Space tech industry urges govt to expand GST exemption to satellites, launch vehicles

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--Market participants are eagerly awaiting the nominal GDP growth estimate for 2024-25.
--India's nominal GDP is seen growing by 8.9 percent this year to Rs 296.58 lakh crore. The ministry had assumed in its calculations that the nominal GDP would grow 10.5 percent this year to Rs 301.75 lakh crore.
--Brokerages seem a little more optimistic and their estimates lie anywhere between 10 percent and 11.5 percent.
--Centre rapidly brought down its fiscal deficit to an expected 5.9 percent of GDP this year from 9.2 percent in 2020-21

-- Tax exemption limit for individuals must be increased and linked with inflation

-- Review capital gains tax structure by bringing consistency in tax rates for different asset classes such as debt, equity and immovable assets

--Extension of the concessional tax regime for setting up of new manufacturing facilities for another five years

--Production Linked Incentive should be expanded to labour intensive sectors, such as apparel, toys, footwear, and chemicals

--Continue spending on infrastructure, expand incentives for manufacturing and tweak import taxes on inputs for certain goods.

--Continue to focus spending on infrastructure and increase it by at least 20% to 12 trillion Indian rupees

--Continue to extend support to states in the form of interest free 50-year loans, and increase the allocation by 23% to 1.6 trillion rupees in 2024/25.

--Steel makers expect continued focus on the infrastructure spending, push to domestic manufacturing, and measures to check rising imports in the upcoming 2024-25 Union Budget.

--"The government should continue the focus on increasing the spend on infrastructure. It should also work on further improving the cost of doing business and the ease of doing business," Tata Steel CEO & MD T V Narendran told PTI.

--The industry also expects the government to take some measures to check rising imports as dumping of steel in India can hurt the profitability of players and the investment plans of the steel industry, he said.

--The industry also expects the government to take some measures to check rising imports as dumping of steel in India can hurt the profitability of players and the investment plans of the steel industry, he said.

-- How much slippage if any is expected in FY24

--What target would the government set for FY25 (A faster pace of consolidation would suggest that a fiscal deficit target of 4.5 percent by FY26 is more credible.)

--What are the expected net market borrowings for FY25 and thus what is the likely impact on 10Y yields.

--We expect that the government will continue their focus on infrastructure spend and public capex, which has stood us in good stead over the last two or three years.

--Look forward to government’s increased focus on manufacturing to encourage self-reliance in India

--Need to be cautious that we do not allow unfair trade into India. And if such things happen, then we need to take appropriate steps to control that.

--Raising investments, particularly of the private sector, has been a key focus area for the government. And according to the ministry's report, stronger balance sheets of banks and companies means "growth in investments and credit are poised to increase in this decade".

--According to the finance ministry, housing prices began to recover after the coronavirus pandemic, with the average annual growth in real estate prices increasing from 2.3 percent in 2021-22 to 4.3 percent in the first half of the current financial year.

--The female labour force participation rate rising to 37 percent in 2022-23 from 23.3 percent in 2017-18, improvement in the sex ratio at birth, and falling maternal mortality rates. "These underline the tectonic shift towards women-led development in India," the report said.

--Finance ministry said the government is "committed to an institutional architecture that fosters macro stability". The report states that economy had progressively become less vulnerable even as buffers were being created for future turbulence.

-- "India's external debt...is considered comfortable and has been prudently managed over time," the finance ministry's report said, adding that a large portion of the short-term debt is in the form of short-term trade credits.

--India spends 0.7 percent of its GDP on scientific R&D – the lowest amongst the US, China, Japan, South Korea and even BRICS and OECD countries.

--India should treat scientific research sector with earnestness and increase R&D share in GDP to 2.5 percent of GDP gradually.

--Budget should address emphasize on creating regulatory certainty in the country to increase overseas investment in business from countries seeking options after withdrawing business from China.

--India should consider a concessional tax regime for companies investing in green technologies.

