Budget 2025: Driving Consumption Through Lower Taxes Will Benefit The World Of Technology

The Budget 2025 proposed by Finance Minister Nirmala Sitharaman on Feb. 1, 2025, had significant implications for the middle class and the salaried income taxpayers. Given the backdrop of all things technology and digital mentioned in the Economic Survey launched a day prior, not that much was on offer for the technology world. This is especially so given the focus on bringing back consumption through changes in the tax slabs. The survey highlighted the impact of artificial intelligence on skills, job losses, and the broader industry. So, everyone was expecting more on technology, digital, and, more specifically, artificial intelligence (AI). However, the government has broader objectives to solve, and hence, the focus of the announcements is entirely understandable.

Before discussing the specifics of technology and digital, as announced in the budget, it is essential to note that driving consumption through lower taxes will also benefit the technology world. The logic is simple: more disposable income in the hands of the middle class means that a decent percentage, if not high double digits, will ultimately be used to buy more technology products like smartphones, televisions, and more. This, coupled with the support for electronics manufacturing that the budget has proposed, will positively impact the consumer electronics industry.

Below is a snapshot of the key announcements made on technology and digital during the budget speech earlier today:

1. Centre Of Excellence In AI For Education

The government has proposed setting up a new Centre of Excellence in AI for Education with a total outlay of Rs 500 crore. This is expected to help leverage AI technologies to improve education outcomes.

We at Greyhound Research believe that given the pace of change in AI and the aggressive work being done by both the United States and China, much more needs to be done to increase the pace and stamp India's leadership on this topic. However, this announcement must not be seen in isolation but in addition to the extraordinary efforts already being made by the India AI mission, which has allocated significant money, resources and efforts to build a public infrastructure of GPUs. The India AI mission is also working towards implementing the framework needed to launch the first globally benchmarked LLM from India. So, this centre of excellence will only add to the broad mission that the country is working toward.

2. Digital Public Infrastructure

The Modi government proposes to set up a "Trade Net" as a unified platform for trade documentation and financing solutions, complementing the Unified Logistics Interface Platform.

Given the country's length and breadth, we at Greyhound Research believe this infrastructure can have a significant impact. While logistics offers excellent potential for growth in the future, it remains a significant pain point for most industries. Although much has changed in the last few years, much more needs to be done to strengthen this infrastructure and extend its impact to every corner of the country. In addition, such an infrastructure will also make available data from various players in the ecosystem that will ultimately help add more intelligence and automation to the platform. This can be used in multiple ways, including aiding in smart logistics, quick commerce, and many similar opportunities.

3. Support for Electronics Manufacturing

The budget proposes rationalising customs duties and exempting domestic electronics manufacturers, such as those that manufacture mobile phone batteries, EV components, and other critical parts. This aligns with the Make in India initiative.

We can write an entire research report on the topic. But without going into the specifics, we at Greyhound Research believe this is a much-needed focus by the government. It also extends what the Modi Government has done in its previous terms. The only observation to be made here is that this support needs to be scaled multiple times compared to the current structure so that we can match, if not bypass, the technical prowess of China. Also, it is worth noting that India, in the last 20 years, has lost this opportunity many times, and it's about time that we make this a high priority and become a formidable part of the global supply chain. Global electronics giants are looking for viable destinations outside China and are flocking to destinations like Vietnam that offer talent and a supportive regulatory environment. India has all the key ingredients required to be a partner of choice. Still, it must seriously work towards removing red tape, increasing the ease of doing business and assuring these companies of a stable political and economic environment.

4. Startup Funding

The Modi government has proposed expanding the Alternate Investment Fund for startups with an additional Rs. 10,000 crore contribution. This will help catalyse funding for the startup ecosystem.

Greyhound Research believes that while this fund is a definite addition to the country, the purpose for which this fund gets used needs more scrutiny. Most of the startups and the VC ecosystem in the country, if not all, have been focused on improving the existing industries by adding digital capabilities or helping introduce newer business models. While this has landed well, it does not do much to place India in the global technology race. This is where government support through taxation or other means can be used to make the VC ecosystem more risk-taking and invest in companies like Tesla, SpaceX, DeepSeek, Perplexity, and more. This is a much-needed change that India needs.

5. National Geospatial Mission

The government plans to start a National Geospatial Mission to develop foundational geospatial infrastructure and data using the PM Gati Shakti platform. This will facilitate the modernisation of land records, urban planning, and infrastructure project design.

