Interim Budget 2024: Investment, Cybersecurity top Digital industry’s wishlist

Finance Minister Nirmala Sitharaman will be presenting the Interim Budget on February 1, 2024. With the Lok Sabha elections slated to be held in April-May, as per media reports, the full-fledged for FY2024-25 will be presented after the formation of the new government.

Given the BJP Government’s push for a Digital India, the digital industry has several expectations from the Budget, especially regarding strategic investment in digitalisation and infrastructure development, strong initiatives to address the challenges of data protection, cybersecurity, deepfakes, etc., policies to nurture India’s tech innovation ecosystem, and more.

Shradha Agarwal, Founder and CEO, Grapes:

“As we are approaching the upcoming budget, there are many expectations and needs for strategic investment to align with the evolving advertising landscape shaped by increasing internet penetration and digital transformation. I believe the major aspect is the call for increased investment in digitalisation and infrastructure development to fuel the growth of digital and physical advertising opportunities. The government should focus on increasing digital adoption among audiences other than youth, making it easier for advertisers and brands to reach a large audience. Also, it is hopeful from the government to facilitate the entry of new businesses into the market that foster innovation and expand the range of services available to citizens. With the budget for 2024, consumption in the country is expected to rise with the growth in e-commerce, resulting in more opportunities for brands and advertisers to capitalise on.

Furthermore, it can’t go without saying that last year we witnessed many deepfake trends in the industry. Anticipating the government’s take on it, I'm hopeful for some strong initiatives to address the challenges of deepfakes and make sure that technology is being used ethically.”

Amit Relan, Co-Founder and CEO, mFilterIt:

“Last year’s Union Budget had a significant mention of the advancements in technology and fostering the digital economy. For the upcoming budget announcement, we are expecting a significant share of focus on critical issues concerning data protection, cybersecurity, and digital infrastructure.

With the introduction of the Data Protection Bill, we are expecting to see stride movements in the regulation of data privacy aligning with global standards, a cohesive policy framework to protect user privacy and also stimulate innovation in the digital economy. Alongside privacy and protection, we expect to see some wave movement around emerging technologies like AI and the nation’s take on leveraging its power to empower further digital advancements.

Focus on innovation and protection will strike the ideal balance to foster the digital infrastructure of the nation.”

Abhinav Jain, CEO and Co-Founder, Almonds Ai:

“In Budget 2024, we hope for policies that nurture India’s tech innovation ecosystem. We need increased investments in R&D initiatives, particularly in areas like AI, robotics, and advanced materials. Additionally, incentives for attracting and retaining skilled tech talent through tax breaks for skill development programs and simplified visa processes would be greatly appreciated. The budget should act as a catalyst for India’s burgeoning startup ecosystem. We urge the government to consider easing regulations for startups, simplifying the funding process, and creating avenues for easier access to angel investors and venture capital.”

Gaurav Agarwal, Co-Founder, Gamezop:

“Amidst global anxieties, India shines as a potent growth engine. However, achieving our ambitious $30 trillion target by 2047 requires more than relying solely on domestic consumption. Throughout history, thriving economies have built their castles on a positive balance of payments and export prowess, with each key sector acting as a brick in the wall. Today, one such sector with undeniable potential is gaming.

Consider the world’s top four economies – their gaming industries stand tall, exporting innovation and creativity. As we approach the upcoming budget, there is a crucial need to prioritize and support this burgeoning sector. Duty Credit Scrips for export-oriented gaming companies will not merely be a handout; it will signify a strategic investment in high-skilled jobs, GDP growth, and building global influence.

It is time for India to transition from being one of the largest consumers of content to becoming the largest creator of content. The hope is that we can seize this moment, not just to play the game, but to rewrite the rules.”

Neha Sampat, CEO-Founder, Contentstack:

“For the 2024 budget, we urge a bold commitment to supporting and evangelising female entrepreneurship. This means concrete policies: dedicated funds and incentives for women-led startups, subsidies for companies prioritizing gender diversity, and educational reforms to bridge the gender gap at the Indian workplace. Empowering women in entrepreneurship is key to India’s robust growth. Their inclusion not only diversifies the business landscape but should also propel the nation towards unprecedented economic heights.”

Nishant Patel, Serial Entrepreneur, Founder and CTO, Contentstack:

“As India stands on the cusp of a startup revolution, the 2024 budget needs to fuel this momentum with policies supporting innovation and ease of doing business. It’s time for a bold leap forward, making India not just a market or an IT services hub for the world, but a crucible for global entrepreneurial success.”