--Electric Vehicle (EV) industry expects the FAME II subsidy program to continue to meet the government's ambitious target of achieving 30 percent EVs on Indian roads by 2030.

--Industry also wants lowering of GST rate on lithium-ion batteries from 18 percent to 5 percent, in sync with EVs sold with fixed batteries, to encourage battery swapping.

--Production-Linked Incentives (PLI) should be extended to the manufacturers of batteries and electric power manufacturing, and the storage industry.

--Budget should also signal measures to develop an appropriate semiconductor ecosystem.

--A thriving fintech ecosystem is crucial for digital penetration and innovation and the budget must rationalise regulations in this space and could offer tax incentives for start-ups in this sector.

--India needs simplified regulations and incentives tailored for key sectors and enhanced governance standards to boost to the overall start-up ecosystem

--The finance minister should consider a reduction in duty of input raw materials for agricultural machinery so that farmers are able to afford such equipment. It would also eventually help in exporting Indian agricultural equipment worldwide.

--The real estate industry’s housing sector expects a major increase in the interest rate deduction cap to Rs 5 lakhs, a redefinition of affordable housing in metropolitan cities and tax benefits for first-time homeowners.

--India’s pharmaceutical sector also requires stepped-up government support including development of new industrial economic zones in Tier 2 and 3 cities.

--The Budget Session of Parliament, the last of the present Lok Sabha, will begin on January 31 with President Droupadi Murmu addressing a joint sitting of the lower and upper Houses, and the government urging opposition parties to cooperate in the smooth conduct of the proceedings.

--Union Finance Minister Nirmala Sitharaman will present the Interim Budget on February 1 ahead of the Lok Sabha elections likely to be held in April-May. The new government will present the full budget after it assumes office. The new government will present the full budget after it assumes office.

--On Republic Day, Union Finance Minister Nirmala Sitharaman stated that the government's policies will prioritise the welfare of youth, women, farmers, and the poor.

--This reckons rationalising income tax slabs to give more disposable income to the vast voter base for higher consumption of fast moving consumer goods and consumer durables.

--Expectations also include increased basic exemption and standard deduction, higher limits for 80C and an annual LTA exemption rather than it being twice in a block of four years.

-- Government must spend at least 3- 6 percent of its GDP on health and education, respectively. This year’s budget must herald a gradual shift in this direction to increase India’s Human Development Index

-- Economists expect the upcoming Union Budget to strike an equilibrium between populist measures and fiscal prudence to contain the fiscal deficit to 5.3 percent and 4.5 percent of the GDP by the end of 2024-25 and 2025-26

-- This will be challenging since electoral populism will push infrastructure, agriculture and rural sector allocations to go up. The budget, however, can be prudent as well as welfarist.

--It also must focus on three key areas: manufacturing, promoting emerging sectors, and research and development.

--The Indian Sugar Mills Association (ISMA) has requested that the government allow an additional 10-12 lakh tonnes of sugar diversion for ethanol production.

-- An upward revision in the procurement prices of ethanol produced from sugarcane juice/syrup, B-heavy molasses, and C-heavy molasses

--The industry wants the government to raise the MSP of sugar to Rs 38 per kg from Rs 31 per kg in account of the increased FRP of sugarcane from Rs 2,550 per tonne in 2017-18 to Rs 3,050 per tonne in 2022-23

"Although the UP government has lowered property tax; I expect it to further reduce. With less property tax and electricity bills, the tourists' affordability and influx will increase. This will benefit not just hotels but other industries as well," says IIA (Indian Industries Association) Tourism Committee Chairman Sarvesh Goel.

"I would want that a special provision be included in the Budget for R&D (research and development) and work towards uplifting the MSMEs and startups (in semiconductor industry)," says Dhawal Shah, CEO and MD at Nessa Illumination Technologies. He said, “Gujarat government currently is allocating a lot of funds to educational institutes and those direct the funds to R&D. If MSMEs could directly participate in this process, semiconductor startups will progress rapidly.”

