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Pre-Budget
Survey2023
January
2023
Introduction
• Objective andMethodology
• RespondentProfile
Executive
Summary
Survey Findings
• Economic GrowthOutlook
• Effectiveness of Government’s
Digital Initiatives
• Industry Expectationsfrom
Budget 2023
‐ Budget Sentiment
‐ Atmanirbhar Bharat andPLI
‐ Taxation Changes and
Expectations
Table ofcontents
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 2
Introduction
• Objective of thestudy
• Respondentprofile
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 3
Introduction
Objective
• Understand the industry’s outlook oneconomic growth
• Assess various digital initiatives by the government that the industry felt
helped make India become the front-runner for technology and
digitalization
• Understand the industry’s perspective on the efficacy of government
initiatives such asAtmanirbhar Bharat and Production Linked Incentive
• Analyse industry’s expectations from the upcoming budget from the
standpoint of economic growth, Environmental, Social, andGovernance
(ESG) adoption, tradeagreements, and boosting exports
• Discuss industries’ outlook towards tax-related changes and strategies that
can help to mitigate risks and support the industries in times of global
uncertainties
Methodology
• We conducted online surveys with senior leaders across differentindustries
and categories ofcompanies.
• The survey contained 27 questions about the economic outlook, budget
projections, corporate and personal taxation changes, and views of
effectiveness of various digital initiatives introduced during the past year.
• We collated a total of 181 responses from 10 industries.
The survey contained multiple select and single-select questions.
The sum of the percentages of options of multiple select questions
will be above 100%
Turnove
r
10%
11%
10%
10% 9%
10%
10%
11%
Respondent profile
Industry
9% 10%
Automotive
Banking,investmentfirms,andinsurance
Capitalgoods
Chemicals
Electronics manufacturing
Energy (Oil, gas, andrenewables)
Food processing
Lifesciences and healthcare
Telecom andtechnology
Textiles
N =181
33%
39%
28%
Above INR 3,000 crore
INR 250 crore–INR 3,000 crore
Less thanINR 250 crore
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 4
Executive
Summary
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 5
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 6
Deloitte − Point of View
Amidst a possible global economic slowdown and geo-political instability, the domestic economy has remained resilient and is well on its way to growth at
7% year over year. To support India’s US$5 trillion economy ambition, the industry holds high expectations from the Budget 2023-24 especially through tax
reforms andcontinuedCAPEX with a focus on infrastructure.
Keyannouncementsin BudgetFY’23 expectedto furtherstrengthenthepace of growth:
Focus on Infrastructure (Physical and Digital) – The Government has been aggressive about infrastructure development in the last few years, and
this momentumis expected to continue.This will reaplong-lastingbenefitsto thenationin theform of industrialgrowth, more employment, globalsupply
chain integration, and investment flows, thereby fueling economic growth and realising the US$5 trillion economy ambition. To support the infrastructure
development, measures such as encouraging private partnerships in large projects – including physical and digital - and incentivising private players or
mitigatingrisks forthemwould provemost useful.
In addition,the government’sstrategicfocus on improvingresearch andinnovationshould move forwardwith more rigour,and attractinginvestments,
bothdomesticandinternational,will prove valuable.
Deloitte’s
expectatio
ns from
the budget
Boost export competitiveness – Giventheencouragementreceivedfor theAtmanirbharBharatandPLI schemes, extendingthescope of incentives and
the coverage of industrieswill helpfurtherboost exportsas well aid in India’sshare in theglobalvaluechain.In addition,various FTAs, executedor in
progress, by India are perceived as favourable to the industry. Various reforms to facilitatethem in the form of easing compliance rules will further
strengthen the momentum.
• Support MSME growth – IntegratingMSMEs intotheglobalsupplychain will be theway forwardfortheMSME sector in India.The accelerated credit
facility,incentivization,and technologyintegrationwill improve operationalefficiencies andreduce costs. This will enhancetheirglobal competitiveness
andstrengthenthe sector, thereby,boosting theeconomy andprovidingmaximum employmentopportunitiesto low-income strataof thepopulation.
Promote a green economy – To realise India’s commitment to achieving carbon neutrality by 2070, there must be targeted efforts in encouraging
industries to adopt ESG measures through incentives. Furthermore, developing capital markets, devising green instruments, and encouraging private
investments will help achieve thisgoal.
Make compliance easier – The tax structure (direct and indirect) needs to be simpler,stable, and unambiguous, leaving no room for interpretational
ambiguities. The changes, such as more clarification on the applicability of tax laws and provisions, such as taxdeducted at source (TDS) are needed.
Furthermore,thedigitaltaxstructureneedsfurtherclarification,such as the implementationof theEqualisationLevyandSignificantEconomic Presence.
Executivesummary
Despite global exigencies weighing on the economic environment there is optimism about India’s growth prospects. India is likely to grow at a
healthy pace and the policy announcement of the forthcoming budget will likely be supportive of growth while balancing concerns around
inflation and global risks.The following points express the expectations of the industry from the budget.
Positive economic growth outlook amongst the leaders
• Industry leaders are highly confident about India’s positive outlook and the economy is likely to achieve the 7% as
projected by NSO’s early estimates; growth willbe attributable to rising domestic demand and the government’s push for capital
expenditure
• The challenges posed by the global recession, currency fluctuations, along with domestic concerns such as inflation and skilled labour
shortages are a few of the downside risks and are seen as impediments to the industry’s growth
• Furthermore,the respondents are more confident of the budget being favourable, than last year
,to their industry’s growth, as they expect
the government to be proactive in cushioning the impact of economic risks that India may encounter this year.
Taking digitisation to the next
level
• The government’s digitisation drive has been much appreciated by the industry, especially by the energy,BFSI, and automotive sectors
• Amongst all the digitised tax administration initiatives by the government, the GST portal and e-invoicing system have been recognised as the
most useful. The GST portal enables filing returns, refunds, and doubt resolution much more efficiently,and provides a one-stop solution.
More effective interventions may be required for the effectiveness of faceless assessments.
• Collaborating and encouraging investments from the private sector in completing digital projects, investing in emerging technologies, and
focusing on innovation will likely boost the digitisation efforts of the government and will consequently step-up India’s play in being a
technology powerhouse
Industry
Insights &
Expectatio
ns
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 7
Executivesummary
Atmanirbhar Bharat
All respondentsseeAtmanirbharBharatas an effectiveprogram
• Most of themexpectthe initiativeto focus more on making thesupplychain resilienceandfacilitatingeasy compliance. Easy clearanceto boost FDI in-
flows is also citedas anotherimportantmeasureto furtherstrengthentheinitiative
• An overwhelmingnumberof respondentsfrom energy
,food processing, andelectronics manufacturingexpect AtmanirbharBharatto developa strong
supplychain
Widening the scope of PLI
• The PLI scheme is perceived as beneficial for industry growth and encourages businesses to extendtheirmanufacturingbases and
enhanceexports, therebyincreasingthesector’s production
• Majorityof respondentsexpectextendingthese incentivesfor additionalyears to supportthemincrease theirproductioncapacity
.This expectationis
highestamongstrespondentsfrom thefood processing andtelecom andtechnologyindustries.
Prime expectations from the Budget
• Additional tax incentives is one of the top expectationof therespondentsfrom thebudgetthatwill spur growthin theirindustries.Theview
resonates
morestronglywith BFSI,food processing,energy,andtelecom respondents
• Acceleratedcreditsupport,and simplificationof capitalgainstaxstructurealso featureamongst thetop-threebudgetexpectations
Boosting exports – Targetedsector–specific schemes and increased PLI coverage are consideredas one of the most effectivestrategiesfor
boosting industrialexports.More respondentsfrom thechemical andtextileindustrysupportthisview
• FTAs are beingperceivedas significantin creatinga market, improvingtheirposition in GVCs,andattractingforeigninvestments.Besides, betterexchange
of technologies, informationandbest practices will improve export competitivenessand benefitssectors such as theBFSI and theautomotivesectors.
Industry
Insights &
Expectatio
ns
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 8
Executivesummary
Infrastructure financing – Raising funds from the bonds market at lower rates along with encouraging private participation are seen as the
two most preferred ways to raise funds for infrastructure development.Additionally, devising innovative structures such as credit guarantee
enhancement is also cited as aneffective measure
Taxation policy reforms expectations
Tax-relatedimprovements arethe most desired budgetary measure since they areconsidered to accelerate industrial expansion
• Corporate taxation
‐ Making taxcompliance easier is the most effective direct tax-related change, as suggested by the majority of respondents. The view is
strongly reflected by respondents from food processing, textiles, electronics, and capital goods, as compared to other sector respondents
‐ Besides easing tax compliance, a high number of respondents anticipate the government to reduce tax litigation
‐ On changing capital gains tax structure, rationalising tax rates across all assets; and indexation of gains are cited as extremely beneficial for
the industry
‐ Acall for reformingthe GST tax structure is loud, also underlining the need for greater simplification of the tariffstructure since many of
the believe this willresult in fewerambiguities, better compliance, and fewerlegal disputes
o Under GSTchanges, ease of availing Input T
axCredit (ITC)and removal of GSTcredit restrictions are the top changes expected from the
budget
‐ Group taxation – Most respondents support group taxation and want it to be put into effect within a year
• Personal taxation
‐ Majority of respondents expect changes in personal taxation in the form of more tax exemptions and increasing deduction limits such as
the interest deduction for house loans, to be most effective for individuals, which would give the consumers more purchasing power and
thereby increase demand (consumer) in themarket
Industry
Insights &
Expectatio
ns
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 9
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 10
2023 Vs.2022
Outlook 2023 2022
Positive Positive
Economic growthoutlook 62% 78%
Budget Outlook 73% 55%
Atmanirbhar Bharat 90% 91%
Efficacy of digital initiatives 57% 59%
Group taxation 75% 81%
Industry Expectation 2023 2022
Digital initiatives
Active collaborationwithprivate sectorin identifying
and accomplishing digitalprojects
Introducing and implementing moreonline platforms to
reduce delays andred-tape
Capital investment
Indian Government Bonds (IGBs) to raise finance and
encourage Public Private Partnership(PPP)
Innovative structures togetprivatecapital
Taxation (for prioritysector)
Benefitofindirect taxes to enterprises in the formof
an exemption window on customsduty or GST
Taxincentivesforenterprises inpriority sectors,such as
foodprocessing,MSMEs, and infrastructure
Group taxation
~80% ofrespondents feelthat grouptaxation should
be implemented ‘now’or ‘in the next year’
70% ofrespondents feelthat group taxationshould be
implemented‘now’or ‘inthe next year’
Total responses 2023 :
181
Total responses 2022 :
163
Survey
Findings
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 11
• Economic Growth Outlook
• Effectivenessof Government’sDigitalInitiatives
• IndustryExpectationsfrom Budget2023
‐ BudgetSentiment
‐ Atmanirbhar Bharatand PLI
‐ TaxationChangesand Expectations
The optimism was relatively more pronounced amongst sectors with better performance and outlook
driven by strongdomestic demand
Amidst global slowdown, over 60% of respondents conveyed confidence about India growing above 6.5%
Outlook by
sectors
Overall growth
outlook
• A majorityof the respondentsexpectIndia to grow over 6.5% in FY’23.This signals
optimismand confidencein India’sresilience and growthprospects
• Capitalgoodssectorhas performedwellin recent quarters, and higher policyrates have
helped banks improvemargins.Geopolitical uncertaintieshave created opportunities for
sectors, such as Chemicals, Electronics, and Energy while digitisation has helped the
technology sector.The buoyanceis evidentfrom their outlookfor the economy,wherea
large share of respondents from these sectors have expressed confidence in growth to
be high. However,respondentsfrom food processingare divided on the outlook.
53%
65%
56%
47%
67%
65%
72%
70%
63%
58%
47%
35%
44%
53%
33%
35%
28%
30%
37%
42%
Textiles
Telecom andtechnology
Lifesciences and health care
Foodprocessing
Energy (Oil, gas,and
renewables)
Electronicsmanufacturing
Chemicals
Capitalgoods
Banking, investment firms,and
insurance
Automotive
Above 6.5% Below6.5%
Question: What is your outlook on India’s growth during 2023–24?
