Budget 2025 Expectations: From GST Compliance To Focus On AI And Cybersecurity, Here’s What The Tech Industry Wants
With a remarkable annual growth rate of 15.5 per cent, the technology sector is poised for even greater expansion, however, industry leaders are seeking major reforms in the Union Budget 2025.
By Varun Parvathaneni
India's technology sector, valued at $227 billion, is set to play a pivotal role in shaping the nation's future. With a remarkable annual growth rate of 15.5 per cent, the sector is poised for even greater expansion, but industry leaders are calling for strategic reforms in the Union Budget 2025 to ensure this momentum is sustained. Following a digital initiative allocation of Rs 16,549 crore in 2024, key stakeholders have outlined several crucial areas requiring attention to foster growth amid global market dynamics.
Boosting Research And Development (R&D)
One of the foremost concerns for the tech industry is India's relatively low investment in research and development, which currently stands at less than 1 per cent of GDP, significantly below the global average of 2.3 per cent. To bridge this gap, industry leaders are pushing for increased tax deductions for R&D activities, particularly in emerging fields like artificial intelligence (AI), quantum computing, and blockchain. Additionally, government grants to support research partnerships between academia and industry could foster global competitiveness. Simplifying patent filing processes and promoting intellectual property creation would further boost R&D efforts, positioning India as a hub for technological innovation.
Supporting Startups And Entrepreneurs
Startups are a crucial driver of India’s economic engine, but they often face challenges such as funding constraints and complex regulations. To support the growth of entrepreneurial ventures, tech leaders are urging for a simplified tax regime and extended tax holidays for startups, as seen in countries like Singapore and the United States. The government’s Fund of Funds for Startups (FFS) should also receive increased financial support to empower emerging businesses. Additionally, there is a call to incentivise innovation in Tier 2 and Tier 3 cities, unlocking untapped potential outside of major urban centers.
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Strengthening Digital Infrastructure
Digital infrastructure remains the backbone of India’s ongoing transformation into a digitally empowered nation. The BharatNet project, which aims to connect over 600,000 villages with high-speed broadband, is a testament to this ambition. However, further steps are needed to accelerate this transformation. Key areas for investment include expanding 5G coverage, which is essential for the advancement of IoT, telemedicine, and smart cities. Offering subsidies for building data centers is another priority, as these are critical for cloud computing and AI-driven applications.
Prioritising AI And Emerging Technologies
India’s tech companies are eager for a dedicated fund to drive the adoption of AI, machine learning, and blockchain. Collaborations between industry and academia could further accelerate research and development in these fields, while skill development programs are necessary to cultivate a workforce prepared for the demands of emerging technologies.
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Cybersecurity And Data Privacy Measures
As digitalisation increases, so do concerns about cybersecurity. Recent incidents like the AIIMS ransomware attack have highlighted the vulnerabilities in India’s digital infrastructure. The tech industry is calling for robust cybersecurity frameworks and increased funding to protect digital assets. Simplifying compliance with the upcoming Data Protection Bill and launching awareness campaigns to educate businesses and citizens on data security are also essential steps to safeguard the digital ecosystem.
Simplifying Compliance For GST
The Goods and Services Tax (GST) regime continues to pose challenges for tech firms, particularly in the software services sector. To ease the burden on businesses, the industry is advocating for a reduction in GST rates on software services and greater clarity on input tax credits. Automation of the tax filing process could also streamline compliance and reduce administrative costs for SaaS providers and IT firms.
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Bridging The Skills Gap
India’s tech firms face a growing skills gap, particularly in emerging fields like AI, blockchain, and cybersecurity. Expanding the Skill India initiative to focus on these high-demand areas is crucial to equipping the workforce for the future. Educational partnerships between tech companies and universities could ensure that graduates are job-ready.
The 2025 Union Budget presents an opportunity to shape the future of India’s technology sector. By focusing on strategic investments in R&D, infrastructure, talent development, and sustainability, the government can catalyse the growth of India’s tech industry, positioning the nation as a global innovation hub. With these targeted reforms, India can continue to lead the digital economy while nurturing both established enterprises and startups.
(The author is the Product Manager at Jukshio)
Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd.
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