- Finance Minister Nirmala Sitharaman is expected to intensify measures to stimulate consumption and support the rural economy while maintaining control over inflation.

- Experts said one way to boost consumption is to put more money in the hands of people, and one of the possible ways of doing it is by reducing the tax burden through tinkering with tax slabs or increasing the standard deduction.

- The government has shown a focus on healthcare in recent years, with initiatives like the Ayushman Bharat scheme and various health-related schemes.

- Experts say that the upcoming budget is expected to continue emphasising the healthcare sector, with increased spending anticipated, especially in areas like health insurance and Ayushman Bharat.

- Economists predict that Finance Minister Nirmala Sitharaman might unveil a target of approximately 5.3 percent of GDP for the 2024-25 fiscal year during the upcoming interim budget.

- Rohit Arora, CEO & Co-founder, Biz2X and Biz2Credit, said, "We anticipate a budget that prioritises financial inclusion and ease of doing business, fostering a conducive environment for growth. Measures such as simplified regulatory procedures and reduced compliance burdens can empower start-ups and MSMEs, promoting a more agile and competitive landscape."

- "Access to affordable credit remains a cornerstone for these entities; thus, the budget should consider incentivised lending rates, credit guarantee schemes, and increased funding channels to enhance financial resilience. Targeted tax incentives for research and development activities can further stimulate innovation within these sectors," Arora added.

- Edtech firms express hope for potential tax incentives and benefits in the interim budget. They contend that a decrease in Goods and Services Tax (GST) rates on digital educational content and services could enhance the affordability of online learning, proving advantageous for both students and edtech companies.

- Nitya Sharma, Founder and CEO, Simpl, said, "“The Indian start-up sector, if nurtured well, has the potential to significantly accelerate commerce in the country, elevate people’s lives and fast track the journey of India’s internet economy to $1 trillion by 2030."

- "This year’s Vote on Account followed by the full year’s Union Budget should view start-ups as the sunrise sector, provide easy financing for sellers akin to MSMEs and open up more avenues in the era of unbundling of E-commerce which has started with ONDC," Sharma added.

- He then said, "We would expect a greater collaboration between the government and industry in further simplifying the ease of doing business in India and resolving bottlenecks swiftly."

- Chairman of Bharatiya Chai Parishad, Nalin Khemani, expresses the tea industry's hopes for self-sustainability.

- Khemani proposed that the government takes over the industry's burden of social costs like hospitals and schools, emphasising the need for a balanced approach. He hopes for increased exports through a tea promotion policy and entry into new markets.

- Khemani said, "Subsidies cannot help an industry if it wants to be self-sustainable. If the government could take over our burden of social costs like hospitals and schools, it would greatly reduce the burden of industry and prove to be a win-win situation for the management as well as the workers."

- Manguirish Pai Raiker, Chairman of the National Council for MSME ASSOCHAM, anticipates enhanced Production Link Incentives (PLI) and increased investment scope.

- Highlighting the success seen in Varanasi and Ayodhya, Raiker expects a continued focus on spiritual destinations, potentially boosting the tourism industry.

- President of the Indian Medical Association (IMA), Dr RV Asokan, has called for a reevaluation of the current health mission strategy. He advocates for direct funding to government public hospitals, citing the need to address healthcare challenges. Dr Asokan asserts that the era of health missions is over.

- Economic growth is our primary driver because a lot of steel consumption comes from the economic movement in India, Jayant Acharya said.

- Read more here.

- With indices at new highs, retail participation in derivatives increasing at breakneck speed and F&O volumes dwarfing cash volume by 400x, the grapevine has it that another hike in securities transaction tax (STT) could be on cards this interim Budget.

- Market regulator Securities and Exchange Board of India (SEBI) has been reminding participants that 9 out of 10 traders lose money in F&O, thus a hike in STT could increase hurdle rate and keep volumes in check.

- Interim budget is expected to include a budget allocation for the recently introduced rooftop solar scheme for households, known as the Pradhan Mantri Suryoday Yojna.