2023 2022
Above
6.5%
Positiv
e
Below
6.5%
Negativ
e
62
%
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 12
38
%
78
%
4
%
N =
181
N= 181
N =
163
The economic growth is expected to be above 6.5% primarily driven by strong domestic demand and
government initiativeslikeAtmanirbhar Bharatand PLI
Pro-growth factors recognised by respondents
• The economy is expected to grow above 6.5% driven by domestic demand
and rising household consumption, which will boost demand for goods
and services across industries, especially the consumer durables
• The initiatives by the central government will stimulate the growth of
MSMEs, manufacturing industries (likeAtmanirbhar Bharat, PLI), exports
(lower custom duties) and will likelyplay a vital role
• Favourable monetary policies by RBI have moderatedretail inflation and
maintained significant forexreserves to deal with currency fluctuations
• Increased spending of government on infrastructure and research and
innovation may yield promisingresults
• The slowdown in the manufacturing economies is a sizable opportunity for
India to capitalise on supporting other economies
• The digital transformation of the private sector
, to become a center of
global offshoring is another opportunityarea
• Growth in industries like–
‐ Healthcare –Surge in the output of medical equipment/vaccines
‐ Automobile -Increased demand for SUVs and EV manufacturing to
attractinvestments
‐ Telecom – 5G roll-out and demand for fiber broadband networklook
promising
Headwinds to the growth identified by respondents
• Upcoming global recession caused by the geopolitical turmoil post-COVID-
19, and soaring energy,food, and labor costs are a major deterrent to
economic growth.Due to this, GDP growth may fallbelow 6.5%
• Skilledtalent shortage will have a detrimental impact on the overall
progress of the servicessector
• Supply chain delays, poor infrastructure, and high indirect costs are likely
to impact business operations. This requires government intervention to
develop a revitalised digitally powered procurement operatingmodel
• Spillovers from the Russia-Ukraine war and global monetarypolicy
tightening will hurt the money supply in the economy
• The fear of subsequent variants of COVID-19 might prompt consumers to
enable savings and likelyto reduce the private demand
• Slowdown in manufacturing industries driven by increased input costs
from international markets will stifle industrialgrowth
• Other factorsinclude:
‐ Limited funds and private sector participation in researchand
innovation
‐ Low spending, and unfavourable customer-centric policies
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 13
Global exigencies overwhelmingly weigh on the economic outlook than domestic factors
Domestically, higher inflationary pressures concern businesses the most, while talent and logistics are
the other impediments
• Respondentsperceive uncertaintiesowing to the globaleconomic
slowdown,exacerbatedby the aggressivemonetarytighteningto
control inflation, and geopolitical conflicts to be the biggest
challenge thatimpactingIndia.
• While globally integrated sectors such as BFSI, automotive,
electronics, and chemicals, are more concerned about the global
slowdown and currency fluctuations, geopoliticalinstabilitiesworry
commodity-based sectorssuch as energy, food, and materials.
• Domestic inflation,exacerbatedby importedinflation,is adding to
cost pressures and evidently concerns 50% of the respondents
respondingto the survey.
• A depreciated currencymakes importsexpensive. which probably
explainsa higher concernaboutinflationfrom the respondents of
the electronics sector (71%). Domestic-focused formulation, API
players, and imported medical instruments are likely to face cost
escalation and margin pressure concerning the life sciences and
healthcare sectors(60%)
• Despite being export-oriented, the textile sector is losing in the
globalmarketas the currenciesof competingcountries registereda
strongerdepreciationagainstthe US dollarcomparedto INR.
• The supply chain issues are of lesser concern and only for a select
few sectors such as automotive, energy, and textile, suggesting an
easingof supplychaindisruptionsand improvedmobility.
• Emerging and skilled-intensive sectors are the ones most concerned
about labour-skillmismatches.
Impediments to
growth
N= 181
Global
slowdow
n
Currency
fluctuatio
ns
Geo-
political
instability
Supply
chain
delays
54
%
43
%
46
%
38
%
Lagging
physical and
social
infrastructure
Inflatio
n
Skills
demand-
supply
mismatch
50
%
40
%
23
%
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 14
National factors
Global factors
Thisisamultiple select question;thesum of percentageswill be above 100%
Question: What according to you canbe the impediments to the growth of your industry?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 15
Globally integrated sectors such as BFSI,automotive, electronics, and chemicalsare
more concerned about the global slowdown
Measures Automotiv
e
Banking,
investme
nt firms,
and
insuranc
e
Capit
al
good
s
Chemicals Electronics
manufacturi
ng
Energy Food
processi
ng
Lifescienc
es and
health
care
Telecom
and
technolo
gy
Textiles
Global slowdown 68% 74% 25% 67% 65% 44% 35% 56% 50% 53%
Supply chaindelays 53% 11% 25% 39% 41% 50% 47% 33% 25% 67%
Currencyfluctuations 21% 32% 40% 39% 71% 50% 53% 56% 50% 60%
Geopoliticalinstability 47% 53% 55% 39% 24% 50% 65% 28% 45% 20%
Inflation 47% 63% 65% 61% 18% 44% 41% 50% 55% 53%
Skills demand-supply
mismatch
37% 37% 40% 39% 53% 22% 35% 56% 55% 20%
Lagging physicaland
socialinfrastructure
26% 26% 40% 6% 29% 28% 18% 11% 20% 20%
Question: What according to you canbe the impediments to the growth of your industry?
Survey
Findings
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 16
• Economic GrowthOutlook
• Effectiveness of Government’s Digital
Initiatives
• IndustryExpectationsfrom Budget2023
‐ BudgetSentiment
‐ Atmanirbhar Bharatand PLI
‐ TaxationChanges andExpectations
The government’s digitisation drive has been appreciated by energy, BFSI,and automotive
More targeted efforts may be needed in digitising administrative processesfor the textile and capital goods sectors
Question: Do you think that the government’s technology and digitisation drive (suchas GST portal, compliance information portal for customs, DataProtectionBill, ONDC project,and GeM) has been helpful for your industry?
40%
75%
61%
53%
61%
65%
56%
40%
58%
63%
47%
20%
39%
41%
28%
29%
44%
45%
42%
37%
13%
5%
6%
11%
6%
15%
Textiles
Telecom andtechnology
Lifesciences and health care
Foodprocessing
Energy (Oil,gas,and renewables)
Electronics manufacturing
Chemicals
Capitalgoods
Banking,investment firms,and insurance
Automotive
Yes Somewhat No
57
%
37
%
Ye
s
Somewh
at
helpful
N
o
Has Digitisation been
helpful?
Sector-
wise
• Therehas been a growing push by thegovernmentto digitise administrativeservices andimprove governance
and ease of doingbusiness.
• 57% of respondentsacross theboardbelievethattherecentdigitisationinitiativeshavebeenverybeneficial,
while 37% believeithas been somewhat beneficial
• Thegovernment’sdigitisationinitiativesmay requirea targetedapproachforthe textileandcapitalgoods
sectors.
N= 181
N= 181
6
%
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 17
Faceless assessments were the least voted initiative, which signals more effective interventions
Helpful digital taxinitiatives
Digitisation initiatives such as the GST portal enabling filing returns, refunds, and doubt resolution and
e-invoicing have been most appreciated
Question: Which have been the most helpful for your industry?
• Digitisationinitiativeshaveprovento helpfiletaxesandease thegovernanceprocess.
• TheGST portalenablingfilingreturns,refunds,doubtresolution, ande-invoicinghas beenmost appreciatedbyrespondentsacross allsectors, followed by Computer-based
scrutinyselection resultinginlimitedcases pickedup forassessment (use of dataanalysis).
• Respondentsfrom the automotive, chemicals andlifescience andhealthcaresectors havebeenmost appreciativeof the mentioneddigitisationinitiativesundertakenso far
,
while therespondentsfrom thetextilesector havegivena mixed response.
• None of therespondentsfoundfaceless assessment useful,which probablysignals thatthegovernmentmeasures may not havebeeneffectivein this area.
57
%
67%
59
%
62%
70%
65%
48
%
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 18
Input tax credit
reconciliation
GST portal enabling filing returns, refunds,
anddoubt resolution
E-invoicing
system
E-way
bill
CPC enabling e-Filing and e-Processing of
taxreturns and refunds
Faceless
assessments
Computer-based selection results in
limitedcases
being picked up for assessment
N =181
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 19
Respondents from the automotive, chemicals, and life science and healthcare sectors have been most
appreciative of the mentioned digitisation initiatives
Question: Which have been the most helpful for your industry?
Measures Automotive Banking,
investme
nt firms,
and
insurance
Capit
al
good
s
Chemicals Electronics
manufacturi
ng
Energy Food
processi
ng
Lifescienc
es and
health
care
Telecom
and
technology
Textiles
GST Portal enablesfiling
returns, refunds, doubt
resolution
89% 79% 75% 67% 76% 61% 65% 72% 70% 40%
E-invoicingsystem 74% 68% 70% 67% 53% 56% 82% 67% 70% 60%
Computer based scrutiny
selection resulting in limited
cases pickedupforassessment
(use of dataanalysis)
84% 63% 65% 78% 59% 44% 47% 78% 60% 67%
E-waybill 58% 47% 65% 56% 53% 61% 76% 67% 80% 60%
Centralized Processing Centre
(CPC) enabling e-Filing and e-
Processing of tax returns and
refunds
74% 68% 50% 61% 59% 56% 53% 72% 50% 47%
Inputtaxcredit reconciliation 63% 68% 65% 67% 53% 44% 53% 50% 50% 60%
Faceless assessments 47% 53% 50% 39% 41% 44% 41% 50% 60% 47%
Respondents suggested activecollaboration with the private sector and investment in
advanced technology
Question: How,according to you, canthe government further improve on this?
Active
collaboration with
private sectorin
identifying and
accomplishing
digital projects
More investments
in digital
infrastructure
and technologies
such as AI, IoT,
and Big Data
Introducing and
implementing
more online
platforms to
reduce delays
and red tape
More focus
on research
and
innovation
Cloud deployment
and implementation
for enhanced digital
privacy and security
Simplified
digital
taxation law
Offering a
conducive work
environment to
vendors/partner
companies
Other
s
N= 181
• As digitalcapabilitiesevolve,theremust be a
consistent push to facilitatetechnology
transformation to its fullpotential
• However
, amongst the various alternatives,
respondents could agree only on a few that could
drive digitisation to the next level. 56% of the
respondentsbelievedthatworking activelywiththe
private sector to identify and accomplish digital
projectsmay advanceeffortstowards digitisation
• Amongst therespondents,thelargest supportfor the
active collaboration from the private sector came
from Lifesciences and healthcare (~72%) and
Electronics manufacturing(~71%)
• Thesecond most popularalternativewas increasing
investment in digital infrastructures such as AI, IoT
and BigDataas highlightedby52% of respondents
• Respondents from the Capital goods and textile
sectors, who responded less favourably to the
digitisationeffortsearlierwere also theones asking
for more online platforms that reduced delays and
red tape.This further underscores the need for
targetedsolutionsfor thesetwo sectors.
Driving technology and digitisation to the
next level
56
%
52
%
42
%
41
%
39
%
35
%
34
%
1
%
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 20
There is a rising ask for bringing in MSMEs into the technology platform and provide them with credit facility
India can enhance its position as a technology powerhouse by focusing on innovation and
bringing ininvestments
• 65% of the respondents expected an increased
innovation focus, together with private-sector
engagementin R&D investmentsto enhanceIndia’s
positionas a technological powerhouse.
• Lifesciences and health care (~78%), Telecomand
Technology (~75%), Automotive (~74%) and BFSI
(~74%) were thebiggestsupporterof innovationand
private sectorparticipation.
• Since digitisationrequiresa lot of investment,59% of
respondents endorsed the idea that attractingboth
foreign and domestic investors to ensure sustained
money inflows to boost digitalization
‐ Respondents from Textiles (~73%), Energy (~72%),
and Capitalgoods (~70%), also believethesame
• 55% of respondents believed that supporting MSMEs
for technological integration and providing a platform
for effectivecreditfacilitieswould aid this endeavour.
• This signals that there is a growing realization of the
importanceof bringingMSME onto digitalplatforms,
which will help in building a strong and inclusive
digitalecosystem.
65%
More focus on innovation and motivate private-sector
participation in
investment in R&D
Attract more investments domestically and
internationally
Support MSMEs to integrate technology in their
operations with effective credit
facility
Strengthening the talent—skilling, reskilling of talent,
and more public spending on education
Tax laws for encouraging strategic sectors such as
semiconductors,
space, higher end of electronics
A robust and refined
data protection
bill
Other
s
59%
55%
48%
45%
26%
2%
N= 181
Question: How,according to you, canIndia become a technology powerhouse?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 21
Survey
Findings
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 22
• Economic GrowthOutlook
• Effectivenessof Government’sDigitalInitiatives
• Industry Expectations from Budget2023
‐ Budget Sentiment
‐ Atmanirbhar Bharatand PLI
‐ TaxationChangesand Expectations
Respondents seemed more confident about asupportive budget than last year,probably because they
expect the government to be proactive in cushioning the impact of risks highlighted earlier
More respondents from electronics, capital goods, and textile sectors are expecting supportive announcements
Sentiment regarding budget on industry revival Sector-wise sentiment
Question: Howpositive are you about the upcoming budget helping your industry’s growth?