Manhar Garegrat, Country Head, India & Global Partnerships, Liminal Custody Solutions:

“As India strides towards the forefront of the digital asset revolution, secure custody solutions are laying the foundation for a new era of financial inclusion. However, unlocking the full potential of this transformative asset class demands a robust ecosystem built on clarity, innovation, and talent. The upcoming Union Budget 2023 presents a pivotal opportunity to pave the way for a thriving digital asset landscape, and Liminal proposes the following key expectations:

1. Clarity in VDA Definition and Tokenization:

The current broad definition of Virtual Digital Assets (VDAs) in Notification no. 74 of 2022 needs to be more nuanced. The tokenization of real-world assets is a $10 trillion opportunity and we are already witnessing the rapid advancements in the field of tokenized RWAs. There is an urgent need for investment and innovation in these segments, if nurtured with progressive policies, India has the potential to become a global leader in the digital asset space. We urge the government to amend the VDA definition, explicitly excluding tokenized assets with proven underlying value, similar to established precedents like gift card exemptions. This targeted revision will foster a dynamic and inclusive digital asset ecosystem.

2. Removal of 1% TDS:

The introduction of a 1% Tax Deducted at Source (TDS) in 2022 led to an estimated loss of $420 million in potential government revenue due to migration of Indian crypto traders to overseas platforms. This highlights the detrimental impact of policies that disincentivize domestic participation in the digital asset market. We propose offering tax breaks for the development of blockchain security infrastructure and the implementation of advanced security protocols. This incentive will attract investment, generate high-skilled jobs, and solidify India's position as a global leader in secure digital asset custody. Just like stocks, users should be allowed to offset losses related to digital assets which will encourage more startups to enter this space. Government should look at creating special economic zones for Web3 startups and offer tax holidays to startups during initial years so that entrepreneurs can focus on innovation and product development without worrying about cash flows.

3. Prioritising Research and Development:

We urge the government to create equal opportunities for Web3 projects by enabling active participation in government sandboxes. The requirements for inclusion in government sandboxes should be more relaxed to create a more inclusive and encouraging Web3 startup ecosystem. Excluding digital assets from such initiatives may not unlock the full potential of blockchain projects and could limit their viability in the long-term. Fostering a culture of innovation in blockchain-based security solutions and compliance tools is crucial to ensure the resilience and sustainability of the digital asset ecosystem. India's vibrant tech landscape presents an ideal breeding ground for developing cutting-edge technology solutions. We call for strategic investments in research and development (R&D) initiatives specifically focused on digital asset security and compliance. This commitment will empower Indian companies to contribute significantly to global solutions and maintain India’s competitive edge in the digital asset space.”

Shivam Thakral, CEO, BuyUcoin:

“The Indian crypto industry stands between boundless potential and frustrating limbo. In the upcoming budget, we urge the government to replace uncertainty with clarity, not with a heavy hand but with a guiding light. A well-defined legal framework can unlock trust and fuel growth. This framework should address taxation complexities, establishing clear guidelines for income and transactions, not as barriers but stepping stones. Exchange licensing protocols should not be shackles but a badge of honour, ensuring responsible participation.

Seamless integration with traditional finance is possible by fostering collaboration and driving mainstream adoption. We understand the need for investor protection, but overzealous regulations could hurt our nascent ecosystem. Let's find the sweet spot that fosters innovation while ensuring responsible participation, allowing India's crypto industry to bloom, attract global players, and nurture domestic startups.

Clarity alone isn’t enough. Imagine India as a fertile field; crypto and blockchain are the seeds waiting to sprout. We need tax incentives and sandboxes to nurture these seeds into thriving startups. Sandbox initiatives need protection to foster experimentation. This will create a new generation of jobs, propel India into the global DeFi and blockchain space, and unlock economic growth. By embracing crypto with vision and collaboration, India can lead the world towards a digitally inclusive financial future, leaving competitors in the shade.”

Om Malviya, President, Tezos India, a blockchain adoption entity:

“While India’s potential in blockchain is undeniable, it faces many roadblocks. Ambiguity around legal status hinders startups as they hesitate to navigate uncharted territory. Tax complexities leave them burdened and their wings clipped before they can soar. Talent that fuels innovation remains scarce, creating a bottleneck within the ecosystem. The upcoming budget holds the promise to remove all these roadblocks and clear the path.

The taxation around digital assets, especially the TDS on transactions should be revisited by the relevant authorities. The exemption limit short term capital gain tax should be relaxed to make digital assets more user friendly.

A comprehensive framework embracing diverse applications, from healthcare record-keeping to secure voting systems, is the need of the hour. Clear taxation guidelines and talent development initiatives targeted at building a skilled workforce would propel nascent startups. Sandbox projects and government collaboration will nurture trust and bridge the theory-practice gap, transforming ideas into tangible solutions. Embracing blockchain is not just an economic decision; it's a chance to empower millions with unprecedented transparency, efficiency, and security. It is about building a future where trust replaces mistrust, and everyone has a seat at the innovation table.

The upcoming budget holds immense significance for India’s growing blockchain ecosystem. We call for clearer regulatory pathways. A comprehensive framework embracing diverse use cases, from healthcare and supply chain management to governance and identity verification, would unlock transformative potential. Tax incentives for blockchain-based startups and R&D initiatives would attract global talent and foster an environment of innovation.”