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BUDGET 2019: INDUSTRY REACTIONS

Mr. Rajan S Mathews, DG, COAI

“The Interim Budget 2019-20 is truly pragmatic and we laud the government’s vision and commitment towards Digital India and the Digital economy. Amongst many welcome steps, Interim Finance Minister Piyush Goyal expressed the Government’s intent to create 1 lakh digital villages over the next 5 years, under the ambitious Digital India initiative. The Government also stated its commitment to deploy three lakh common service centres which will be delivering digital services, especially to the rural areas.
Additionally, to take the benefits of Artificial Intelligence and other emerging technologies to the people, a comprehensive National Programme on ‘Artificial Intelligence’ has been envisaged by the Government. A National Centre on Artificial Intelligence is to be established, along with other Centres of Excellence. A total of nine priority areas have also been identified and plans for building a National Artificial Intelligence portal has also been put forth.

Though several significant reforms were articulated, touching multiple industries, considering the given financial position the telecom sector is reeling under and the economic backbone that the sector provides to the economy and almost all industries, we expected concrete targeted initiatives to revitalise this sector.
While the Interim Finance Minister spoke extensively about investing in infrastructure such as road, railway, highways, electricity amongst others, geared to target a 10 trillion dollar economy; the telecom sector, which is the backbone of the country’s economy, did not receive significant support.”

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Budget Will Promote Emerging Tech & Empower Startups: IAMAI

The Internet & Mobile Association of India [IAMAI] has welcomed the announcements made in the interim budget by Shri Piyush Goyal. Reacting to the budget, Dr. Subho Ray, President, IAMAI said “The announcement of National Artificial Intelligence portal is expected to propel India on the path of leveraging advanced and disruptive technologies for growth and economic prosperity and growth.

In a statement, IAMAI said that the budget acknowledges the innovation taking place in the country, saying India was now the second-largest hub for startups in the world.

IAMAI has also welcomed the focus on clean energy and electric vehicles. According to IAMAI, Road transport significantly drives India’s climate change impact. It is a major fossil fuel consumer: consuming 70% of India’s diesel and 99.6% of India’s petrol in 2013. It is a significant GHG emitter: generating 8.7% of India’s total emissions – 64,317 gigagrams CO2e– in 2015. While India’s overall mitigation efforts are well underway, they would be undermined by inaction on transportation emissions, which estimates indicate would nearly quadruple between 2010 and the Paris Agreement’s 2030 deadline. This make India’s transportation sector a vital arena for climate change mitigation. Sri Goyal’s announcement is recognition of this and is in line with the plan of Hon’ble Minister for Power when he announced plans to shift India to an all-electric fleet by 2030.

According to IAMAI, the Government’s vision to make 1 lakh villages into Digital Villages over next five years with the help of Common Service Centres (CSCs) is ambitious and will usher in the much needed digital revolution under the Digital India initiative, and will help in the last mile connectivity. This will also bridge the Rural-Urban digital divide, and will open avenues to jobs and employment creation.

IAMAI congratulates the government for this forward-looking budget.

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Mr. Tarun Bhalla, CEO & Founder, Avishkaar:

1. Budget 2019 will prove to be a godsend for the Artificial Intelligence (AI) sector in India. With over 200 AI start-ups currently innovating AI-based solutions in the country, they’ll help serve the society and help make a marked difference in the education, healthcare, transportation, infra and agricultural sectors of India.

2. It’s great to see the government sending out a clear signal by launching National Artificial Intelligence Portal. Artificial Intelligence (AI) is here to stay and will play a significant role in the future of the country. What’s more heartening is the fact that the government is willing to invest in AI in major sectors – education, healthcare, transportation, infra and agricultural in the country.

3. This is a step in the right direction. Sourcing 25% requirements of government projects will give a much-needed boost to SMEs. This will enable them to take powerful strides into becoming a major player in their local regions. Of course, this will also work in favour of Make in India and serve as a nice little thing to toot about.

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Rajiv Kapoor, Vice President, India & SAARC, Cambium Networks

“The government’s plans to set-up 100,000 digital villages in the next five years is a huge step towards leapfrogging India’s march on critical initiatives such as Digital India. By placing wireless connectivity at the heart of India’s development particularly in rural areas, the country is poised to further consolidate its position as the global hub for disruptive innovations,” said Rajiv Kapoor, Vice President, India & SAARC, Cambium Networks.
Sanjay Jalona, CEO & MD , LTI (L&T Infotech)

“The continued support by the government on new age concepts such as AI that has the power to emerge as not only national assets but global disruptors is a huge trigger to further advancements in these fields. The role of such exponential technologies in driving the nation’s development is immense and provides a much-needed avenue to address and overcome pertinent age-old issues. Furthermore government’s vision for 2030 to place India as a modern, technology-driven, high growth and transparent society including leading the world in transport through electric vehicles and energy storage devices further emphasizes the role of digital technologies in transforming not only businesses but overall living standards.”

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Piyush Sinha, Deputy Managing Director, NEC Technologies India Pvt. ltd.

