The stage is set – there are only two days to go for the Union Budget 2020 on February 1, and industries across India are expecting big-ticket reforms for economic revival. This time around, the government is ridden by mounting pressure to revitalise the economy, in the wake of inflationary pressure and increasing fiscal deficit. In spite of the current situation, most industry leaders are positive that the government will focus on enhancing investments, job creation, upskilling, and laying out a roadmap for further development.
Let’s find out what some of the leading industry leaders anticipate from Union Budget 2020:
Increase in healthcare spending is the need of the hour
According to reports, India currently has one of the lowest spending on healthcare in comparison to other countries across the world. While it was stated that India is slated to increase healthcare spending to 2.5% of the GDP; currently, the number stands at 1%.
Mr. Sanjay Bhutani, Country Manager, Bausch & Lomb India, adds, “Healthcare services should be zero rated – once zero rated, hospitals will be able to avail GST credit on inputs, leading to lower healthcare services cost. In addition, medical devices should be bought at par with preferential products and taxed at a lower rate of 5% – this will promote expansion of healthcare sector through reduced costs improving patient accessibility as well as provide impetus to medical tourism.”
Further, he says that it is significant to rationalise GST rates for subservient products to keep them in the same rate structure as the main product, for which these are used – for example Lenscare Solution (HSN 3307) and spares for medical equipment (HSN 9018).
On the personal taxation front, Mr. Sanjay Bhutani says, “There should be reduction to individual taxation through rate cuts, encouraging savings, simplification of capital gains taxes that will boost investments into equity – these measures will grow disposable income while also helping channelise the same to spur private investment.”
Mr. Pavan Choudary, Managing Director, Vygon India and Chairman – MTaI (Medical Technology Association of India) adds, “The hospital sector is facing the challenge of attractiveness. For commercial attractiveness at least 10% EBIDTA is a must. For physical attractiveness violence against doctors should be decisively checked. For legal and regulatory attractiveness, the regulatory burden (including consumer protection burden) should not become overstraining and take away the individual motivation to become a doctor or the entrepreneurial desire to get into the provider space.
The medical device and the Pharma sector are still grappling with regulations which are changing too fast. The other challenge facing these sectors is microscopic price control. This should be done away with and to achieve the affordability it wishes to bring, the government should bring in a predictable pricing mechanism. Our recommendation is that the DOP committee’s report on high trade margin should be followed, and the trade margins should be at least 50% and not the 8% or 24% which currently prevail on price controlled devices. This predictability in pricing regimen will keep the sector attractive, not only for domestic but also for foreign direct investment, as well as provide the minimal elbow room that the hospitals and the trade require.”
Focus on integrating technology in mainstream education
The 2019 Interim Budget had evoked a great response from educationists across India. A 10% increase in the education budget for country-wide academic development was welcome news. This year too, industry leaders in the education space have pinned their hopes on an increase in financial support for the sector. In addition, they also anticipate the integration of technology in mainstream classrooms as well as a reduction in GST for online courses – today it stands at 18 percent.
Speaking in this regard, Mr. Aakrit Vaish, Co-founder and CEO, Haptik adds, “Over the last few years, with a larger number of businesses incorporating emerging technologies such as Artificial Intelligence and Machine Learning, there has been a sharp rise in demand for curating specialized skill-sets. In this direction, the Government, in the soon-to-be-announced Budget 2020, should take measures which duly fill the severe need-gaps. Allocating funds towards the required training and technical know-how will be instrumental in empowering the deserving and well-minded youth of the country with industry-aligned germane skills like AI, IoT, Big Data and Robotics.”
Mr. Anil Shastri, Chairman, Lal Bahadur Shastri Institute of Management opines, “The proposed New Education Policy has already piqued the interest of most stakeholders in the education sector, and brings with it a whole lot of promise. We hope the Budget 2020-21 is in tune with global needs and focuses on digitalization and skilling professionals, so that they can be better prepared for Industry 4.0. Speaking of which, I also believe that more emphasis must be laid on e-learning as a medium. A GST rate cut in online courses will encourage more students to opt for such courses, and will provide an impetus to ed-tech startups.”