1% 25% 43% 30%
1%
2% 20% 23% 48% 7%
2022
2023
1 - notatallpositive 2 3 4 5 - verypositive
• 73% of the respondents are optimistic that the forthcoming budget would be
supportiveof theirsector's growthamidstthedownsiderisks theyface thisyear.
This is a sharp improvement over the previous year
,where 55% indicated such
sentiments in2022
• Amongst the sectors, Electronics manufacturing (88%), Capital goods (85%) and
Textiles(80%) aremost positiveandhopefulof theupcomingbudget,followed by
foodprocessing(76%) andBFSI (74%)
5%
20%
25%
39%
24%
33%
6%6%
33%
15%
26%
37%
67%
40%
39%
41%
44%
29%
45%
50%
42%
37%
13%
30%
22%
35%
23%
59%
22%
35%
32%
26%
Textiles
Telecom andtechnology
Lifesciences and health care
Foodprocessing
Energy (Oil,gas,and renewables)
Electronicsmanufacturing
Chemicals
Capitalgoods
Banking, investment firms,and
insurance
Automotive
1 - not atallpositive 2 3 4 5 - verypositive
N= 181
N= 181
Taxincentives, credit support, and simplification of capitalgains taxstructure featuredthe most
amongst the top-three budget expectations
Although 37% of the responses had public capex featuring as the top-3 expected policies, raising finances through
disinvestments did not get asmuch attention
Budgetary steps for sector growth
• Amongst the top3 expectationsfrom the budget, additionaltaxincentivesfeatured amongst49% of the responses signallingthe most needed impetus. Taxincentivesare featured as the most
expected initiative amongstrespondentsfrom the BFSI,food processing,and energy sectors.
• Accelerated creditsupportwas the otherone amongstthe top-3 expectation(40% of the respondents), with respondentsin the Energy (56%), Telecom(50%) and Textile (53%) sectorsvotingit
highin their budget expectations.
• Demand for rationalizationof taxesdid not feature as top-3for most respondents, while very few respondentsvotedfor socialand innovationspending.
• Surprisingly,the percentageof respondents prioritisingincreased public CAPEX in their expectations,did not matchwith that of the need to raise funds high. This couldbe because this year,
top-3 expectationswere more sector-specificincentivesgiven the economic headwindsahead.
This is amultiple select question; the sum ofpercentages will not sum up to 100%
Question: What budgetary steps, according to you, can actas an impetus for your sector’s growth?
Accelerated credit
support
40
%
Incentivising private
sector
participation
35
%
Accelerated
divestment
programmes/asset
monetisation
programmes
29
%
Additional tax
incentives
49
%
Increasing public
capex
37
%
Increased spending
on research and
innovation
30
%
Simplification of
capital gains tax
structure
38
%
Rationalisation of
taxes
32
%
Other
s
2
%
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 24
Given the spur towards FTAs,a well-negotiated agreement featured as one of the three expectations amongst 43% of
the respondents
Targeted schemes and broader coverage of PLI,lower custom duties, and affordable credit featured the
most amongst the top three expectations to boost exports
Budgetary steps for sector
growth
• 56% of therespondentsmentionedtargeted
sector-specific schemes and increased
coverage of PLI as the top-three expected
measure to driveexports
− 80% of therespondentsfrom thetextiles
sector and 72% from the chemicals
sectors advocated for enhancing the
coverage of PLI
• Incentivesaroundduties,credit,andtaxes
were the other top-3 asks from the
respondentsto boost exports.
• 43% of therespondentsvoted FTAs as one of
thetop threeexpectations
• Surprisingly, very few respondents
emphasizedpoliciesaroundinfrastructure
and marketing support in their top 3
expectations. This could be because they
expectedcontinuedgovernmentspending
towards infrastructure,but they were not
certainaboutsector-specificincentivesto
boost exports.
56%
Targeted schemes
and
coverage of PLI
43%
More and well
negotiated free trade
agreements
53%
Lower
custom
duties
32%
Improve port
infrastructure
and shipping
50%
Availability of credit
at affordable rates
22%
Support to
marketing efforts
43%
Increase and
extend tax
incentives
1%
Other
s
N= 181
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 25
Question: What measures by the government canboost your industry’s exports?
An overwhelming majorityof respondents perceived trade treaties to help create markets and enhance
their role inGVCs
Respondents expected treatiesto enhance investment flows and the exchange of emerging technologies
Perception of tradetreaties
• Indiais aggressivelypursuingfreetradeagreements,recentlyfinalisingthose with Mauritius,theUAE andAustralia aftera gap of 10 years.Further
,an agreementwiththe UK is
also on theway
.
• Respondentsare veryoptimistic abouttherole these treatieswill playin creatinga market, improvingtheirpositionin GVCs, andattractingforeigninvestments.These treaties
will also help domestic firms get access to emerging technologies. All these will help in improving exports. Higher numbers of respondents from BFSI and automotive sector
hopedforbetterexchangeof technologies
• Respondentswere dividedaboutwhethertradetreatiescould possibly impactgrowthamongstMSMEs adversely
41%
61
%
69
%
81
%
80
%
23%
8%
7%
8%
4%
36%
31%
24%
11%
16%
Will hamperthegrowth/expansionof small/middlescale
industries
Willoffer access to emergingtechnologies
Will increasetheinvestmentin-flows
Will enhancerole in globalvalue chain
Will createmarket formy product
Yes No Notsure
Question: How do you perceive this focus on trade treaties impacting your industry?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 26
N= 181
IGBs and PPP were voted as the most preferred ways to raise the funds for infrastructure
One of the untapped potentials of utilizing the National Pension System (NPS) and other long-term funds was also
recognized as measures to raise funds by almost half the respondents
Measures increase private investment in infrastructure
• 60% of the respondents suggested raising
funds through Indian Government Bonds.
Thisproportionhas increasedby12% from
thepreviousyear
.Since thefundinggap is a
criticalchallenge, relying on low-interest
sovereign bonds is one of the affordable
options.
• Private partnership has taken off only in a
fewpockets of infrastructurefinancing.58%
of the respondents felt PPP could be
encouraged in meeting the funding gap
significantly,by addressingissues thatdeter
private participation, including dispute
settlements and removing risks and
uncertainties.
• One possible way of addressingthefinance
gap problem is a better utilization of NPS
and other longer-term funds that have not
yet beentappedto theirpotential.
N= 181
Others
Impetusto investmentvehicles such as bonds
Betterutilisationof NationalPensionSystem
(NPS) andotherlong-termfunds
Innovativestructuressuch as creditguarantee
enhancementto bringin privatecapital
EncouragePPP byworking on aspects such as
disputesettlements,removingrisks and
uncertaintiesfor privateplayers
IndianGovernmentBonds(IGBs) to raisefinance
Securitisationof infrastructure assets
60
%
58
%
54
%
49
%
43
%
33
%
1
%
What measures according to you canincrease private investment in infrastructure?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 27
Competitive import duties, incentivisation/subsidization, and reduced license fees were the key
expected measures during the budget to support manufacturing
Policies related to credit were the other asks amidsttightening monetary policies
Question: In the wakeof opportunities created by the slowdown in majormanufacturing economies, what, according to you, could be the most effective way to utilise this opportunity for your industry?
• 60% of respondentsexpectedimportduties
to be competitive to help the country grab
opportunities in the international market
when major manufacturing economies are
experiencing aslowdown
‐ This was closely followed by
incentivisation or subsidisation of
construction,plant,machinery,CLCSSfor
technology upgradation, and
employment/skilling) as the next priority
steps to boostoutput
• 56% of leaders concur that additional
reductions in license costs might
significantlyboost productioncapacity
• Access to easy finance may also contribute
to preserving the possibility of a downturn
in industrialcompanies
Measures to support
manufacturing
Incentivisation
or
subsidisation
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 28
Easy credit
flow
Extension of sunset
date for
commencing
manufacturing
Making import
duties
competitive
Reducing license
fees
Financing supply
chain
60
%
58
%
56
%
53
%
48
%
26
%
Taxincentives and subsidies can promote ESG adoption in the industries, highlighted
by majority (~64%)of the leaders
Question: What,according to you, can the budget offer to facilitate ESG adoption in your industry?
• With the government pledging to being
carbonneutralby2070, itis crucialthatthe
forthcoming budget must focus on
Environmental, Social, and Governance
(ESG)concerns
• 64% of the leaders cited that provision of
taxincentivesandsubsidies areneededto
foster a greeneconomy
• More than half of the leaders suggest
increasingthecapitalflow bycreationof
capitalmarkets
‐ 73% of thetextilesindustryleaders
concurred with thisviewpoint
• Nearlyhalfof theleaders agreedthathaving
green instruments for financing can further
enhance the ESGadoption
• Majorityof theleadersfrom Energyindustry
trustthatincentivisingprivatefinancingand
purchasing power parity will boost the ESG
adoption
Expectations regarding ESG
measures
42
%
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 29
46
%
48
%
48
%
51
%
Anyother 1
%
64
%
Introducingemissiontradingmechanisms
Introducing carbontax
IncentivisingprivatefinancingandPPP
Deviseinnovativegreeninstrumentsfor financing
Promote capitalflow bydevelopingcapitalmarkets
Offeringtaxincentivesandsubsidiesto promote green
economy
N= 181
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 30
More respondents from automotive, lifesciences & healthcare and textile industry cite the need for
emission tradingmechanisms.
Question: What,according to you, canthe budget offer to facilitate ESG adoption in your industry?
Measures Automotive Banking,
investme
nt firms,
and
insurance
Capital
goods
Chemicals Electronics
manufacturin
g
Energy Food
processing
Lifescienc
es and
health
care
Telecom
and
technology
Textiles
Offering tax incentives and
subsidies to promote green
economy
58% 68% 65% 67% 82% 61% 76% 50% 55% 53%
Promote capital flow by
developingcapital markets
63% 47% 35% 56% 41% 56% 47% 50% 45% 73%
Devise innovative green
instruments forfinancing
42% 37% 45% 44% 65% 56% 59% 61% 35% 40%
Incentivising privatefinancing
andPPP
37% 53% 65% 44% 24% 67% 53% 39% 55% 40%
Introducing carbontax 37% 53% 65% 50% 41% 22% 35% 50% 65% 40%
Introducing emissiontrading
mechanisms
63% 37% 25% 39% 47% 39% 24% 50% 45% 53%
N= 181
Survey
Findings
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 31
• Economic GrowthOutlook
• Effectivenessof Government’sDigitalInitiatives
• Industry Expectations from Budget2023
‐ Budget Sentiment
‐ Atmanirbhar Bharat and PLI
‐ TaxationChangesand Expectations
Confidence in the effectiveness of policies under Atmanirbhar Bharathas not changedsince last year
Respondents expected the initiative to primarily addresssupply chain resilience
Question: Do you feel Atmanirbhar Bharat is helping your sectorat an operational level? Ifyes, how do you think Atmanirbhar Bharat can be further strengthened?
N= 163
Expectations from Atmanirbhar
Bharat
• Developing strong supply chains is expectedto be the most important measure for
strengtheningtheAtmanirbharBharatProgramme
‐ 82% of energy and 80% of electronics manufacturing respondents emphasise to
this
• More than half of the respondents said that streamlining administrative
proceduresand easing compliance requirementswill enrich the initiative
• Anotherstepproposedby50% of theleaders is easingclearancesto boost FDI
• Only a significant percentage of respondents from the Lifesciences and healthcare
sector expected extending the R&D incentives and initiating weighted deductions
on theR&D expenditure,as well as digitisationto be covered undertheinitiative.
90
%
10
%
Y
es No
202
3
Is Atmanirbhar Bharat
effective?
91
%
9
%
Yes No
202
2
Others
R&Dincentives
extension/weighted
deduction
Competitive importtariffs
Easyclearanceto promote
FDIinflow
Reduceadministrative
inefficienciesand
complianceburdens
Developstrongsupply
chains
Continuedemphasison
digitisationto builda robust
digitalecosystem
64
%
53
%
50
%
44
%
44
%
39
%
6
%
N =
181
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 32
N= 163
Incentives fortraders
selling to the
domesticmarket
Question: Do you feel Atmanirbhar Bharat is helping your sectorat an operational level? Ifyes, how do you think Atmanirbhar Bharat can be further strengthened?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 33
An overwhelming number of respondents from electronics manufacturing,energy, and food processing
sectors expected the Atmanirbhar Bharatinitiative to develop a strong supply chain.
