Union Budget 2025 Expectations Updates: Duty cut on smartphone parts to hit electronics ecosystem, says GTRI

Smitha Shetty from Achilles Information Ltd stresses that the upcoming budget should focus on fostering sustainable growth, especially for MSMEs. She advocates for initiatives like easier access to green financing, tax incentives for eco-friendly investments, and the development of a Green Credit and Carbon Market to encourage sustainability and emission reductions. Shetty also emphasizes the need for transparent supply chains to promote responsible sourcing, reduce environmental impacts, and strengthen resilience, all of which align with India’s Net Zero 2070 goals. She urges the government to introduce practical policies that enable businesses to adopt sustainable practices.

Jitendra Tanwar of Namdev Finvest looks forward to the Union Budget addressing the evolving needs of the MSME sector, highlighting the crucial role Non-Banking Financial Companies (NBFCs) like Namdev Finvest play in providing accessible financing. He advocates for initiatives that ease access to affordable bank funding, particularly for lending to small businesses in rural and semi-urban areas. Tanwar also suggests including sub-₹20 lakh secured loans under SARFAESI eligibility to expedite the resolution of delinquent loans. Additionally, Tanwar emphasizes the need for the Budget to focus on promoting sustainable energy solutions for MSMEs, with a special focus on electric vehicles (EVs) and solar energy. Providing financing for these green initiatives would reduce costs for small businesses and support India's sustainability objectives.

Jitin Bhasin of SaveIN views the upcoming Union Budget as a key opportunity to drive innovation within the fintech lending sector while empowering MSMEs. He anticipates policy measures that will strengthen digital infrastructure, simplify access to credit, and promote sustainable financial practices. The integration of embedded finance, which integrates financial services into everyday transactions, is seen as pivotal in encouraging responsible consumption. With trends such as green fintech, AI-driven decision-making, and blockchain for carbon credit trading, the industry is set to transform how financial services are offered. Government initiatives focused on fiscal prudence, skill development, and MSME growth will be crucial for fostering inclusive economic growth and establishing India as a leader in the global fintech ecosystem.

Muskan Kakkar of GoMechanic is optimistic about the potential opportunities the Union Budget 2025 could bring to the automotive service industry. With a rise in vehicle ownership, the shift towards electric vehicles (EVs), and growing demand for organized servicing, the sector is poised for significant growth. Kakkar hopes the budget will focus on infrastructure funding for the EV ecosystem, including tax incentives for green technologies and subsidies for EV service centers. Additionally, supporting the upskilling of technicians to handle electric and autonomous vehicles is crucial for meeting future demands. Another key area is strengthening the integration of digital technologies within the automotive service sector. Providing incentives to companies investing in AI-driven diagnostics, predictive maintenance, and customer-centric solutions could boost efficiency and satisfaction. With targeted government support, the automotive service sector can play a significant role in job creation, sustainability, and the broader growth of India’s automotive industry.

Trade unions have called for several reforms in the 2025-26 Union Budget, including a fivefold increase in the minimum EPFO pension to Rs 5,000 per month, the formation of the 8th Pay Commission, and higher taxes on the super-rich to fund social security for informal workers. They also urged raising the income tax exemption limit to Rs 10 lakh, introducing a social security scheme for gig workers, and restoring the old pension scheme for government employees. Additionally, they demanded the government halt the privatization of PSUs and extend social security to agriculture workers. Read more

The mutual fund industry hopes the Union Budget 2025-26 will restore long-term tax benefits, including the indexation benefit for debt funds removed in Budget 2023. Experts argue that reinstating indexation could boost retail participation in debt markets. The industry also seeks reductions in capital gains tax and Securities Transaction Tax (STT), tax parity with the National Pension System (NPS), and incentives for pension-oriented funds. Additionally, there are calls to eliminate capital gains tax on switches from regular to direct plans and provide tax-free growth for equity funds held for over seven years. Read more

Raghvendra Nath of Ladderup Wealth Management anticipates that the Union Budget 2025 will focus on continued infrastructure investment, particularly in housing, electricity, and employment generation, rather than major tax cuts or incentives. He expects modest equity market growth in 2025 due to higher valuations and a strong bull market in recent years, with bonds possibly outperforming equities. He also sees improved earnings for Q3 FY25, driven by favorable factors like the festive season and government spending. However, he cautioned that earnings growth should be assessed against Q3 FY24, particularly in sectors like hospitality, real estate, and auto sales. Nath does not foresee major risks in the NBFC sector, although unsecured lending and microfinance may see moderation. He believes economic growth will rebound in the second half of FY25 with increased government expenditure and rural demand.