- Read our exclusive report, here.

- The power segment received a significant boost in the FY24 budget, with a 58 percent increase in allocation to Rs 20,671 crore.

- Analysts anticipate continued attention on this sector in the FY25 budget.

- head of the presentation of the interim Budget, bond market experts have pitched for steps to deepen India's municipal bond market and encourage more investor participation.

-“If the Budget introduces favourable measures, such as incentives or simplified processes, it could encourage more municipalities to tap the bond market,” said Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP.

- Power sector is expected to gain momentum, driven by the government's increased focus on expanding the utilization of renewable energy.

- The interim budget is likely to include additional details about the recently launched Pradhanmantri Suryodaya Yojana, aimed at making electricity affordable.

- Anticipated announcements include increased capital expenditure for renewable energy projects

- The budget may introduce incentives to promote green initiatives.

- The government needs to continue with favourable policies to promote green mobility and focussing on infrastructure development at a robust pace.

- The luxury car industry aspires for a rationalised duty structure and GST on priority

- Industry expects policy stability and continued emphasis on spurring investment and infrastructure development continued push to green mobility, infra development.

- Adopting afavourabletax regime and other supportive measures, in continuance of the progressive, reforms-based approach adopted by the government in recent years.

- Abolition of the Universal Service Obligation Fund (USOF) levy to address the aspect of high regulatory levies on the sector

- Reduction in license fee from 3 percent to 1 percent, to cover only administrative costs by the Department of Telecommunications (DoT)/government.

- Urges theDoTto initiate a comprehensive consultation process on the matters surrounding adjusted gross revenue (AGR)

- The Index of Industrial Production (IIP) data reveals a strong growth of 12.9 percent for the capital goods index and 8.4 percent for the infrastructure/construction goods index in fiscal 2023.
- These indices have sustained their momentum into fiscal 2024, recording cumulative growth rates of 7.5 percent and 11.1 percent, respectively, up to November 2023.

- The public sector's capital expenditure, encompassing Union government capex, grants to states for capital asset creation, and the investment resources of central public sector enterprises, has risen from Rs 5.6 lakh crore in FY15 to Rs 18.6 lakh crore in FY24.
- Over this timeframe, there was a 5.1-fold increase in capital expenditure, grants to states for capital asset creation saw a 2.8-fold rise, and the resources of public sector enterprises increased by 2.1 times.

- The Confederation of Indian Industry (CII) urges timely implementation to lower logistics costs to a level comparable with developed countries.

- CII also recommends prioritizing public sector enterprises with high investor interest and proposes a three-year schedule for state-run enterprises' disinvestment.

- CII further proposes extending the concessional 15% tax rate for eligible manufacturing units to March 31, 2025, and expanding the PLI scheme to labor-intensive sectors like apparel, toys, and footwear.

- Space tech industry urges GST exemption expansion to satellites, launch vehicles, and ground equipment in the upcoming Interim Budget.

- Further, Indian Space Association (ISpA), representing 39 startups and major companies, seeks tax holidays and exemptions for space sector firms.

- Bengaluru-based startup Digantara's CEO, Anirudh Sharma, urges relaxation of custom duties for the space sector in the interim budget.

- Space tech industry urges GST exemption expansion to satellites, launch vehicles, and ground equipment in the upcoming Interim Budget.

- Further, Indian Space Association (ISpA), representing 39 startups and major companies, seeks tax holidays and exemptions for space sector firms.

- Bengaluru-based startup Digantara's CEO, Anirudh Sharma, urges relaxation of custom duties for the space sector in the interim budget.

- Schools have a long list of expectations from the interim budget, ranging from the establishment of a subject matter expert (SME) committee for teachers to specific resource allocation for cultural change in institutions.

- The allocation for the Department of School Education and Literacy was increased to Rs 68,804 crore in FY24 from Rs 59,052 crore (revised) in FY23. However, school administrators said the Union government must focus on quality control in light of sweeping changes proposed in the National Education Policy (NEP) 2020.

