'Government needs to up support to incentivise R&D'

Union Budget 2020: Government needs to up support to incentivise R&D

(Credit: iStockPhoto)

By Keshav Murugesh

India has two distinct advantages in the global business environment: talent and scale. In order to leverage these advantages and partner with Government of India (GoI) in its dream of becoming a $ 5 trillion economy by 2025, its imperative that India boost its cost competitiveness. In the Union Budget 2020, NASSCOM seeks impetus on all critical areas such as incentivizing R&D incentivizing talent and skilling; strong measures to support the start-up ecosystem; Ease taxation regime for digital economy and promoting Ease of Doing Business.

a. Incentivizing R&D: We have witnessed that Innovation is an important driver of businessand economic growth. Currently, India’s expenditure in R&D is low compared to other competing economies. To increase India’s R&D expenditure to 2% of GDP by 2022, the industry seeks greater government support and tax policies to incentivize R&D which includes measures like creation of design to manufacturing innovation clusters, amongst other things.

b. Incentivizing Talent and Skilling: In India, there is a huge demand-supply gap in Artificial Intelligence (AI) and Big Data Analytics space for roles like Machine Learning engineers, Data Scientist, etc. The talent demand-supply gap in AI and Big Data Analytics is
expected to grow from 62,000 to 140,000 over the next 3 years as per a report by WEF*. There is a need for reskilling the huge IT work force that India has, to stay relevant in the sector, as a result, companies need to be encouraged to invest in training and skilling of
employees. What is required is carefully designed tax incentives to companies to encourage skilling and reskilling.

c. Boost to Start-up Industry: The GoI acknowledges that Innovation and start-ups will play a crucial role for India to become a USD 5-trillion economy. In addition to the continued investor interest, Indian start-ups (both B2B and B2C) are expanding to other markets,
and global giants are gravitating towards India. We recommend measures such as creation of Deep Tech Investment Fund of INR 3000 crores to be invested in Deep Tech start-ups over the next 5 years on the same lines as Fund of Funds (FoF) for start-ups to flourish.

d. It’s a forgone conclusion that Ease of Doing Business (EODB) is one of the most important parameters businesses consider while making an investment decision. Therefore, for any country that wants to build an image as a business-friendly nation and attract investment, providing an environment with EODB is a necessity. According to World Bank’s Ease of Doing Business Report, India’s rank has improved from 142 in 2014 to 63 in 2019. Taxation is an important parameter here where simplified taxation, processes is a big enabler. NASSCOM seeks a detailed 15-point agenda that would help India to be viewed as one of the leading countries for doing business.

(Keshav Murugesh is the Chairman of NASSCOM and Group CEO of WNS)