Measures Automotiv
e
Banking,
investme
nt firms,
and
insuranc
e
Capit
al
good
s
Chemicals Electronics
manufacturi
ng
Energy Food
processi
ng
Lifescienc
es and
health
care
Telecom
and
technolo
gy
Textiles
Yes % 95% 84% 90% 100% 88% 94% 82% 83% 100% 80%
Develop strongsupply
chains
61% 63% 44% 61% 80% 82% 79% 47% 55% 75%
Reduceadministrative
inefficiencies and
complianceburdens
67% 25% 61% 67% 47% 41% 36% 60% 65% 50%
Easy clearanceto
promote FDI inflow
56% 69% 61% 56% 40% 47% 64% 7% 45% 58%
Competitive import
tariffs
39% 56% 44% 28% 40% 59% 50% 33% 50% 42%
Continued emphasis on
digitisation to build a
robust digitalecosystem
39% 44% 56% 39% 47% 35% 36% 60% 50% 33%
R&D incentives
extension/weighted
deduction
39% 38% 33% 33% 40% 29% 29% 80% 35% 33%
70% of the respondents perceived the PLI scheme to be beneficial to their sector.
Close to 60% of the respondents were expecting an extension of the incentive to further years
Expectations from the PLI
scheme
7%
39%
43%
49%
49%
54%
59%
Others
Incentivising additionalemployment
generation
Support to research and development
Choice ofastrategic sector
Encouraginginvestment fromwithin and
outsideIndia
Increasingthe ambitof the PLI scheme to other
sectors
Facilitatingand increasing productioncapacity
byextending incentives tomore years
Perception of the PLI
scheme
70%
Positiv
e
25%
Neutral
5%
Negativ
e
• Majority(~70%) of respondentshighlightedthat the various ProductionLinked
Incentivesschemeshave been beneficialfor the growthof theirsector
• Further,59% of the respondentsadvocatedthat extendingthese incentivesfor
additionalyears wouldfacilitateand increasetheir productioncapacity
‐ 71% of food processingand 70% of telecomand technology respondentsexpected an
extension
• A majorityof the respondentsacross all sectors, exceptelectronics manufacturingand
energy, advised broadeningthescopeof PLIprogrammesto include othersectors.
• Surprisingly,respondentsdid not expectthe scheme to address skills and incentiviseR&D
under itspurview
Question: How do you think the PLIscheme has benefited your industry? What more canbe done in the PLIscheme to benefit your industry
© 2023 Deloitte Touche Tohmatsu India LLP.
N =
181
Pre-Budget Survey2023 34
N= 181
• Incentives forexport
manufacturers
• Exportduty concessionsfor
MSMEs
• Incentives forsupporting
industries
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 35
The expectation to extend the PLI scheme was the highest amongst respondents from food processing
and telecommunications andtechnology
Question: How do you think the PLI scheme has benefited yourindustry?
Measures Automotive Banking,
investme
nt firms,
and
insuranc
e
Capit
al
good
s
Chemicals Electronics
manufacturi
ng
Energy Food
processi
ng
Lifescien
ce s and
health
care
Telecom
mu
nications
and
technolog
y
Textiles
Facilitating and increasing
production capacity by
extending incentives tomore
years
47% 63% 50% 56% 65% 61% 71% 56% 70% 53%
Increasing the ambit of the
PLI scheme to othersectors
53% 53% 50% 56% 47% 39% 59% 67% 55% 60%
Encouraging investment from
within and outsideIndia
37% 58% 50% 50% 71% 56% 35% 39% 45% 53%
Choice of a strategicsector 53% 53% 70% 50% 35% 61% 47% 39% 35% 47%
Support to researchand
development
63% 26% 40% 44% 35% 44% 47% 61% 35% 27%
Incentivising additional
employment generation
42% 47% 40% 33% 35% 22% 41% 33% 60% 33%
Survey
Findings
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 36
• Economic GrowthOutlook
• Effectivenessof Government’sDigitalInitiatives
• Industry Expectations from Budget2023
‐ BudgetSentiment
‐ Atmanirbhar Bharatand PLI
‐ Taxation Changes and Expectations
Most respondents citeeasing taxcomplianceto be the most effective direct tax-relatedchange
60% respondents from Telecomand half of respondents from Energy and Lifesciences expect reduction in corporate tax
N= 181
Direct tax-related
changes
Easing
tax
complian
ce
Reducing
tax
litigation
More clarification on
applicability of tax laws and
provisions, such as TDS
under Section 194-O
Further
reductions in
corporate
taxation
66
%
44
%
45
%
43
%
Clarity on
implementation of
Equalisation Levy (EQL)
& Significant Economic
Presence (SEP)
This is amultiple select question; the sum of percentages will be above 100%
Question: What could be the most effective changes in direct taxregulations for your industry?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 37
Extension of
the sunset
clause for
Section 194LC
and Section
194LD
Transfer
pricing
39
%
33
%
29
%
• Amidst global uncertainties and a looming global
economic slowdown, tax-relatedchanges would
boost industrygrowthand arethemost sought-after
measures from thebudget
• Besides easing taxcompliance, 45% of respondents
anticipatethe governmentreducingtax litigation
• 44% expectto gainclarificationof taxlaws and
provisionssuch as TDS undersection 194-O
• Automotiveleaders(53%) also wish to haveclarityon
the implementation of the Equalisation Levy and
Significant Economic Presence, addressed in the
budget
This is amultiple select question; the sum of percentages will be above 100%
Question: What could be the most effective changes in direct taxregulations for your industry?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 38
Capital-intensive sectors such as Food Processing, Textiles, Electronics, Capital Goods hope for easier
taxcompliance
Measures Automotive Banking,
investme
nt firms,
and
insurance
Capit
al
good
s
Chemicals Electronics
manufacturi
ng
Energy Food
processi
ng
Lifescienc
es and
health
care
Telecom
and
technolo
gy
Textiles
Easing taxcompliance 58% 63% 70% 56% 76% 78% 88% 50% 55% 67%
Reducing taxlitigation 42% 21% 55% 61% 47% 39% 53% 50% 40% 47%
More clarification on the
applicability of tax laws and
provisions, such as TDSunder
Section
1940
47% 68% 30% 44% 41% 39% 35% 56% 45% 27%
Furtherreductionsin corporate
taxation
42% 42% 40% 39% 24% 50% 41% 50% 60% 40%
Clarity on implementation ofEQL
andSEP
53% 42% 35% 33% 35% 33% 24% 50% 35% 47%
Extensionof thesunsetclause for
Section 194LC andSection 194LD
16% 47% 45% 44% 35% 28% 24% 22% 40% 20%
Transferpricing 42% 16% 20% 22% 41% 33% 35% 17% 25% 47%
Majority of respondents feel rationalisation of taxrates across all assets and gains indexation would be
highly beneficial
This is a multiple select question; thesum of percentages will be above 100%
Question: What changes in the capital gains taxstructure will be helpful for your industry?
N= 181
Capital gains tax structure
changes
• The industry is expecting the budget to simplify the
capitalgainstaxstructureandremove ambiguitiesin
interpretation of tax thereby making its compliance
easier
• Thisbecomes even more relevantas theeconomy is
moving towards the digital era where new and
innovative forms of instruments are likely to enter
andfuelgrowth of theeconomy and especiallystart-
up ecosystem
• The structural changes in the capita gains tax
becomes more imperativeatpresentwhentheglobal
economyis slow, andCOVID-19 threatis looming
• This step will spur investment and economic growth
and willprovidelong-termreliefto thetaxpayersand
the taxadministration
Others
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 39
Rationalisingmultipleholdingperiods
Removing ambiguityin interpretationof tax
Gains should be indexed(Inflationaryeffectscan be
factoredin)
Rationalisationof ratesacross allasset classes 54%
54%
48
%
44
%
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 40
With Energy being in the focus, 61% respondents from the sector hope for reduced
ambiguity in taxinterpretation
This is a multiple select question; thesum of percentages will be above 100%
Question: What changesin the capital gains taxstructure will be helpful for your industry?
Measures Automotive Banking,
investme
nt firms,
and
insurance
Capit
al
good
s
Chemicals Electronics
manufacturi
ng
Energy Food
processi
ng
Lifescienc
es and
health
care
Telecom
and
Technolog
y
Textiles
Rationalisation ofrates
across all assetclasses
63% 58% 55% 67% 35% 44% 59% 39% 70% 40%
Gains should be indexed
(Inflationary effects canbe
factoredin)
63% 53% 55% 44% 53% 61% 47% 56% 55% 47%
Removing ambiguityin
interpretation oftax
42% 53% 40% 39% 47% 61% 41% 61% 40% 53%
Rationalisingmultiple
holdingperiods
32% 37% 50% 50% 65% 22% 53% 44% 35% 60%
Three-quarters of respondents support group taxation,with ~80% wanting it to be
implemented within ayear
Question: Should India move to a “group taxation” concept, wherein taxpayers canfile a single group tax return, similar to group consolidations for financial statements, to promote better private sectorparticipation and speedier
infrastructure development?
N =181
Moving to group
taxation
• 75% of theindustryleaders(as comparedto 81% in past year)citethatIndiashould opt for Grouptaxation
• In theabove cohort,78% of leadersfeelthatgroup taxationshould be implemented‘now’or ‘inthenext year’
75%
25%
81%
19%
Y
es No
2023 2022
Opportune time for
movement
22%
55%
23%
After a minimumof 5 years
In thenext year
Now
Theopportunetime for movementwas askedonlyto those
respondents(136) who feel that India shouldmove to group
taxation(“Yes”in previousquestion).
Y
es
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 41
76% respondents believe thatchanges in GST taxstructure would be most impactfulfor their industries
Large majority of respondents from Energy,Telecom,and Lifesciences strongly support the above perspective
This is amultiple select question; the sum of percentages will be above 100%
Question: What could be some of the most effective changes in indirect tax regulations for your industry?
N= 181
• Close to 70% of respondents also highlighted the
needfor furthersimplificationof tariffstructureas
simplification will lead to fewer interpretational
issues, bettercompliance,andless litigation
• Simplificationof the tariffstructurefor importand
exports and easy compliance rules for FTA
agreementswill make compliance easier
,reducing
futurelitigations
• Close to 55% respondents believe that amnesty
schemes for customs would also fast-trackdispute
resolution, helping them to reduce time and cost
effort on thisfront
• 72% Energyrepresentativesmentionedthe need for
amnestyschemes forcustoms (relateddisputes)
Indirect tax-related
changes
Others
Implementationof DESH Bill/amendmentsto SEZrules
Amnestyscheme for customs (relateddisputes)(similar to
SabkaVishwas, and Vivadse Vishwas)
Ease compliancerules for FreeTradeAgreement (FTA)
imports
Furthersimplificationof tariffstructure
GST tax structurechanges 76
%
69
%
62
%
54
%
3
%
36
%
N =
181
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 42
Question: What could be some of the most effective changes in indirect tax regulations for your industry?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 43
Most sectors opted for simplification of the tariffstructure as the most significant indirect taxchange
This is amultiple select question; the sum of percentages will be above 100%
Measures Automotive Banking,
investme
nt firms,
and
insurance
Capit
al
good
s
Chemicals Electronics
manufacturi
ng
Energy Food
processi
ng
Lifescienc
es and
health
care
Telecom
and
Technolog
y
Textiles
GST taxstructure
changes
74% 79% 75% 78% 59% 94% 59% 83% 85% 73%
Further simplificationof
the tariffstructure
79% 58% 65% 83% 82% 44% 71% 72% 65% 67%
Ease compliancerules
for Free Trade
Agreement (FTA)
imports
74% 53% 65% 44% 65% 56% 71% 56% 75% 67%
Amnesty schemefor
customs (related
disputes)
32% 63% 65% 39% 53% 72% 65% 56% 40% 53%
Ease of availing Input TaxCredit (ITC) and removal of GST credit restrictions are the top GST-related
changes expected from the budget
Energy,BFSI,and Lifesciences and Health Care amongst the top sectors to expectso
Expected GST related changes
N= 138
• Existing GST procedures need to allow for
rectificationof previouslyfiledreturns,establishment
of centralAAR etc.to ease compliance
• More than 40% respondents highlighted easing
removingambiguitiesanddecriminalisationof GST
laws as importantstepsin promotingease of doing
business
3%
This is amultiple select question; the sum of percentages will be above 100%
Question: What changesin GST canbe beneficial for your industry?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 44
23%
30%
36%
41%
41%
Others 1%
58%
Clearguidelineon taxpolicyfor digitaleconomy, i.e.,
source income from crypto,online gaming,casino
Set up of appellateforumsfor GSTmatters
Reduction inthe numberof slabs
Decriminalisation of GSTlaw
Ease complianceburden
Removal of GST creditrestrictions
Ease of availingInputTaxCredit(ITC)
This question was asked only to those respondents (138) who feel that a changein GST canbe beneficial (selected GST changes in last question).
