Data Centre Parks Policy soon for Private Firms to Leverage the Power of Data : Union Budget

New Delhi, India, February 1, 2020 : Presenting the first Union Budget of the third decade of the 21^st century, Finance Minister Smt. Nirmala Sitharaman, unveiled a series of far-reaching reforms, aimed at energizing the Indian economy through a combination of short-term, medium-term, and long term measures.

Emphasizing on the disruptive innovations of the ‘New Economy’ like Artificial Intelligence (AI), the Union Finance and Corporate Affairs Minister, Smt. Nirmala Sitharaman proposed further measures by the Government to take advantage of these new technologies. These were stated in her Union Budget Speech 2020-21, presented in the Parliament today.

The Finance Minister observed that technologies like Artificial Intelligence (AI), Internet-of-Things (IoT), 3D printing, drones, DNA data storage, quantum computing, etc., are re-writing the world economic order. She noted that India has already embraced new paradigms such as the sharing economy with aggregator platforms displacing conventional businesses. The Minister added that the Government has also harnessed these new technologies to enable direct benefit transfers and financial inclusion on a scale never imagined before.

Proposals for Leveraging Data

Highlighting the importance of ‘data as the new oil’, the Minister asserted that Analytics, Fintech and IoT are changing the way we deal with our lives. Smt. Sitharaman proposed the following measures to take advantage of this power of data:

• To soon bring out a policy to enable private sector in building Data Centre Parks throughout the country, thus enabling firms to incorporate data in every step of their value chains.
• To link 100,000 gram panchayats this year with Fibre to the Home (FTTH) connections through Bharatnet. This will fulfill the vision of providing digital connectivity to all ‘public institutions’ like Anganwadis, health and wellness centres, government schools, etc. at Gram Panchayat level. It is proposed to provided Rs. 6000 crore to Bharatnet programme in 2020-21, the Minister said.

Proposals for Start-ups

With a view to expand the base for knowledge-driven enterprises, the Finance Minister underscored the importance of intellectual property creation and protection. In this regard, she proposed several measures to benefit Start-ups:

• To promote a digital platform that would facilitate seamless application and capture of IPRs. A Centre is also proposed to be established in an Institute of Eminence for working on innovation in the field of Intellectual Property.
• Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas.
• Technology Clusters, with test beds and small scale manufacturing facilities for designing, fabrication and validation of proof of concept to be established.
• Two National-level Science Schemes are to be initiated to create a comprehensive database of mapping India’s genetic landscape, given its criticality for next generation medicine, agriculture and bio-diversity management.
• It is also proposed to provide early life funding, including a seed fund, to support ideation and development of early stage Start-ups.

Proposals for Quantum Technology

The Finance Minister noted that quantum technology is opening up new frontiers in computing, communications, cyber security with wide-spread applications. She pointed out that a lot of commercial applications are expected to emerge from theoretical constructs developing in this area. Thus, the Minister proposed to provide an outlay of Rs. 8000 crore over a period of five years for the National Mission on Quantum Technologies and Applications.

Instant PAN through Aadhaar

In order to further ease the process of allotment of PAN, a system will be launched under which PAN shall be instantly allotted online on the basis of Aadhaar, without any requirement for filling up of detailed application form.

Start-ups

The Finance Minister noted that during their formative years, Start-ups generally use Employee Stock Option Plan (ESOP) to attract and retain highly talented employees. Currently, ESOPs are taxable as perquisites at the time of exercise. In order to give a boost to the start-up ecosystem, the Finance Minister has proposed to ease the burden of taxation on the employees by deferring the tax payment for five years or till they leave the company or when they sell their shares, whichever is earliest.

An eligible Start-up having turnover upto 25 crore is allowed deduction of 100% on its profits for three consecutive assessment years out of seven years if the total turnover does not exceed 25 crore rupees. The Finance Minister has proposed to increase this limit to Rs. 100 crore. She has also proposed to extend the period of eligibility for claim of deduction from the existing 7 years to 10 years.

