digital revolution. Owing to the Third Industrial Revolution, two of the most significant contributing sectors of the Indian economy, Micro, Small & Medium Enterprises (MSMEs) and Small & Medium Enterprises (SMEs) are gaining exposure to the global market. Yet, they are plagued with a number of challenges that are restricting their growth. SMEs and MSMEs are still struggling to stay afloat amidst the evident changing times. 

The SMEs and MSMEs within the software and technology industry have high expectations from the Union Budget 2019, which will be presented in the Lok Sabha on Friday, July 5. It is hoped that Union Budget 2019 will turn out to be a major achievement if the government announces some much needed MSME and SME sector specific reforms.

BW CIOWORLD brings you expectations from the upcoming Union Budget for the MSME amd SME industries of the Indian IT sector:

From Interim Budget to Union Budget 

Mahesh Makhija, Partner and Leader, Digital and Emerging Tech, EY says, “With the goal of making India a $5tn economy by 2024, the government is likely to introduce measures in the budget to encourage growth of start-ups, especially in new growth industries like AI and machine learning."

The previous government had commenced some limited schemes for MSMEs including the 59-minute loan scheme. However, the Interim budget in February this year came about as quite disappointing for the sector." We would expect the government to further expand on the measures announced in the interim budget and allocate additional funds to support deep tech segments like AI, Robotics and Machine Learning.” adds Mahesh Makhija. 

Rajarshi Bhattacharyya, Country Manager, SUSE India too spoke about the comparison and expectations between the interim and union budget. “The interim budget in early 2019 rightly focused on digital transformation and the need to enhance technologies such as IoT, AI, ML, Robotics across key sectors. With the upcoming budget, the Government with its ‘Digital India’ vision should look to pushing reforms on digital innovation and creating policy frameworks that encourage MSMEs in India to invest in deep tech locally.


Praveen Agrawal, Managing Director, OakNorth says, “We expect sustained push towards a digital-first economy, which would include support for R&D and AI, reduced regulatory restriction on use of technology in financial services sector, and simplified tax deduction at source (TDS) and repayments in online lending.”

Startups for Smart Cities 

UdayaBhaskar Rao Abburu, CEO & Managing Director, iRAM Technologies shares his expectation from the budget, "MSMEs and Indian start-ups should be given preference to participate in smart cities projects. In order to boost domestic manufacturing, we expect our honorable Finance Minister to provide duty exemption to those vendors who import raw materials for smart cities projects. This will give price parity for Indian manufacturers to compete against Chinese imports."

Policy Framework 

Since one of the major challenge faced by startups is on regulatory and compliance front, therefore, regulations should be made friendlier for startup companies and compliance regulation should ease. Rashi Gupta, Chief Data Scientist & Co-founder, Rezo.AI adds, Startups contribute substantiate growth to the economy. Hence, we urge the government to make early stage and growth capital more easily accessible for startups. Also, relaxation in the regulatory compliance procedures and development of incubation centres to aid employment generation and spur growth will open dynamics for startups to propel."

Affordable Financial Inclusion 

Neel Juriasingani, CEO & Co-founder, Datacultr believes that the funds allocated for the startups in the budget should be easily accessible to the startups incubated by the central or the state government. "We expect that with the new budget, the government will introduce easy early stage funding and grants for tech start-ups working in the space of digital and financial inclusion. 

Goods and Services Tax

Another key area that the GoI needs to address is GST compliance. "We also expect the government to reduce tax rates creating a more welcoming ecosystem for the industry players. Policy regulations like these will allow entrepreneurs to devote their time, energy and resources to gain success and build upon more innovative ideas." adds Neel.


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