An employee prepares to move a heavy bar of steel inside the ArcVac ForgeCast factory, in Hooghly district, in the eastern state of West Bengal, India, April 26, 2024.
Credit: Reuters Photo
Bengaluru: Now that initial euphoria over Union Budget 2025 has died down, industry players have started bristling about what they call “a lack of trust from the government”, which they say is hampering not just their businesses but overall industrial growth.
The new Fund of Funds, the credit guarantee coverage, extension of tax benefits have not cut ice with the startups, it appears, as they still have to contend with being certified by the inter-ministerial board as innovative to claim any benefit.
Speaking at a post-budget breakdown session organised by the Bangalore Chamber of Industry and Commerce (BCIC) and Deloitte, Siddarth Pai, Founding Partner, CFO, and ESG Officer, 3one4 Capital, observed in no uncertain terms, "As far as startups are concerned, I think the biggest ask we have from the government is to just let us be."
Elaborating further, he added “The lack of trust that the government has is actively hampering. Most of these startups cannot do their business in India because they don't have hardcore manufacturing. In fact, there are delegations from Abu Dhabi, Dubai and the Middle East coming to India to actively seduce Indian entrepreneurs to move there, whereas our government is debating whether what we do is innovative or not.”
Even looking at AI, Pai said that we are “woefully unprepared” when looking at the basic compute needed to train AI models. He said, “The government has to rethink the way they look at AI compared to everything else. The first thing that the Economic Survey spoke about AI is how to tax AI, when we as a nation haven't even built the industry.”
Other industry leaders present pointed out that the manufacturing sector is not getting the traction it requires to grow. Executives also unanimously agreed that there is an absence of a government thrust for research and development (R&D). This gap is adding to the difficulty of doing large-scale manufacturing.
Yet, Kamal Bali, President and Managing Director, Volvo Group India argued that the Budget cannot fulfill this need. “The Budget can only provide policy direction and some funding. Most of the aspects of the National Manufacturing Mission will have to be driven by at the state level.”
However, those critical of the government’s role pointed to a need to deregulate, decriminalise, and de-risk sectors like manufacturing to make the environment friendlier.
Sameer Agarwal, Group Chief Financial Officer, Manipal Hospitals, pointed out that from an allocation standpoint, health is still not a priority sector. This country is woefully short of beds, well-below the World Health Organisation standard.
He pointed out that for setting up a hospital today, one needs 64 approvals. “73% of the capex is coming out of private healthcare. The only green shoot is when the government talks about PPPs, but the issue is how they implement the PPP on-ground. For example, payments are awfully delayed,” he added.
Then again, K R Sekar, Past President, BCIC & Partner, Deloitte Touche Tohmatsu India LLP lauded the government’s initiatives for MSMEs. He recounted a conversation with a nationalised bank’s chairman who said there would be a lot more credit going from banks to MSMEs owing to the revised guarantee limit, bringing a revival to the sector.
Union Budget 2025 | Nirmala Sitharaman, as Finance Minister, presented her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', the Modi govt gave income tax relief for those making up to Rs 12 lakh per year in salaried income. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.