This is amultiple select question; the sum of percentages will be above 100%
Question: What changesin GST canbe beneficial for your industry?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 45
CapitalGoods and Chemicals amongst top sectors against GST credit restrictions
Measures Automotive Banking,
investme
nt firms,
and
insurance
Capit
al
good
s
Chemicals Electronics
manufacturi
ng
Energy Food
processi
ng
Lifescienc
es and
health
care
Telecom
and
technology
Textiles
Ease of availingInputTax
Credit(ITC)
64% 73% 47% 64% 60% 88% 70% 73% 65% 45%
Removal of GSTcredit
restrictions
64% 53% 73% 79% 50% 41% 60% 53% 47% 64%
Ease complianceburden 21% 47% 60% 29% 50% 41% 40% 33% 53% 36%
Decriminalisation ofGST
law
29% 33% 40% 29% 30% 41% 40% 60% 65% 36%
Reductioninthenumber
of slabs
64% 27% 40% 36% 40% 41% 30% 40% 18% 18%
Set up of appellateforums
for GSTmatters
36% 27% 27% 43% 30% 29% 40% 13% 24% 45%
About 40% of industry leaders think that granting indirect taxbenefits to businesses and accelerating
the expenditure deduction will boost priority industries’ growth
Anticipated tax incentives for priority
sectors
N =
181
Benefitof indirecttaxes to enterprisesintheform of
anexemptionwindowon customs dutyor GST
Accelerated deduction of expenditure incurred on
investmentinbusinesses in these sectors, especiallyin
areas such asR&D
Incentives forexports
202
3
202
2
40
%
34
%
26
%
• Along with PLII, furthertaxincentivesare expectedfrom theindustryleaders.40% of leaders(down from 53% last year)believethatbenefitsof indirecttaxes should be
providedto firms in theform of GST or customs dutyexemptions,such as manufacturingbonds
• Comparedto 52% of industryleaders last year
,34% of leaders favouredexpediteddeductionof expenses relatedto company investmentthisyear
• Incentivisingexportsis also an equallyimportantmeasure as cited by27% of theleaders
Question: What other tax incentives, along with PLI,canthe government consider for enterprises in priority sectors?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 46
53
%
52
%
N= 163
Over 55% respondents feel thatsimplifying taxregulations and reporting demands canremove
ambiguities and improve compliance,leading to reduced litigations
These aremultiple select question; the sum of percentages will be above 100%
Question: What aspectsin compliance should the government focus on to ease the taxation process? How do you think tax litigation canbe reduced?
• Over 51% respondentsexpressedtheneedforstable laws andnewercomplianceprotocols
• Furthermore,~50% also feelthatavoidingdualinvestigationsby multipleauthoritiescan ease theircompliance
• In additionto simplifyinglaws, majorityof respondentsalso feelthatensuringthesmooth andtimelyfunctioningof disputeresolutionmechanisms such as faceless appeals,
AdvancePricingAgreement(APA) mechanism, BoardforAdvanceRuling(BAR) andDisputeResolution Scheme(DRS) will reducetaxlitigation
56
%
Simpletaxregulationsand
reportingdemands
51
%
Stablelaws Avoiding dual
investigations bymultiple
taxauthorities
49%
Ease of availing credit with
vendors,accountpayablerules
43%
Others
1%
N= 181
Aspects to ease the compliance in taxation
process
Measures to reduce tax
litigation
Simplified laws that create no ambiguity in
interpretation
Ensuring smoothand timely functioning of
56%
dispute resolution mechanismssuch asfaceless 53%
appeals, APA mechanism, Board for Advance…
Legislate the newfast-trackconciliation process
that benefits both thetax department and 46%
taxpayer
Notsure
• Invoking resolutionatall Others
levels
• Flexible taxregimes
3%
21%
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 47
N =
181
70% respondents expect changes in personal taxation;over 60% expect increase in exemption and
deduction limits
These aremultiple select question; the sum of percentages will beabove 100%
Question: Do you think any changein personal taxation would help increase demand in your industry? If yes, whatdo you think canease individuals’ tax burdens?
• Most respondentsbelieve thatincreased exemptionanddeductionlimitsin personaltaxeswilllead to increasedconsumerdemandfor theirindustry.
• Increasingyearly NPS contribution (under Section80C and Section80CCD(1b)) and rationalisingincometaxslabs and rates have alsobeen citedas effective by a significantnumber of
respondents
• The survey also assessed theeffectivenessof the New Tax Regime and found that the response was divided.However,mostrespondentscitedthat the New tax regime needs
further simplification
Changes in personal taxation,
effective?
Expected changes in personal
taxation
N =
125
Increasingtaxexemption limitto boostliquidity
and increase demand(consumer)
Enhancement of the deduction limit, for example,
for interest on home loans under section 24(B)
Increase in the yearlyNPS contributionunder
Section 80C andSection 80CCD(1b)
Rationalising income taxslabsand rates
Exemption in provident fund contribution already
taxed
Makingthe employee’s contributiontoEPF
voluntary
61%
67%
60%
51%
47%
44%
37%
45%
2023 2022
69%
2023
88%
2022
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 48
N= 163
N= 181
Further simplification of new taxregime is expected by the majority of respondents
Implementation of the New Tax
Regime
42
%
24
%
15
%
6
%
13% More simplificationof newregime
Two regimes—Old and New Regime—are working fine
New regime is betterthantheold regime
Old regime is betterthan thenew regime
Notsure
N= 181
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 49
Thisisamultiple selectquestion;thesum of percentageswill be above 100%
Question: The New Taxregime was introduced in Budget 2020-21.How do you see its implementation in the future?
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 50
Respondents across sectors expect enhancement of the deduction limit, such as interest on home
loans
This is amultiple select question; the sum of percentages will be above 100%
Question: The New Taxregime was introduced in Budget 2020-21.How do you see its implementation in the future?
Measures Automotive Banking,
investme
nt firms,
and
insurance
Capit
al
good
s
Chemicals Electronics
manufacturi
ng
Energ
y
Food
processi
ng
Lifescienc
es and
health
care
Telecom
and
technology
Textiles
Increasing tax exemption limit
to boost liquidity and increase
demand
53% 56% 64% 50% 53% 44% 70% 85% 73% 56%
Enhancementof thededuction
limit, for example, for interest
on home loans under section
24(B)
47% 69% 55% 50% 80% 56% 40% 62% 80% 44%
Increase in the yearly NPS
contribution under Section80C
and Section80CCD(1b)
47% 31% 55% 75% 47% 44% 70% 62% 33% 67%
Rationalising income taxslabs
andrates
67% 56% 36% 50% 47% 67% 50% 31% 20% 56%
Exemption in providentfund
contribution alreadytaxed
67% 56% 27% 33% 33% 56% 20% 31% 53% 56%
Making theemployee’s
contribution to EPFvoluntary
20% 31% 64% 42% 40% 33% 50% 31% 40% 22%
Thank
You
© 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 51
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UKprivate company limited by guarantee (“DTTL”),its network of member firms, and their related entities. DTTL
and each of its member firms are legally separate and independent entities. DTTL(also referred to as “Deloitte Global”) does not provide services to clients. Please see
www.deloitte.com/about for a more detailed description of DTTLand its member firms.
This material is prepared by Deloitte Touche Tohmatsu India LLP(DTTILLP).This material (including any information contained in it) is intended to provide general information on a
particular subject(s) and is not an exhaustive treatment of such subject(s) or a substitute to obtaining professional services or advice. This material may contain information sourced
from publicly available information or other third party sources. DTTILLPdoes not independently verify any such sources and is not responsible for any loss whatsoever causeddue to
reliance placed on information sourced from such sources. None of DTTILLP,Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte
Network”) is, by means of this material, rendering any kind of investment, legal or other professional advice or services. Youshould seek specific advice of the relevant professional(s)
for these kind of services. This material or information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any
decision or taking any action that might affect your personal finances or business, you should consult aqualified professional adviser.
No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person or entity by reason of access to,use of or reliance on, this material. By using this
material or any information contained in it,the user acceptsthis entire notice and terms of use.
© 2023 Deloitte Touche Tohmatsu India LLP.Member of Deloitte Touche Tohmatsu Limited

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  • 2. Introduction • Objective andMethodology • RespondentProfile Executive Summary Survey Findings • Economic GrowthOutlook • Effectiveness of Government’s Digital Initiatives • Industry Expectationsfrom Budget 2023 ‐ Budget Sentiment ‐ Atmanirbhar Bharat andPLI ‐ Taxation Changes and Expectations Table ofcontents © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 2
  • 3. Introduction • Objective of thestudy • Respondentprofile © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 3
  • 4. Introduction Objective • Understand the industry’s outlook oneconomic growth • Assess various digital initiatives by the government that the industry felt helped make India become the front-runner for technology and digitalization • Understand the industry’s perspective on the efficacy of government initiatives such asAtmanirbhar Bharat and Production Linked Incentive • Analyse industry’s expectations from the upcoming budget from the standpoint of economic growth, Environmental, Social, andGovernance (ESG) adoption, tradeagreements, and boosting exports • Discuss industries’ outlook towards tax-related changes and strategies that can help to mitigate risks and support the industries in times of global uncertainties Methodology • We conducted online surveys with senior leaders across differentindustries and categories ofcompanies. • The survey contained 27 questions about the economic outlook, budget projections, corporate and personal taxation changes, and views of effectiveness of various digital initiatives introduced during the past year. • We collated a total of 181 responses from 10 industries. The survey contained multiple select and single-select questions. The sum of the percentages of options of multiple select questions will be above 100% Turnove r 10% 11% 10% 10% 9% 10% 10% 11% Respondent profile Industry 9% 10% Automotive Banking,investmentfirms,andinsurance Capitalgoods Chemicals Electronics manufacturing Energy (Oil, gas, andrenewables) Food processing Lifesciences and healthcare Telecom andtechnology Textiles N =181 33% 39% 28% Above INR 3,000 crore INR 250 crore–INR 3,000 crore Less thanINR 250 crore © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 4
  • 5. Executive Summary © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 5
  • 6. © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 6 Deloitte − Point of View Amidst a possible global economic slowdown and geo-political instability, the domestic economy has remained resilient and is well on its way to growth at 7% year over year. To support India’s US$5 trillion economy ambition, the industry holds high expectations from the Budget 2023-24 especially through tax reforms andcontinuedCAPEX with a focus on infrastructure. Keyannouncementsin BudgetFY’23 expectedto furtherstrengthenthepace of growth: Focus on Infrastructure (Physical and Digital) – The Government has been aggressive about infrastructure development in the last few years, and this momentumis expected to continue.This will reaplong-lastingbenefitsto thenationin theform of industrialgrowth, more employment, globalsupply chain integration, and investment flows, thereby fueling economic growth and realising the US$5 trillion economy ambition. To support the infrastructure development, measures such as encouraging private partnerships in large projects – including physical and digital - and incentivising private players or mitigatingrisks forthemwould provemost useful. In addition,the government’sstrategicfocus on improvingresearch andinnovationshould move forwardwith more rigour,and attractinginvestments, bothdomesticandinternational,will prove valuable. Deloitte’s expectatio ns from the budget Boost export competitiveness – Giventheencouragementreceivedfor theAtmanirbharBharatandPLI schemes, extendingthescope of incentives and the coverage of industrieswill helpfurtherboost exportsas well aid in India’sshare in theglobalvaluechain.In addition,various FTAs, executedor in progress, by India are perceived as favourable to the industry. Various reforms to facilitatethem in the form of easing compliance rules will further strengthen the momentum. • Support MSME growth – IntegratingMSMEs intotheglobalsupplychain will be theway forwardfortheMSME sector in India.The accelerated credit facility,incentivization,and technologyintegrationwill improve operationalefficiencies andreduce costs. This will enhancetheirglobal competitiveness andstrengthenthe sector, thereby,boosting theeconomy andprovidingmaximum employmentopportunitiesto low-income strataof thepopulation. Promote a green economy – To realise India’s commitment to achieving carbon neutrality by 2070, there must be targeted efforts in encouraging industries to adopt ESG measures through incentives. Furthermore, developing capital markets, devising green instruments, and encouraging private investments will help achieve thisgoal. Make compliance easier – The tax structure (direct and indirect) needs to be simpler,stable, and unambiguous, leaving no room for interpretational ambiguities. The changes, such as more clarification on the applicability of tax laws and provisions, such as taxdeducted at source (TDS) are needed. Furthermore,thedigitaltaxstructureneedsfurtherclarification,such as the implementationof theEqualisationLevyandSignificantEconomic Presence.