- As per a BankBazaar.com report, it suggests that more documents such as the EPFO passbook, ePAN, and form 26 AS (statement showing tax credit) be included in DigiLocker. This will ensure that customers have convenient access to their documents and are able to share them with financial institutions for quick disbursal of credit.

- Parity in taxation of listed & unlisted equities –Listed and unlisted equity are taxed differently. Capital gains (in excess of Rs 1 lakh per year) from sale of listedequityshares held for more than 12 months are treated as long-term in nature and are taxed at a flat 10 percent.

- The agriculture sector stood strong during the coronavirus pandemic, growing by 5.1 percent on average in 2019-20 and 2020-21. If not for the farm sector, the economy would have contracted by far more than the average 1 percent in each of the two aforementioned years.

- However, it has been a tough 2023-24 for farmers, with the statistics ministry estimating that the sector's growth rate this year is set to be at an eight-year low of 1.8 percent.

- The govt's capital expenditure may witness a significant slowdown in 2024-25, with a Moneycontrol survey of 15 economists suggesting that this week's interim budget may allocate around Rs 11 lakh crore for the same.

- As per economists, the govt may revise down its capex for the current fiscal year by around Rs 30,000 crore to Rs 9.7 lakh crore.

- Traders are often enticed to take positions before the budget. Yet, the recent volatility signals inherent risks that one must heed before engaging in pre-budget trades.

- Here's a list of Do's and Dont's for traders. Take a look.

Union Budget 2024 Expectations Live Updates: Auto sector projections
- The automobile sector anticipates that a focus on improving last-mile connectivity, enhancing infrastructure, and maintaining policy consistency will drive the expansion of the industry.
- The Society of Indian Automobile Manufacturers (SIAM) holds the view that while specific announcements for the sector are not likely, the association is optimistic that there won't be any "drastic changes" in the existing policies that could disrupt the ecosystem.
- Industry stakeholders, particularly those heavily invested in battery-operated vehicles, are also hopeful for continued support for sustainable technologies, particularly electric vehicles.
- The automotive sector is eager for updates on potential schemes like FAME 3 (incentivising electric vehicle production), a reduction in GST on lithium-ion batteries, production-linked incentives, and a decrease in GST for entry-level internal combustion engine two-wheelers, currently set at 18 percent.

- Although there will be an emphasis on expanding distributed renewable energy capacities, the government is expected to reintroduce the Approved List of Models and Manufacturers (ALMM) to foster competitiveness and innovation within the solar industry.
- There is an expectation that the budget might include a proposal for viability gap funding for offshore wind projects.
- Moneycontrol first reported on June 13, 2023, that the government is considering a viability gap funding (VGF) of approximately Rs 6,800 crore to support the development of offshore wind projects in India.

- The interim budget is anticipated to incorporate a financial provision for the recently launched Pradhan Mantri Suryoday Yojna, a rooftop solar initiative for households.
- Enhanced subsidies under the scheme are expected to be revealed in the budget.
- According to two officials familiar with the program, the allocation in the interim budget for this scheme is likely to be a minimum of Rs 20,000 crore, disclosed on the condition of anonymity to Moneycontrol.

- Although India's public finances are frequently mentioned as a vulnerability, and inflation can exhibit volatility, the external position is generally recognized as a significant strength.
- Regarding external debt, although it has increased in absolute terms, it remains manageable and easily serviceable.

- While reforms and ground-level changes unfold, it is essential to uphold and enhance the overall resilience of the economy to sustain investor confidence.
- The finance ministry has affirmed the government's dedication to an institutional framework that promotes macro stability.
- The creation of a macro-vulnerability index, incorporating factors such as fiscal deficit, current account deficit, and retail inflation, reveals that the economy has gradually become less susceptible, concurrently establishing buffers for potential turbulence.

