As anticipation mounts around Budget 2025, concerns are brewing across India’s tech, engineering, and R&D (ER&D) sectors about whether the government is taking the necessary steps to safeguard their global competitiveness. While industry leaders have outlined a clear wishlist, several systemic gaps threaten to undermine the country’s position as a leading innovation hub.
SEZ Benefits: A Looming Gap
The expiration of SEZ benefits has left mid-tier IT players like L&T technology Services (LTTS) and Happiest Minds Technologies grappling with uncertainty. Despite calls to reinstate these incentives, the government has yet to provide clarity. SEZ benefits were pivotal in attracting investment, fostering innovation, and boosting technology exports. Without them, companies fear a sharp rise in operational costs, reduced global competitiveness, and a potential exodus of investments to more favorable destinations like vietnam or the Philippines.
Amit Chadha, CEO of LTTS, warns that without these benefits, india risks losing its edge as an ER&D hub. “Opportunities to create more complex, high-value innovations will shrink,” he notes, highlighting the urgency of policy interventions to support the National Green Hydrogen Mission and bolster tech exports.
Ignoring wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital Infrastructure
Happiest Minds Technologies and Magellanic Cloud have called for investments in wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital infrastructure like broadband, smart cities, and data centers, but these pleas seem to have fallen on deaf ears. With the rise of AI and an anticipated 27 lakh tech jobs by 2028, the lack of support for such initiatives could leave the industry ill-prepared for the impending wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital transformation.
Joseph Anantharaju, Executive Vice Chairman of Happiest Minds, believes that without grants and incentives to enhance the ease of doing business, growth opportunities will be stifled. “The absence of proactive policies will slow down innovation and sustainability initiatives,” he cautions.
AI Development and Indic Languages: A Missed Priority
India's AI sector is at a critical juncture, yet the budget appears to have overlooked key investment areas. For instance, enabling AI to work effectively in Indic languages is vital for driving inclusivity and empowering the next wave of wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital transformation. ManageEngine’s President, Rajesh Ganesan, has underscored the need for GPUs and energy-efficient AI adoption to prevent unsustainable growth. However, this pressing issue has yet to receive adequate attention.
Experts like Hari balaji from EY india argue that incentivizing indigenous chip design and manufacturing is essential to reducing dependency on volatile global supply chains. Without such investments, India’s AI sovereignty may remain fragile, and the country could lag in capitalizing on emerging opportunities.
Skill Development: A Critical Oversight
While the industry has repeatedly emphasized the need for workforce skilling and education programs, particularly in advanced technologies, the government's efforts appear scattered. Joseph Sudheer Thumma, Global CEO of Magellanic Cloud, stresses the importance of prioritizing these areas to ensure India’s IT sector remains globally competitive. Failure to address skill gaps could lead to a talent crunch, further harming the sector’s growth prospects.
Sustainability: More Talk, Less Action
The lack of concrete sustainability policies tied to tech and AI adoption is another glaring issue. industry leaders are calling for collaboration between the government and businesses to meet rising energy demands while advancing environmental goals. But so far, these demands appear to be sidelined, leaving companies to shoulder the burden of sustainability independently.
Will the Budget Harm India’s Tech and ER&D Industries?
The government's inaction on key demands—such as reinstating SEZ benefits, investing in wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital infrastructure, and supporting AI innovation—could have far-reaching consequences:
- Loss of Investments: india risks losing foreign investments to countries with better tax policies and infrastructure support.
- Decline in Global Competitiveness: Without proper incentives, India’s IT and ER&D sectors could fall behind in innovation and exports.
- Talent Shortages: A lack of skill development initiatives may lead to a talent crunch, impeding growth in emerging fields like AI and sustainability.
- Environmental Challenges: The absence of sustainability-focused policies could exacerbate energy consumption issues, leaving companies struggling to meet environmental targets.
A Call for Immediate Action
Budget 2025 could have been a game-changer for India’s tech and ER&D sectors, but the lack of decisive measures threatens to squander this opportunity. Policymakers must act swiftly to address these gaps and ensure that india remains a preferred destination for innovation and investment. Without immediate interventions, the nation’s ambition to become a global tech powerhouse may remain just that—a distant dream.
What’s your take on the government’s approach? Is the budget doing enough for India’s tech sector, or is it a step backward?
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