The All India Gem and Jewellery Domestic Council (GJC) has urged the government to reduce the Goods and Services Tax (GST) on the gems and jewellery sector from 3% to 1% in the upcoming Union Budget to ease the cost burden on the industry. GJC Chairman Rajesh Rokde highlighted that rising gold prices are making the current GST rate a strain on both the industry and consumers. The proposed reduction would promote compliance, improve affordability, and boost revenue by formalizing more of the economy.

Additionally, GJC called for a lower GST rate on lab-grown diamonds, which are more sustainable and cost-effective than natural diamonds. The council also requested the creation of a dedicated ministry for the jewellery sector, the establishment of state-specific offices, and the introduction of an EMI option for jewellery purchases. Furthermore, GJC emphasized the need to revamp the Gold Monetisation Scheme to help unearth idle household gold and reduce imports.

The Election Commission (EC) will inform the Cabinet Secretary that no Delhi-specific provisions can be included in the Union Budget, as it could disrupt the level-playing field ahead of the upcoming elections. Chief Election Commissioner (CEC) Rajiv Kumar stated that the EC will write to the Cabinet Secretary to ensure fairness during the election period.

The All-India Plastics Manufacturers' Association (AIPMA) has urged the government to introduce a production-linked incentive (PLI) scheme for the plastics sector in the upcoming Union Budget 2025 to boost India's global share in the market. In a pre-budget consultation with Finance Minister Nirmala Sitharaman, AIPMA called for reducing GST to zero for plastic waste and recycling machinery, promoting recycling efforts. It also proposed lowering the GST on recycled plastic granules conversion cost to 5% and offering a 20% subsidy for purchasing recycling equipment. AIPMA highlighted India’s potential to grow its plastic exports, citing China’s dominance, and suggested a Rs 2,500 crore technical upgradation fund for the plastic processing sector. Additionally, it recommended creating plug-and-play facilities to support MSMEs in scaling operations.

The National Real Estate Development Council (NAREDCO) has called for increasing the housing loan interest deduction from Rs 2 lakh to Rs 5 lakh and granting infrastructure status to the housing sector in the upcoming Union Budget. NAREDCO Chairman Niranjan Hiranandani highlighted the need for more funding for affordable housing, pointing out that growth in this sector is currently negative. He also suggested reforms to capital gains tax rules related to purchasing multiple houses and emphasized the importance of supporting rental housing. Industry leaders also sought government support for Indian infrastructure companies working abroad.

Xitij Kothi, Co-founder of Vidyut, on Budget Expectations says, "As we approach the upcoming budget, it's crucial to lower the GST on EV batteries from 18% to 5%, in line with the tax rate on EVs. Replacement batteries, especially for 3W commercial vehicles, need to be changed every 3–5 years due to frequent use. Without subsidies and with the high GST on replacement batteries, the Total Cost of Ownership (TCO) for EVs in the long run becomes less appealing. This also diminishes the TCO savings from innovative ownership models like BAAS or battery swapping. A reduced GST would make EVs more affordable and help fast-track India’s transition to clean mobility."

Over 100 participants from nine stakeholder groups, including farmer associations, agriculture economists, trade unions, MSMEs, and representatives from education, health, infrastructure, energy, and urban sectors, took part in the pre-Budget consultations for Union Budget 2025. These discussions allowed experts and organizations to share their perspectives and proposals, contributing to the government's efforts to create an inclusive Budget by incorporating diverse viewpoints from across the economy.

From January 10, 2025, citizens can share their ideas and suggestions for the Union Budget 2025-26 via the MyGov platform. This yearly initiative encourages public involvement in the Budget process, aligning with the concept of ‘Jan Bhagidari’. The Ministry of Finance, in partnership with MyGov, invites individuals to submit creative and constructive proposals to help shape policies that address the country's key priorities and challenges. Public participation is encouraged to ensure the Budget reflects the aspirations of the people.