Medium, Small and Micro Enterprises

In order to reduce the compliance burden on small retailers, traders, shopkeepers who comprise the MSME sector, the Finance Minister has proposed to raise by five times, the turnover threshold for audit from the existing Rs. 1 crore to Rs. 5 crore. In order to boost less-cash economy, she has proposed that the increased limit shall apply only to those businesses which carry out less than 5% of their business transactions in cash.

Five new smart cities

The Finance Minister proposed setting up of an Investment Clearance Cell that will provide “end to end” facilitation and support to create more opportunities to youth and remove road-blocks. She also proposed to develop five new smart cities in collaboration with States in PPP mode and such sites would be chosen that offer the best choices in terms of aforementioned principles.

Manufacture of mobile phones

Smt. Nirmala Sitharaman said that electronics manufacturing industry is very competitive and the potential in job creation is immense. She further said that India needs to boost domestic manufacturing and attract large investments in the electronics value chain. She proposed a scheme to encourage manufacture of mobile phones, electronic equipment and semi-conductor packaging. She also proposed a National Technical Textiles Mission with a four-year implementation period from 2020-21 to 2023-24 at an estimated outlay of Rs. 1480 crore to position India as a global leader in Technical Textiles.

Government e-Marketplace

Smt. Sitharaman said that Government e-Marketplace (GeM) is moving ahead for creating a Unified Procurement System in the country for providing a single platform for procurement of goods, services and works. She proposed to take the turnover of GeM to Rs. 3lakh crores. She also proposed to provide Rs. 27300 crore for development and promotion of Industry and Commerce for the year 2020-21.

Union Budget 2020-21 Quotes from Industry Experts

Dr Sangita Reddy, President, FICCI said, The presentation of the budget and the structure that was followed by the Finance Minister was both interesting and all encompassing. In line with the Prime Minister’s vision of ‘Sabka Saath, Sabka Vikas, Sabka Vishwas’, the budget outlined a series of measures to enhance the ease of living for the people of our country and promote welfare of all sections of our society. The building blocks for growth of any economy are the social sectors such as healthcare, education and skill development.

Each of these areas has got due attention with appropriate outlays in the budget and it is commendable that the government has kept its focus on the long-term goals and has not curtailed the resources allocated for the social sectors. While Rs 99,300 crore has been allotted for the education sector Rs 69,000 crore; Rs 12,300 crore and Rs 3,000 crore have been allocated for the Healthcare sector, Swacch Bharat program and Skills Development respectively.

Sunil Jose, Senior Vice President & Country Leader, Salesforce India said, We’re pleased to see Artificial Intelligence (AI) adoption emphasised in the Union budget 2020-21, by the government. At Salesforce we agree that there is a tremendous opportunity in India to reskill existing and develop new AI talent for jobs of the future. It’s also equally important that as we develop new advances in AI and skill new workers, that we make sure the ethical use of AI is a part of this development process. 

Salesforce stands by its commitment to expand its presence in the country by investing continuously in the country’s workforce. We feel that the Finance Minister’s announcement on creating programs with local bodies to provide opportunities for young engineers is a positive move, he added.

Hemal Gathani, Co-founder, Zeux Innovation said, Two messages stand out from today’s Union Budget address for companies like us. One, the commitment being demonstrated by the Government to emerging technologies and initiatives being taken to improve the ecosystem – be it in terms of setting knowledge or technology clusters or announcing a National Mission on Quantum Technologies. Having relocated from US to start a company here, we are thrilled with the government’s resolve on this issue. Two, trying to do their bit in creating more stable start-ups – by resolving issues such as tax relaxation on ESOPs. Although much more is still to be done jumpstart the economy, but steps such as these will surely help stem the fall and lay new ground for growth.

Government is walking the talk to make India a leading startup hub in the world. Government has announced numerous benefits for all the key stakeholders in the startup space – Employees, Investors & Promoters etc. This will go a long way to make India the preferred destination for startups, he added.