With the Interim Budget 2019-20, Government has announced to strengthen the Sagarmala Project which is a positive step towards transforming the nation through port modernization. The emphasis on port development will give a further impetus to PM Modi’s vision of Ease of Doing business in India. As per the World Bank report 2019 on Ease of Doing Business, India has taken a huge leap of 23 ranks from 100 in 2017-18 to 77 in 2018-19 indicating it is continuing its steady shift towards global standards. We welcome government’s push for ‘Trading across borders’ which shows an impressive improvement from 146 rank last year to 80th rank this year. Upgradation of port infrastructure, improvement of processes, and digitization of document submission has not only reduced Export/Import cargo handling time at ports but has significantly contributed towards improving the trading across border parameter and India’s impressive growth in the World Bank’s report.

We hope that the government’s focus on development of port infrastructure and capacity enhancement, improvement in last mile connectivity and development of multi-modal hubs to promote EXIM while reducing logistics cost and time will prove beneficial for the Indian economy in the long run thereby making India a global power house. We believe that initiatives like installation of Radio Frequency Identification (RFID) system at Major Ports to enhance security and remove bottlenecks for seamless movement of traffic across Port gates; DMICDC’s Logistics Databank system (LDB) deployment for tracking & tracing movement of EXIM container in the Major Ports thereby enabling the consigners and consignees to track the movement of the containers from LDB portal and Direct Port Delivery (DPD) and Direct Port Entry (DPE) enabling direct movement of containers from factories / port without intermediate handling requirement, thus saving cost & time will help in fulfilling government’s vision of Ease of Doing Business in India.

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Takayuki Inaba, Managing Director–NEC Technologies India Pvt ltd

“The Government’s effort towards using advanced technology like AI for masses is a welcome step. AI has been one of the biggest technological advancements in the recent past. The government’s vision of developing a national program on AI will set the implementation process in motion and help people and government immensely. Identifying priority areas for AI hubs will streamline the development work in the AI domain and give a certain direction to the start-ups working on this technology. All these efforts will promote the use of technology and digitisation and play an important role in the development of the economy”.

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Rajesh Ram Mishra, President at India Electronics and Semiconductor Association, IESA

The draft electronics policy released by the Ministry of Electronics and IT sets an ambitious target of creating a USD400 billion electronics manufacturing industry by 2025, primarily focusing on the consumer segment with mobile phone devices segment contributing to around 50% of the production. We are excited that NPE also aims at supporting “make for the world” initiative as over 54% of the mobile phones manufactured in India would be exported by 2025. However, Consumer segment will constitute less than 20% of the total ESDM market in India. IESA believes there is a big opportunity of design led manufacturing to make India a global hub in intelligent electronics. We would like to appeal to the government to address specific issues that will help promote a thriving ESDM ecosystem across all segments in the country:

1. Address industry concerns on disincentive for domestic manufacturing and products designed in India due to differential duty structure in multiple segments.

2. Unlike software products, R&D for electronic products and semiconductors require higher investments. As rightly captured in the draft NEP, R&D for electronic products may need roughly USD 10-15Million and R&D for Semiconductors (chips, ICs) requires USD 40-50 Million per product. Start ups in Electronics and Semiconductor space primarily depend on Angel and self funding as very few VCs in India are investing is ESDM companies. Angel tax and the current policy of getting the start up valuation done by a merchant banker is hitting the ESDM start ups very hard.

• We recommend government to abolish the Angel Tax for ESDM start ups.
• Government should create a seed fund of 1000 Crore which can be matched by industry and VCs to provide seed funding to build 1000 start ups ESDM space.
• Additionally we urge the government to enable R&D through provisioning separate budget to fund projects of national interest in the Electronics& Semiconductor domain and enable collaborative R&D among PSUs, Indian SMEs and start-ups.

3. Electronics is key enabler in creating an ‘intelligent’ economy – whether its smart homes, smart transportation, smart cities, smart manufacturing, smart governance, smart health care, smart communication and smart industry etc.We want the government to provide support to create 50 Intelligent Electronics Incubators collaborating with industry invarious technology and industry verticals in Mission Mode, similar to Atal Innovation Mission.

4. For scaling small and mid size companies in ESDM space to become large MNCs like Huawei & ZTE government must ensure domestic market access through stricter implementation of PMA, global market access through linkage of Indian government grant to developing countries with export from Indian ESDM companies and reduction in half the cost of financing for both R&D and manufacturing.

4. Building secured digital infrastructure in India is critical considering the vulnerabilities arising due to geo political uncertainties. Hence, govt should insist on “all-in India” products for strategic needs where every component used is designed and manufactured in India, a practice being followed in China today. Telecom Service Providers who are one of the biggest consumer of electronics products &systems and today provide the back bone of our voice and data networks should be encouraged through policy to use “all-in India” products.
5. Despite MSIP, large manufacturing set up in semiconductor and electronics have still not come up. The new incentive scheme could focus on guaranteed market for certain percentage of production from these large ESDM manufacturers instead of purely focussing on early subsidy, similar to BOT model that is working well in construction of road, airports etc in the country.

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