  • 7. Executivesummary Despite global exigencies weighing on the economic environment there is optimism about India’s growth prospects. India is likely to grow at a healthy pace and the policy announcement of the forthcoming budget will likely be supportive of growth while balancing concerns around inflation and global risks.The following points express the expectations of the industry from the budget. Positive economic growth outlook amongst the leaders • Industry leaders are highly confident about India’s positive outlook and the economy is likely to achieve the 7% as projected by NSO’s early estimates; growth willbe attributable to rising domestic demand and the government’s push for capital expenditure • The challenges posed by the global recession, currency fluctuations, along with domestic concerns such as inflation and skilled labour shortages are a few of the downside risks and are seen as impediments to the industry’s growth • Furthermore,the respondents are more confident of the budget being favourable, than last year ,to their industry’s growth, as they expect the government to be proactive in cushioning the impact of economic risks that India may encounter this year. Taking digitisation to the next level • The government’s digitisation drive has been much appreciated by the industry, especially by the energy,BFSI, and automotive sectors • Amongst all the digitised tax administration initiatives by the government, the GST portal and e-invoicing system have been recognised as the most useful. The GST portal enables filing returns, refunds, and doubt resolution much more efficiently,and provides a one-stop solution. More effective interventions may be required for the effectiveness of faceless assessments. • Collaborating and encouraging investments from the private sector in completing digital projects, investing in emerging technologies, and focusing on innovation will likely boost the digitisation efforts of the government and will consequently step-up India’s play in being a technology powerhouse Industry Insights & Expectatio ns © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 7
  • 8. Executivesummary Atmanirbhar Bharat All respondentsseeAtmanirbharBharatas an effectiveprogram • Most of themexpectthe initiativeto focus more on making thesupplychain resilienceandfacilitatingeasy compliance. Easy clearanceto boost FDI in- flows is also citedas anotherimportantmeasureto furtherstrengthentheinitiative • An overwhelmingnumberof respondentsfrom energy ,food processing, andelectronics manufacturingexpect AtmanirbharBharatto developa strong supplychain Widening the scope of PLI • The PLI scheme is perceived as beneficial for industry growth and encourages businesses to extendtheirmanufacturingbases and enhanceexports, therebyincreasingthesector’s production • Majorityof respondentsexpectextendingthese incentivesfor additionalyears to supportthemincrease theirproductioncapacity .This expectationis highestamongstrespondentsfrom thefood processing andtelecom andtechnologyindustries. Prime expectations from the Budget • Additional tax incentives is one of the top expectationof therespondentsfrom thebudgetthatwill spur growthin theirindustries.Theview resonates morestronglywith BFSI,food processing,energy,andtelecom respondents • Acceleratedcreditsupport,and simplificationof capitalgainstaxstructurealso featureamongst thetop-threebudgetexpectations Boosting exports – Targetedsector–specific schemes and increased PLI coverage are consideredas one of the most effectivestrategiesfor boosting industrialexports.More respondentsfrom thechemical andtextileindustrysupportthisview • FTAs are beingperceivedas significantin creatinga market, improvingtheirposition in GVCs,andattractingforeigninvestments.Besides, betterexchange of technologies, informationandbest practices will improve export competitivenessand benefitssectors such as theBFSI and theautomotivesectors. Industry Insights & Expectatio ns © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 8
  • 9. Executivesummary Infrastructure financing – Raising funds from the bonds market at lower rates along with encouraging private participation are seen as the two most preferred ways to raise funds for infrastructure development.Additionally, devising innovative structures such as credit guarantee enhancement is also cited as aneffective measure Taxation policy reforms expectations Tax-relatedimprovements arethe most desired budgetary measure since they areconsidered to accelerate industrial expansion • Corporate taxation ‐ Making taxcompliance easier is the most effective direct tax-related change, as suggested by the majority of respondents. The view is strongly reflected by respondents from food processing, textiles, electronics, and capital goods, as compared to other sector respondents ‐ Besides easing tax compliance, a high number of respondents anticipate the government to reduce tax litigation ‐ On changing capital gains tax structure, rationalising tax rates across all assets; and indexation of gains are cited as extremely beneficial for the industry ‐ Acall for reformingthe GST tax structure is loud, also underlining the need for greater simplification of the tariffstructure since many of the believe this willresult in fewerambiguities, better compliance, and fewerlegal disputes o Under GSTchanges, ease of availing Input T axCredit (ITC)and removal of GSTcredit restrictions are the top changes expected from the budget ‐ Group taxation – Most respondents support group taxation and want it to be put into effect within a year • Personal taxation ‐ Majority of respondents expect changes in personal taxation in the form of more tax exemptions and increasing deduction limits such as the interest deduction for house loans, to be most effective for individuals, which would give the consumers more purchasing power and thereby increase demand (consumer) in themarket Industry Insights & Expectatio ns © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 9
  • 10. © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 10 2023 Vs.2022 Outlook 2023 2022 Positive Positive Economic growthoutlook 62% 78% Budget Outlook 73% 55% Atmanirbhar Bharat 90% 91% Efficacy of digital initiatives 57% 59% Group taxation 75% 81% Industry Expectation 2023 2022 Digital initiatives Active collaborationwithprivate sectorin identifying and accomplishing digitalprojects Introducing and implementing moreonline platforms to reduce delays andred-tape Capital investment Indian Government Bonds (IGBs) to raise finance and encourage Public Private Partnership(PPP) Innovative structures togetprivatecapital Taxation (for prioritysector) Benefitofindirect taxes to enterprises in the formof an exemption window on customsduty or GST Taxincentivesforenterprises inpriority sectors,such as foodprocessing,MSMEs, and infrastructure Group taxation ~80% ofrespondents feelthat grouptaxation should be implemented ‘now’or ‘in the next year’ 70% ofrespondents feelthat group taxationshould be implemented‘now’or ‘inthe next year’ Total responses 2023 : 181 Total responses 2022 : 163
  • 11. Survey Findings © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 11 • Economic Growth Outlook • Effectivenessof Government’sDigitalInitiatives • IndustryExpectationsfrom Budget2023 ‐ BudgetSentiment ‐ Atmanirbhar Bharatand PLI ‐ TaxationChangesand Expectations
  • 12. The optimism was relatively more pronounced amongst sectors with better performance and outlook driven by strongdomestic demand Amidst global slowdown, over 60% of respondents conveyed confidence about India growing above 6.5% Outlook by sectors Overall growth outlook • A majorityof the respondentsexpectIndia to grow over 6.5% in FY’23.This signals optimismand confidencein India’sresilience and growthprospects • Capitalgoodssectorhas performedwellin recent quarters, and higher policyrates have helped banks improvemargins.Geopolitical uncertaintieshave created opportunities for sectors, such as Chemicals, Electronics, and Energy while digitisation has helped the technology sector.The buoyanceis evidentfrom their outlookfor the economy,wherea large share of respondents from these sectors have expressed confidence in growth to be high. However,respondentsfrom food processingare divided on the outlook. 53% 65% 56% 47% 67% 65% 72% 70% 63% 58% 47% 35% 44% 53% 33% 35% 28% 30% 37% 42% Textiles Telecom andtechnology Lifesciences and health care Foodprocessing Energy (Oil, gas,and renewables) Electronicsmanufacturing Chemicals Capitalgoods Banking, investment firms,and insurance Automotive Above 6.5% Below6.5% Question: What is your outlook on India’s growth during 2023–24? 2023 2022 Above 6.5% Positiv e Below 6.5% Negativ e 62 % © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 12 38 % 78 % 4 % N = 181 N= 181 N = 163
  • 13. The economic growth is expected to be above 6.5% primarily driven by strong domestic demand and government initiativeslikeAtmanirbhar Bharatand PLI Pro-growth factors recognised by respondents • The economy is expected to grow above 6.5% driven by domestic demand and rising household consumption, which will boost demand for goods and services across industries, especially the consumer durables • The initiatives by the central government will stimulate the growth of MSMEs, manufacturing industries (likeAtmanirbhar Bharat, PLI), exports (lower custom duties) and will likelyplay a vital role • Favourable monetary policies by RBI have moderatedretail inflation and maintained significant forexreserves to deal with currency fluctuations • Increased spending of government on infrastructure and research and innovation may yield promisingresults • The slowdown in the manufacturing economies is a sizable opportunity for India to capitalise on supporting other economies • The digital transformation of the private sector , to become a center of global offshoring is another opportunityarea • Growth in industries like– ‐ Healthcare –Surge in the output of medical equipment/vaccines ‐ Automobile -Increased demand for SUVs and EV manufacturing to attractinvestments ‐ Telecom – 5G roll-out and demand for fiber broadband networklook promising Headwinds to the growth identified by respondents • Upcoming global recession caused by the geopolitical turmoil post-COVID- 19, and soaring energy,food, and labor costs are a major deterrent to economic growth.Due to this, GDP growth may fallbelow 6.5% • Skilledtalent shortage will have a detrimental impact on the overall progress of the servicessector • Supply chain delays, poor infrastructure, and high indirect costs are likely to impact business operations. This requires government intervention to develop a revitalised digitally powered procurement operatingmodel • Spillovers from the Russia-Ukraine war and global monetarypolicy tightening will hurt the money supply in the economy • The fear of subsequent variants of COVID-19 might prompt consumers to enable savings and likelyto reduce the private demand • Slowdown in manufacturing industries driven by increased input costs from international markets will stifle industrialgrowth • Other factorsinclude: ‐ Limited funds and private sector participation in researchand innovation ‐ Low spending, and unfavourable customer-centric policies © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 13
  • 14. Global exigencies overwhelmingly weigh on the economic outlook than domestic factors Domestically, higher inflationary pressures concern businesses the most, while talent and logistics are the other impediments • Respondentsperceive uncertaintiesowing to the globaleconomic slowdown,exacerbatedby the aggressivemonetarytighteningto control inflation, and geopolitical conflicts to be the biggest challenge thatimpactingIndia. • While globally integrated sectors such as BFSI, automotive, electronics, and chemicals, are more concerned about the global slowdown and currency fluctuations, geopoliticalinstabilitiesworry commodity-based sectorssuch as energy, food, and materials. • Domestic inflation,exacerbatedby importedinflation,is adding to cost pressures and evidently concerns 50% of the respondents respondingto the survey. • A depreciated currencymakes importsexpensive. which probably explainsa higher concernaboutinflationfrom the respondents of the electronics sector (71%). Domestic-focused formulation, API players, and imported medical instruments are likely to face cost escalation and margin pressure concerning the life sciences and healthcare sectors(60%) • Despite being export-oriented, the textile sector is losing in the globalmarketas the currenciesof competingcountries registereda strongerdepreciationagainstthe US dollarcomparedto INR. • The supply chain issues are of lesser concern and only for a select few sectors such as automotive, energy, and textile, suggesting an easingof supplychaindisruptionsand improvedmobility. • Emerging and skilled-intensive sectors are the ones most concerned about labour-skillmismatches. Impediments to growth N= 181 Global slowdow n Currency fluctuatio ns Geo- political instability Supply chain delays 54 % 43 % 46 % 38 % Lagging physical and social infrastructure Inflatio n Skills demand- supply mismatch 50 % 40 % 23 % © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 14 National factors Global factors Thisisamultiple select question;thesum of percentageswill be above 100% Question: What according to you canbe the impediments to the growth of your industry?
  • 15. © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 15 Globally integrated sectors such as BFSI,automotive, electronics, and chemicalsare more concerned about the global slowdown Measures Automotiv e Banking, investme nt firms, and insuranc e Capit al good s Chemicals Electronics manufacturi ng Energy Food processi ng Lifescienc es and health care Telecom and technolo gy Textiles Global slowdown 68% 74% 25% 67% 65% 44% 35% 56% 50% 53% Supply chaindelays 53% 11% 25% 39% 41% 50% 47% 33% 25% 67% Currencyfluctuations 21% 32% 40% 39% 71% 50% 53% 56% 50% 60% Geopoliticalinstability 47% 53% 55% 39% 24% 50% 65% 28% 45% 20% Inflation 47% 63% 65% 61% 18% 44% 41% 50% 55% 53% Skills demand-supply mismatch 37% 37% 40% 39% 53% 22% 35% 56% 55% 20% Lagging physicaland socialinfrastructure 26% 26% 40% 6% 29% 28% 18% 11% 20% 20% Question: What according to you canbe the impediments to the growth of your industry?