- The crucial factor for India's future economic expansion lies in increasing the participation of women in the workforce.
- The World Bank has highlighted that achieving sustained 8 percent growth, essential for India to attain developed status by 2047, is hindered by the current low level of female engagement in the labor market.
- The finance ministry reports that the government's initiatives are yielding positive results, as evidenced by the rise in the female labor force participation rate from 23.3 percent in 2017-18 to 37 percent in 2022-23.
- Additionally, improvements in sex ratio at birth and declining maternal mortality rates are notable outcomes of these efforts.

- The growth of the economy relies significantly on the housing sector due to its extensive connections both backward and forward.
- When the housing sector thrives, it positively impacts related industries like cement and steel.
- As per the finance ministry, there has been a noticeable rebound in housing prices post the COVID-19 pandemic.
- The average annual growth in real estate prices has surged from 2.3 percent in 2021-22 to 4.3 percent in the initial half of the current fiscal year.

- The government has placed significant emphasis on boosting investments, particularly from the private sector.
- As per the ministry's report, the robust financial positions of both banks and companies indicate that "investment and credit growth are set to rise in the coming decade."

- In an unusual move, the finance ministry issued a report titled 'The Indian Economy: A Review' a few days prior to the presentation of the Union Budget for 2024-25 in Parliament on February 1.
- The document, written by officials from the office of the Chief Economic Adviser V Anantha Nageswaran, appears to take the place of the typical Economic Survey that is traditionally released before the complete Budget.
- Nevertheless, Nageswaran emphasized in the preface of the report, released on January 29, that "this does not serve as the Economic Survey of India."

- Atul Vithal Jadhav, Vice President of the Indian Coastal Conference Shipping Association, highlights essential requests from the maritime industry, including the establishment of a thorough financing policy, a revision of Section 31 D in the SARFAESI Act, and the incorporation of marine gas oil into Goods and Services Tax (GST) input credit.
- Jadhav underscores the importance of lowering manning costs to support economic sustainability and ensure the well-being of the workforce.

- Nalin Khemani, the head of Bharatiya Chai Parishad, articulates the tea industry's aspirations for achieving self-sustainability.
- Khemani suggests that the government assumes responsibility for the industry's social costs, such as hospitals and schools, advocating for a more equitable strategy. - He envisions enhanced exports facilitated by a tea promotion policy and expansion into new markets.

- Dr. Girdhar J Gyani, the Director General of the Association of Healthcare Providers (India), has stressed the importance of the government incentivizing the private sector and giving priority to preventive healthcare initiatives.
- He suggested fostering collaboration between the government, non-governmental organisations (NGOs), Gram Panchayats, and Zila Panchayats to enhance the effectiveness of healthcare interventions, especially in rural and underserved areas.

- The President of the Indian Medical Association (IMA), Dr RV Asokan, urges a reassessment of the existing health mission strategy, emphasising the importance of channeling funding directly to government-run hospitals.
- He highlighted the imperative to tackle healthcare challenges and contends that the era of health missions has come to an end.
- Dr Asokan said, "Now, there are two streams in government- regular ministry and department, and another is a health mission, both rural as well as urban health mission, which is another way of funding. Health missions have to go. The time for health missions is over, and actually, it is not giving the results that were desired. So direct funding of the government public hospitals has to take place from the government in all governments."

- Krishnan Ramachandran, Managing Director and CEO of Niva Bupa Health Insurance, has, meanwhile, highlighted the importance of improving healthcare accessibility in India.
- He underscored that the existing 18 percent GST rate unnecessarily increases the cost of health insurance, potentially impeding its widespread acceptance.
- Ramachandran advocated for a reduction in the GST rate on health insurance, asserting that such a measure would greatly contribute to enhancing affordability and expanding healthcare coverage to a broader population.

- Continuing with the customary practice before each session, the Centre has scheduled a meeting today with floor leaders from various political parties in Parliament. During this gathering, leaders from different parties will bring attention to the issues they intend to raise in Parliament, and the government will provide them with insight into its agenda while seeking their cooperation.