Ahead of the Union Budget on February 1, the Association of Mutual Funds in India (AMFI) has presented 12 key proposals aimed at boosting investor confidence and participation in mutual funds.

1. Restore Long-Term Indexation for Debt Funds

2. Roll Back Capital Gains Tax Hikes

3. Expand Definition of Equity-Oriented Funds

4. Launch Pension-Oriented Mutual Fund Schemes

5. Mutual Fund Units as Specified Assets

6. Simplify Offshore Fund Taxation

7. Uniform TDS Surcharge for NRIs

8. Relax ELSS Investment Rules

9. Increase TDS Threshold

10. Adjust LTCG Tax on Equity

11. Introduce Debt-Linked Savings Schemes (DLSS)

12. Ease TDS Compliance for PAN Issues

The mutual fund industry expects the Union Budget for 2025-26 to bring back the long-term taxation benefit for debt schemes that was withdrawn last year.

According to industry experts, revisiting the withdrawal of indexation on long-term debt investments and taxing capital gains on redemption of debt mutual funds held for more than one year at the rate of 12.5 percent are key demands of the mutual fund industry. Read more

Any reduction in the customs duty on smartphone parts in the forthcoming budget will harm India's developing component ecosystem, discourage investment, increase imports, and make local firms uncompetitive, potentially resulting in job losses, think tank GTRI said on Tuesday.

India's smartphone industry is a 'Make in India' success story, with 2023-24 production reaching USD 49.2 billion and exports at USD 15.6 billion, making smartphones the fourth-largest export after diesel, aviation fuel, and polished diamonds.

However, a few industry groups are pushing for further import tariff cuts on smartphone components in the Union Budget for FY26.

The Global Trade Research Initiative (GTRI) warns that this could harm India's growing local manufacturing ecosystem and long-term ambitions in electronics.

Finance Minister Nirmala Sitharaman on Monday concluded month-long consultations with various stakeholders, including representatives of the industry and social sectors, as part of the budget preparation exercise.

The consultations started on December 6, 2024, the Finance Ministry said in a statement.

"In the course of the in-person consultations, more than 100 invitees across 9 stakeholder groups, including experts and representatives from farmer associations & agriculture economists; trade unions; education & health sector; MSME; trade & services; industry; economists; financial sector & capital markets; as well as, infrastructure, energy and urban sector, participated in the meetings," it said.

The Union Budget 2025 presents a pivotal moment for the EV industry, which is poised to reach a valuation of Rs 20 lakh crore and create nearly five crore jobs by 2030. While the 5% GST on EVs has fostered adoption, achieving GST parity for EV batteries could further reduce production costs and make EVs more accessible. Enhancing the FAME II scheme with extended timelines and increased incentives will catalyze widespread adoption across various vehicle categories. To support infrastructure development, prioritizing charge point operators under priority sector lending could lower financing costs and accelerate the deployment of charging networks. Additionally, bridging the gap in local EV battery manufacturing through budget-backed initiatives and fostering international collaborations will be instrumental in establishing India as a global leader in the EV ecosystem: Neuron Energy, a sustainable energy solutions provider

As Finance Minister Nirmala Sitharaman gets ready to present the Union Budget on February 1, the Association of Mutual Funds ( AMFI) has released a document with 13 proposals from the Mutual Fund Industry.

In a media comment, Venkat Chalasani, Chief Executive, AMFI said" "We anticipate a Union Budget that prioritizes investor confidence and deepens participation in mutual funds by addressing key tax-related concerns. We look forward to a progressive budget that reinforces mutual funds as a pillar of economic development and investor wealth creation." Read more

Given the current political stability, I anticipate that the Budget 2025 will largely reflect the government's ongoing commitment to fiscal prudence, which they have emphasized in recent years. This presents a great opportunity for the government to make strides toward achieving its targeted fiscal deficit, said Raghvendra Nath of Ladderup Wealth Management.

While the Union Budget will be beneficial for the overall economy, I don’t foresee any major policy announcements that would significantly sway equity market sentiment, Raghvendra Nath of Ladderup Wealth Management said in an interview with Moneycontrol.

He expects continued investment in infrastructure, with a stronger focus on areas like housing, electricity, and employment generation, rather than significant tax cuts or major incentives in the budget. Read more