  • 16. Survey Findings © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 16 • Economic GrowthOutlook • Effectiveness of Government’s Digital Initiatives • IndustryExpectationsfrom Budget2023 ‐ BudgetSentiment ‐ Atmanirbhar Bharatand PLI ‐ TaxationChanges andExpectations
  • 17. The government’s digitisation drive has been appreciated by energy, BFSI,and automotive More targeted efforts may be needed in digitising administrative processesfor the textile and capital goods sectors Question: Do you think that the government’s technology and digitisation drive (suchas GST portal, compliance information portal for customs, DataProtectionBill, ONDC project,and GeM) has been helpful for your industry? 40% 75% 61% 53% 61% 65% 56% 40% 58% 63% 47% 20% 39% 41% 28% 29% 44% 45% 42% 37% 13% 5% 6% 11% 6% 15% Textiles Telecom andtechnology Lifesciences and health care Foodprocessing Energy (Oil,gas,and renewables) Electronics manufacturing Chemicals Capitalgoods Banking,investment firms,and insurance Automotive Yes Somewhat No 57 % 37 % Ye s Somewh at helpful N o Has Digitisation been helpful? Sector- wise • Therehas been a growing push by thegovernmentto digitise administrativeservices andimprove governance and ease of doingbusiness. • 57% of respondentsacross theboardbelievethattherecentdigitisationinitiativeshavebeenverybeneficial, while 37% believeithas been somewhat beneficial • Thegovernment’sdigitisationinitiativesmay requirea targetedapproachforthe textileandcapitalgoods sectors. N= 181 N= 181 6 % © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 17
  • 18. Faceless assessments were the least voted initiative, which signals more effective interventions Helpful digital taxinitiatives Digitisation initiatives such as the GST portal enabling filing returns, refunds, and doubt resolution and e-invoicing have been most appreciated Question: Which have been the most helpful for your industry? • Digitisationinitiativeshaveprovento helpfiletaxesandease thegovernanceprocess. • TheGST portalenablingfilingreturns,refunds,doubtresolution, ande-invoicinghas beenmost appreciatedbyrespondentsacross allsectors, followed by Computer-based scrutinyselection resultinginlimitedcases pickedup forassessment (use of dataanalysis). • Respondentsfrom the automotive, chemicals andlifescience andhealthcaresectors havebeenmost appreciativeof the mentioneddigitisationinitiativesundertakenso far , while therespondentsfrom thetextilesector havegivena mixed response. • None of therespondentsfoundfaceless assessment useful,which probablysignals thatthegovernmentmeasures may not havebeeneffectivein this area. 57 % 67% 59 % 62% 70% 65% 48 % © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 18 Input tax credit reconciliation GST portal enabling filing returns, refunds, anddoubt resolution E-invoicing system E-way bill CPC enabling e-Filing and e-Processing of taxreturns and refunds Faceless assessments Computer-based selection results in limitedcases being picked up for assessment N =181
  • 19. © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 19 Respondents from the automotive, chemicals, and life science and healthcare sectors have been most appreciative of the mentioned digitisation initiatives Question: Which have been the most helpful for your industry? Measures Automotive Banking, investme nt firms, and insurance Capit al good s Chemicals Electronics manufacturi ng Energy Food processi ng Lifescienc es and health care Telecom and technology Textiles GST Portal enablesfiling returns, refunds, doubt resolution 89% 79% 75% 67% 76% 61% 65% 72% 70% 40% E-invoicingsystem 74% 68% 70% 67% 53% 56% 82% 67% 70% 60% Computer based scrutiny selection resulting in limited cases pickedupforassessment (use of dataanalysis) 84% 63% 65% 78% 59% 44% 47% 78% 60% 67% E-waybill 58% 47% 65% 56% 53% 61% 76% 67% 80% 60% Centralized Processing Centre (CPC) enabling e-Filing and e- Processing of tax returns and refunds 74% 68% 50% 61% 59% 56% 53% 72% 50% 47% Inputtaxcredit reconciliation 63% 68% 65% 67% 53% 44% 53% 50% 50% 60% Faceless assessments 47% 53% 50% 39% 41% 44% 41% 50% 60% 47%
  • 20. Respondents suggested activecollaboration with the private sector and investment in advanced technology Question: How,according to you, canthe government further improve on this? Active collaboration with private sectorin identifying and accomplishing digital projects More investments in digital infrastructure and technologies such as AI, IoT, and Big Data Introducing and implementing more online platforms to reduce delays and red tape More focus on research and innovation Cloud deployment and implementation for enhanced digital privacy and security Simplified digital taxation law Offering a conducive work environment to vendors/partner companies Other s N= 181 • As digitalcapabilitiesevolve,theremust be a consistent push to facilitatetechnology transformation to its fullpotential • However , amongst the various alternatives, respondents could agree only on a few that could drive digitisation to the next level. 56% of the respondentsbelievedthatworking activelywiththe private sector to identify and accomplish digital projectsmay advanceeffortstowards digitisation • Amongst therespondents,thelargest supportfor the active collaboration from the private sector came from Lifesciences and healthcare (~72%) and Electronics manufacturing(~71%) • Thesecond most popularalternativewas increasing investment in digital infrastructures such as AI, IoT and BigDataas highlightedby52% of respondents • Respondents from the Capital goods and textile sectors, who responded less favourably to the digitisationeffortsearlierwere also theones asking for more online platforms that reduced delays and red tape.This further underscores the need for targetedsolutionsfor thesetwo sectors. Driving technology and digitisation to the next level 56 % 52 % 42 % 41 % 39 % 35 % 34 % 1 % © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 20
  • 21. There is a rising ask for bringing in MSMEs into the technology platform and provide them with credit facility India can enhance its position as a technology powerhouse by focusing on innovation and bringing ininvestments • 65% of the respondents expected an increased innovation focus, together with private-sector engagementin R&D investmentsto enhanceIndia’s positionas a technological powerhouse. • Lifesciences and health care (~78%), Telecomand Technology (~75%), Automotive (~74%) and BFSI (~74%) were thebiggestsupporterof innovationand private sectorparticipation. • Since digitisationrequiresa lot of investment,59% of respondents endorsed the idea that attractingboth foreign and domestic investors to ensure sustained money inflows to boost digitalization ‐ Respondents from Textiles (~73%), Energy (~72%), and Capitalgoods (~70%), also believethesame • 55% of respondents believed that supporting MSMEs for technological integration and providing a platform for effectivecreditfacilitieswould aid this endeavour. • This signals that there is a growing realization of the importanceof bringingMSME onto digitalplatforms, which will help in building a strong and inclusive digitalecosystem. 65% More focus on innovation and motivate private-sector participation in investment in R&D Attract more investments domestically and internationally Support MSMEs to integrate technology in their operations with effective credit facility Strengthening the talent—skilling, reskilling of talent, and more public spending on education Tax laws for encouraging strategic sectors such as semiconductors, space, higher end of electronics A robust and refined data protection bill Other s 59% 55% 48% 45% 26% 2% N= 181 Question: How,according to you, canIndia become a technology powerhouse? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 21
  • 22. Survey Findings © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 22 • Economic GrowthOutlook • Effectivenessof Government’sDigitalInitiatives • Industry Expectations from Budget2023 ‐ Budget Sentiment ‐ Atmanirbhar Bharatand PLI ‐ TaxationChangesand Expectations
  • 23. Respondents seemed more confident about asupportive budget than last year,probably because they expect the government to be proactive in cushioning the impact of risks highlighted earlier More respondents from electronics, capital goods, and textile sectors are expecting supportive announcements Sentiment regarding budget on industry revival Sector-wise sentiment Question: Howpositive are you about the upcoming budget helping your industry’s growth? 1% 25% 43% 30% 1% 2% 20% 23% 48% 7% 2022 2023 1 - notatallpositive 2 3 4 5 - verypositive • 73% of the respondents are optimistic that the forthcoming budget would be supportiveof theirsector's growthamidstthedownsiderisks theyface thisyear. This is a sharp improvement over the previous year ,where 55% indicated such sentiments in2022 • Amongst the sectors, Electronics manufacturing (88%), Capital goods (85%) and Textiles(80%) aremost positiveandhopefulof theupcomingbudget,followed by foodprocessing(76%) andBFSI (74%) 5% 20% 25% 39% 24% 33% 6%6% 33% 15% 26% 37% 67% 40% 39% 41% 44% 29% 45% 50% 42% 37% 13% 30% 22% 35% 23% 59% 22% 35% 32% 26% Textiles Telecom andtechnology Lifesciences and health care Foodprocessing Energy (Oil,gas,and renewables) Electronicsmanufacturing Chemicals Capitalgoods Banking, investment firms,and insurance Automotive 1 - not atallpositive 2 3 4 5 - verypositive N= 181 N= 181
  • 24. Taxincentives, credit support, and simplification of capitalgains taxstructure featuredthe most amongst the top-three budget expectations Although 37% of the responses had public capex featuring as the top-3 expected policies, raising finances through disinvestments did not get asmuch attention Budgetary steps for sector growth • Amongst the top3 expectationsfrom the budget, additionaltaxincentivesfeatured amongst49% of the responses signallingthe most needed impetus. Taxincentivesare featured as the most expected initiative amongstrespondentsfrom the BFSI,food processing,and energy sectors. • Accelerated creditsupportwas the otherone amongstthe top-3 expectation(40% of the respondents), with respondentsin the Energy (56%), Telecom(50%) and Textile (53%) sectorsvotingit highin their budget expectations. • Demand for rationalizationof taxesdid not feature as top-3for most respondents, while very few respondentsvotedfor socialand innovationspending. • Surprisingly,the percentageof respondents prioritisingincreased public CAPEX in their expectations,did not matchwith that of the need to raise funds high. This couldbe because this year, top-3 expectationswere more sector-specificincentivesgiven the economic headwindsahead. This is amultiple select question; the sum ofpercentages will not sum up to 100% Question: What budgetary steps, according to you, can actas an impetus for your sector’s growth? Accelerated credit support 40 % Incentivising private sector participation 35 % Accelerated divestment programmes/asset monetisation programmes 29 % Additional tax incentives 49 % Increasing public capex 37 % Increased spending on research and innovation 30 % Simplification of capital gains tax structure 38 % Rationalisation of taxes 32 % Other s 2 % © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 24
  • 25. Given the spur towards FTAs,a well-negotiated agreement featured as one of the three expectations amongst 43% of the respondents Targeted schemes and broader coverage of PLI,lower custom duties, and affordable credit featured the most amongst the top three expectations to boost exports Budgetary steps for sector growth • 56% of therespondentsmentionedtargeted sector-specific schemes and increased coverage of PLI as the top-three expected measure to driveexports − 80% of therespondentsfrom thetextiles sector and 72% from the chemicals sectors advocated for enhancing the coverage of PLI • Incentivesaroundduties,credit,andtaxes were the other top-3 asks from the respondentsto boost exports. • 43% of therespondentsvoted FTAs as one of thetop threeexpectations • Surprisingly, very few respondents emphasizedpoliciesaroundinfrastructure and marketing support in their top 3 expectations. This could be because they expectedcontinuedgovernmentspending towards infrastructure,but they were not certainaboutsector-specificincentivesto boost exports. 56% Targeted schemes and coverage of PLI 43% More and well negotiated free trade agreements 53% Lower custom duties 32% Improve port infrastructure and shipping 50% Availability of credit at affordable rates 22% Support to marketing efforts 43% Increase and extend tax incentives 1% Other s N= 181 © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 25 Question: What measures by the government canboost your industry’s exports?