We at Greyhound Research believe this mission aligns with our previous observations on focusing on technology areas that truly put us on the map of technical advancements. If India can build a data repository, the standards and the ability to manage access and distribution mechanisms, they can be helpful in urban planning, environmental monitoring, and more. Such data can also aid government programmes on logistics and, most importantly, in better-managing emergency response. I want to point out that urban planning is a key issue in the country today, given the stress on the urban infrastructure that most states are dealing with.

6. Rural Prosperity And Resilience

The budget proposed a programme to address under-employment in agriculture through skilling, investment, technology, and invigorating the rural economy. This programme will aid other key national missions: 1) on high-yielding seeds to strengthen the research ecosystem, develop and propagate seeds with high yield, pest resistance, and climate resilience and 2) for cotton productivity aimed to provide the best of science and technology support to farmers to improve productivity and sustainability of cotton farming.

We at Greyhound Research believe that such programmes have great potential to mobilise the rural youth who, by and large, get left behind on the latest technological advancements. Such missions can be of great use and importance given the change in sentiment of the youth in rural populations that are increasingly becoming upwardly mobile, aspire to match their urban counterparts, and, most importantly, are becoming technology savvy.

7. Clean Tech Manufacturing

The budget announced that the National Manufacturing Mission will support Clean Tech manufacturing to improve domestic value addition and build the ecosystem for solar PV cells, EV batteries, motors and controllers, electrolysers, wind turbines, high-voltage transmission equipment, and grid-scale batteries.

We at Greyhound Research believe that the Modi Government has done exceptionally well on the topic. It only recently unveiled the Bharat CleanTech Manufacturing Platform, an initiative to enhance India's contributions to the solar, wind, hydrogen, and battery sectors. If this is to become a success and if India wants to be seen as a global leader in sustainability, we need to collaborate with other global majors, access substantial financing to scale, and, most importantly, upskill.

8. Atal Tinkering Labs

The budget proposed setting up 50,000 Atal Tinkering Labs in Government schools to cultivate curiosity, innovation, and scientific temper among young minds.

This is a crucial proposal given the previous success of this mission. For the uninitiated, this mission has successfully taught the future generation about topics like computational thinking, the Internet of Things, space science and drones, AI development, and gaming, to name a few. The mission and this course also do exceptionally well in training the future generation in topics like 3-D modelling, 3-D shapes, and other topics that make up the base for advanced thinking and technical know-how. We at Greyhound Research believe such initiatives are fundamental to creating a new generation of skill sets to help the country achieve its broad mission by 2050. Such missions also require government bodies to work closely with private institutions and other educational institutes around the globe to ensure the curriculum stays ahead of the curve.

9. Broadband Connectivity

In her speech, the finance minister discussed providing broadband connectivity to all government, secondary, and primary schools to ensure better access to digital learning resources.

The focus on broadband connectivity in India is not new and has been championed aggressively over the last decade. From 251.59 million in March 2014, total internet subscribers skyrocketed to 954.40 million by March 2024. While remarkable, Greyhound Research believes much more can be done to extend optical fibre cable connectivity to rural households. For reference, this comes under the BharatNet project. It might help to know that over 2.13 lakh Gram Panchayats have already been made service-ready. The government has previously announced its intent to provide optical fabric connectivity to 42,000 uncovered Gram Panchayats and the remaining 3.84 lakh villages on an on-demand basis and to provide 1.5 crore rural home fibre connections.

Greyhound Research believes this is a significant initiative by the government of India. The availability of broadband and the increase in the average speed will help. This will allow citizens access to government services and reduce the burden on metropolitan towns already stressed by infrastructure, power, water, and other immunities. Connectivity also enables the possibility of starting local BPOs and a host of other startups that cater to regional problems like sanitation, garbage management, traffic management, smart cities, and more.

10. Nuclear Energy Mission For Viksit Bharat

Per the budget speech, this mission aims to develop at least 100 GW of nuclear energy by 2047 and includes research and development of small modular reactors (SMRs) with an outlay of Rs. 20,000 crore.

The focus on small modular reactors is the need of the hour. Only recently, Google signed its first corporate deal to purchase power from SMRs to meet the energy needs of the AI systems. We at Greyhound Research believe that as India focuses sharply on its mission to be the data centre capital of the region in the short term and the world in the long term, our energy requirements will go multi-fold. The focus on SMRs will go a long way in shaping clean energy solutions for data centres. We must consider that net zero carbon emissions are critical for any country serious about broad carbon footprint goals. Conversely, India is also vigorously pursuing its mission of focusing on semiconductors. Assuming this goes well, and India begins to play a critical role in semiconductor design and manufacturing, having a continuous supply of energy from various sources will be a critical success factor. And clean energy solutions are a big part of the conversation on the topic.

Sanchit Vir Gogia is Chief Analyst, Founder and CEO of Greyhound Research.

The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.