Momentum needs to continue in the EV space
The transition towards electric mobility is a promising proposition for India, not just to revolutionise the transport sector, but also to tackle significant issues the country has been grappling with. Increasing concerns regarding India’s rising crude oil imports, widespread pollution and growing risk of health issues make electric mobility the need of the hour. Further, this move can help India achieve its global commitment to reduce carbon footprint and greenhouse gas emissions, as well as facilitate employment in this sector.
While the last Budget provided some encouragement to players in the EV space, industry leaders believe that the momentum needs to continue. The industry expects a reduction in road and registration taxes, as well as expansion of EV charging infrastructure in the upcoming Union Budget 2020.
Mr. Akash Gupta, Co-Founder & CEO of Zypp, shares his view, “Drop GST on EV buying, leasing and renting to 0% to grow the Electric Vehicle adoption amongst masses. Also, on top if users can get 5% cashback on all rides done via EV platforms or e-vehicles, it’ll be a game changer to grow EV adoption in India by fleet companies and users together.”
Another big player in this space – Morris Garages (MG) Motor India – recently launched the much-awaited ZS EV, which is the first electric internet SUV in India. The car has a driving range of 340 kilometres on a full charge. Reports suggest that the global carmaker has received over 2,800 bookings in 27 days for the ZS EV – this number has surpassed the total number of EV cars sold in India in 2019.
Voicing his expectations for Budget 2020, Mr. Rajeev Chaba, President and Managing Director – MG Motor India, says, “The government’s recent announcements on the promotion of EVs in India, especially for government use and public transport, is encouraging. However, we feel that more work needs to be done to promote EV adoption in India not only in public transport but among private customers as well.”
In 2019, Mr. RK Singh, Union Minister of State for Power and New & Renewable Energy, approved amendments in the Electric Vehicle Charging Guidelines and Specifications. According to the revised amendments, at least one charging station will be available in a grid of 3 kilometres x 3 kilometres in cities, and one charging station will be set up every 25 kilometres on both sides of highways/roads. In addition, all mega cities and expressways will be taken up for coverage in the first phase, while other big cities will be covered in the second phase. For inter-city travel, fast charging stations will be installed after every 100 kilometres.
This news was hailed by industry leaders and sparked optimism but the dream is yet to be realised. While there are some industry leaders who are looking forward to this Budget, they do not anticipate any path-breaking reforms to be announced this time around.
Mr. Maxson Lewis, Managing Director, Magenta Power, adds, “When everyone was praising Budget 2019 as a major boost for EV, I had kept my views subjective and it turns out that Budget 2019 was indeed a lot of noise and less of action on the ground. This was reflected in the low number of EVs sold. This time however, I believe the budget will be a positive one and will include a focus on EV and EV charging. But it may still not be a game changer since the government will have to balance out the priorities for the traditional auto industry and the EV industry.”
The future is green and 2020 seems to be a breakthrough year, especially with a slew of big names launching EV models in the near future.
Mr. Naveen Munjal (Managing Director, Hero Electric & President, SMEV), believes that 2020 is posed to be the year of EVs, hence the government’s support is crucial to realise the dream of electric India. He adds, “Last year’s budget was a mixed bag from an EV industry point of view. While it had certain inclusion to appease EV manufacturers, a lot more has to be done in order to ensure customer adoption. From an industry point of view, we expect the upcoming budget to bridge the gap between manufacturers and the end consumers with lucrative incentives and measures in order to make EVs more accessible and affordable for the masses.”
Real estate sector might be rejuvenated
The real estate sector has drawn quite a bit of attention, especially with the government announcing several reforms last year. Budget 2020 brings with high expectations of completion of stalled projects to improve the buyer sentiment and boost demand.
If the budget provides for 10% tax exemption on fresh/new investments for under-construction properties (until the occupation certificates are obtained), it will be a welcome move that will rejuvenate the industry and significantly increase the volume of GST collections.
Not so long ago, the government had announced its target to make India a USD 5-trillion economy. Besides, Pradhan Mantri Aawas Yojna aims to provide 20 million homes by the end of year 2022. If everything comes together successfully, it could spell a new lease of life for the real estate sector.
The clock is ticking – let’s wait and watch what this much-anticipated Budget 2020 brings for all the industries; after all, the future is green!