  • 26. An overwhelming majorityof respondents perceived trade treaties to help create markets and enhance their role inGVCs Respondents expected treatiesto enhance investment flows and the exchange of emerging technologies Perception of tradetreaties • Indiais aggressivelypursuingfreetradeagreements,recentlyfinalisingthose with Mauritius,theUAE andAustralia aftera gap of 10 years.Further ,an agreementwiththe UK is also on theway . • Respondentsare veryoptimistic abouttherole these treatieswill playin creatinga market, improvingtheirpositionin GVCs, andattractingforeigninvestments.These treaties will also help domestic firms get access to emerging technologies. All these will help in improving exports. Higher numbers of respondents from BFSI and automotive sector hopedforbetterexchangeof technologies • Respondentswere dividedaboutwhethertradetreatiescould possibly impactgrowthamongstMSMEs adversely 41% 61 % 69 % 81 % 80 % 23% 8% 7% 8% 4% 36% 31% 24% 11% 16% Will hamperthegrowth/expansionof small/middlescale industries Willoffer access to emergingtechnologies Will increasetheinvestmentin-flows Will enhancerole in globalvalue chain Will createmarket formy product Yes No Notsure Question: How do you perceive this focus on trade treaties impacting your industry? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 26 N= 181
  • 27. IGBs and PPP were voted as the most preferred ways to raise the funds for infrastructure One of the untapped potentials of utilizing the National Pension System (NPS) and other long-term funds was also recognized as measures to raise funds by almost half the respondents Measures increase private investment in infrastructure • 60% of the respondents suggested raising funds through Indian Government Bonds. Thisproportionhas increasedby12% from thepreviousyear .Since thefundinggap is a criticalchallenge, relying on low-interest sovereign bonds is one of the affordable options. • Private partnership has taken off only in a fewpockets of infrastructurefinancing.58% of the respondents felt PPP could be encouraged in meeting the funding gap significantly,by addressingissues thatdeter private participation, including dispute settlements and removing risks and uncertainties. • One possible way of addressingthefinance gap problem is a better utilization of NPS and other longer-term funds that have not yet beentappedto theirpotential. N= 181 Others Impetusto investmentvehicles such as bonds Betterutilisationof NationalPensionSystem (NPS) andotherlong-termfunds Innovativestructuressuch as creditguarantee enhancementto bringin privatecapital EncouragePPP byworking on aspects such as disputesettlements,removingrisks and uncertaintiesfor privateplayers IndianGovernmentBonds(IGBs) to raisefinance Securitisationof infrastructure assets 60 % 58 % 54 % 49 % 43 % 33 % 1 % What measures according to you canincrease private investment in infrastructure? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 27
  • 28. Competitive import duties, incentivisation/subsidization, and reduced license fees were the key expected measures during the budget to support manufacturing Policies related to credit were the other asks amidsttightening monetary policies Question: In the wakeof opportunities created by the slowdown in majormanufacturing economies, what, according to you, could be the most effective way to utilise this opportunity for your industry? • 60% of respondentsexpectedimportduties to be competitive to help the country grab opportunities in the international market when major manufacturing economies are experiencing aslowdown ‐ This was closely followed by incentivisation or subsidisation of construction,plant,machinery,CLCSSfor technology upgradation, and employment/skilling) as the next priority steps to boostoutput • 56% of leaders concur that additional reductions in license costs might significantlyboost productioncapacity • Access to easy finance may also contribute to preserving the possibility of a downturn in industrialcompanies Measures to support manufacturing Incentivisation or subsidisation © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 28 Easy credit flow Extension of sunset date for commencing manufacturing Making import duties competitive Reducing license fees Financing supply chain 60 % 58 % 56 % 53 % 48 % 26 %
  • 29. Taxincentives and subsidies can promote ESG adoption in the industries, highlighted by majority (~64%)of the leaders Question: What,according to you, can the budget offer to facilitate ESG adoption in your industry? • With the government pledging to being carbonneutralby2070, itis crucialthatthe forthcoming budget must focus on Environmental, Social, and Governance (ESG)concerns • 64% of the leaders cited that provision of taxincentivesandsubsidies areneededto foster a greeneconomy • More than half of the leaders suggest increasingthecapitalflow bycreationof capitalmarkets ‐ 73% of thetextilesindustryleaders concurred with thisviewpoint • Nearlyhalfof theleaders agreedthathaving green instruments for financing can further enhance the ESGadoption • Majorityof theleadersfrom Energyindustry trustthatincentivisingprivatefinancingand purchasing power parity will boost the ESG adoption Expectations regarding ESG measures 42 % © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 29 46 % 48 % 48 % 51 % Anyother 1 % 64 % Introducingemissiontradingmechanisms Introducing carbontax IncentivisingprivatefinancingandPPP Deviseinnovativegreeninstrumentsfor financing Promote capitalflow bydevelopingcapitalmarkets Offeringtaxincentivesandsubsidiesto promote green economy N= 181
  • 30. © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 30 More respondents from automotive, lifesciences & healthcare and textile industry cite the need for emission tradingmechanisms. Question: What,according to you, canthe budget offer to facilitate ESG adoption in your industry? Measures Automotive Banking, investme nt firms, and insurance Capital goods Chemicals Electronics manufacturin g Energy Food processing Lifescienc es and health care Telecom and technology Textiles Offering tax incentives and subsidies to promote green economy 58% 68% 65% 67% 82% 61% 76% 50% 55% 53% Promote capital flow by developingcapital markets 63% 47% 35% 56% 41% 56% 47% 50% 45% 73% Devise innovative green instruments forfinancing 42% 37% 45% 44% 65% 56% 59% 61% 35% 40% Incentivising privatefinancing andPPP 37% 53% 65% 44% 24% 67% 53% 39% 55% 40% Introducing carbontax 37% 53% 65% 50% 41% 22% 35% 50% 65% 40% Introducing emissiontrading mechanisms 63% 37% 25% 39% 47% 39% 24% 50% 45% 53% N= 181
  • 31. Survey Findings © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 31 • Economic GrowthOutlook • Effectivenessof Government’sDigitalInitiatives • Industry Expectations from Budget2023 ‐ Budget Sentiment ‐ Atmanirbhar Bharat and PLI ‐ TaxationChangesand Expectations
  • 32. Confidence in the effectiveness of policies under Atmanirbhar Bharathas not changedsince last year Respondents expected the initiative to primarily addresssupply chain resilience Question: Do you feel Atmanirbhar Bharat is helping your sectorat an operational level? Ifyes, how do you think Atmanirbhar Bharat can be further strengthened? N= 163 Expectations from Atmanirbhar Bharat • Developing strong supply chains is expectedto be the most important measure for strengtheningtheAtmanirbharBharatProgramme ‐ 82% of energy and 80% of electronics manufacturing respondents emphasise to this • More than half of the respondents said that streamlining administrative proceduresand easing compliance requirementswill enrich the initiative • Anotherstepproposedby50% of theleaders is easingclearancesto boost FDI • Only a significant percentage of respondents from the Lifesciences and healthcare sector expected extending the R&D incentives and initiating weighted deductions on theR&D expenditure,as well as digitisationto be covered undertheinitiative. 90 % 10 % Y es No 202 3 Is Atmanirbhar Bharat effective? 91 % 9 % Yes No 202 2 Others R&Dincentives extension/weighted deduction Competitive importtariffs Easyclearanceto promote FDIinflow Reduceadministrative inefficienciesand complianceburdens Developstrongsupply chains Continuedemphasison digitisationto builda robust digitalecosystem 64 % 53 % 50 % 44 % 44 % 39 % 6 % N = 181 © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 32 N= 163 Incentives fortraders selling to the domesticmarket
  • 33. Question: Do you feel Atmanirbhar Bharat is helping your sectorat an operational level? Ifyes, how do you think Atmanirbhar Bharat can be further strengthened? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 33 An overwhelming number of respondents from electronics manufacturing,energy, and food processing sectors expected the Atmanirbhar Bharatinitiative to develop a strong supply chain. Measures Automotiv e Banking, investme nt firms, and insuranc e Capit al good s Chemicals Electronics manufacturi ng Energy Food processi ng Lifescienc es and health care Telecom and technolo gy Textiles Yes % 95% 84% 90% 100% 88% 94% 82% 83% 100% 80% Develop strongsupply chains 61% 63% 44% 61% 80% 82% 79% 47% 55% 75% Reduceadministrative inefficiencies and complianceburdens 67% 25% 61% 67% 47% 41% 36% 60% 65% 50% Easy clearanceto promote FDI inflow 56% 69% 61% 56% 40% 47% 64% 7% 45% 58% Competitive import tariffs 39% 56% 44% 28% 40% 59% 50% 33% 50% 42% Continued emphasis on digitisation to build a robust digitalecosystem 39% 44% 56% 39% 47% 35% 36% 60% 50% 33% R&D incentives extension/weighted deduction 39% 38% 33% 33% 40% 29% 29% 80% 35% 33%
  • 34. 70% of the respondents perceived the PLI scheme to be beneficial to their sector. Close to 60% of the respondents were expecting an extension of the incentive to further years Expectations from the PLI scheme 7% 39% 43% 49% 49% 54% 59% Others Incentivising additionalemployment generation Support to research and development Choice ofastrategic sector Encouraginginvestment fromwithin and outsideIndia Increasingthe ambitof the PLI scheme to other sectors Facilitatingand increasing productioncapacity byextending incentives tomore years Perception of the PLI scheme 70% Positiv e 25% Neutral 5% Negativ e • Majority(~70%) of respondentshighlightedthat the various ProductionLinked Incentivesschemeshave been beneficialfor the growthof theirsector • Further,59% of the respondentsadvocatedthat extendingthese incentivesfor additionalyears wouldfacilitateand increasetheir productioncapacity ‐ 71% of food processingand 70% of telecomand technology respondentsexpected an extension • A majorityof the respondentsacross all sectors, exceptelectronics manufacturingand energy, advised broadeningthescopeof PLIprogrammesto include othersectors. • Surprisingly,respondentsdid not expectthe scheme to address skills and incentiviseR&D under itspurview Question: How do you think the PLIscheme has benefited your industry? What more canbe done in the PLIscheme to benefit your industry © 2023 Deloitte Touche Tohmatsu India LLP. N = 181 Pre-Budget Survey2023 34 N= 181 • Incentives forexport manufacturers • Exportduty concessionsfor MSMEs • Incentives forsupporting industries
  • 35. © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 35 The expectation to extend the PLI scheme was the highest amongst respondents from food processing and telecommunications andtechnology Question: How do you think the PLI scheme has benefited yourindustry? Measures Automotive Banking, investme nt firms, and insuranc e Capit al good s Chemicals Electronics manufacturi ng Energy Food processi ng Lifescien ce s and health care Telecom mu nications and technolog y Textiles Facilitating and increasing production capacity by extending incentives tomore years 47% 63% 50% 56% 65% 61% 71% 56% 70% 53% Increasing the ambit of the PLI scheme to othersectors 53% 53% 50% 56% 47% 39% 59% 67% 55% 60% Encouraging investment from within and outsideIndia 37% 58% 50% 50% 71% 56% 35% 39% 45% 53% Choice of a strategicsector 53% 53% 70% 50% 35% 61% 47% 39% 35% 47% Support to researchand development 63% 26% 40% 44% 35% 44% 47% 61% 35% 27% Incentivising additional employment generation 42% 47% 40% 33% 35% 22% 41% 33% 60% 33%
  • 36. Survey Findings © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 36 • Economic GrowthOutlook • Effectivenessof Government’sDigitalInitiatives • Industry Expectations from Budget2023 ‐ BudgetSentiment ‐ Atmanirbhar Bharatand PLI ‐ Taxation Changes and Expectations
  • 37. Most respondents citeeasing taxcomplianceto be the most effective direct tax-relatedchange 60% respondents from Telecomand half of respondents from Energy and Lifesciences expect reduction in corporate tax N= 181 Direct tax-related changes Easing tax complian ce Reducing tax litigation More clarification on applicability of tax laws and provisions, such as TDS under Section 194-O Further reductions in corporate taxation 66 % 44 % 45 % 43 % Clarity on implementation of Equalisation Levy (EQL) & Significant Economic Presence (SEP) This is amultiple select question; the sum of percentages will be above 100% Question: What could be the most effective changes in direct taxregulations for your industry? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 37 Extension of the sunset clause for Section 194LC and Section 194LD Transfer pricing 39 % 33 % 29 % • Amidst global uncertainties and a looming global economic slowdown, tax-relatedchanges would boost industrygrowthand arethemost sought-after measures from thebudget • Besides easing taxcompliance, 45% of respondents anticipatethe governmentreducingtax litigation • 44% expectto gainclarificationof taxlaws and provisionssuch as TDS undersection 194-O • Automotiveleaders(53%) also wish to haveclarityon the implementation of the Equalisation Levy and Significant Economic Presence, addressed in the budget
  • 38. This is amultiple select question; the sum of percentages will be above 100% Question: What could be the most effective changes in direct taxregulations for your industry? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 38 Capital-intensive sectors such as Food Processing, Textiles, Electronics, Capital Goods hope for easier taxcompliance Measures Automotive Banking, investme nt firms, and insurance Capit al good s Chemicals Electronics manufacturi ng Energy Food processi ng Lifescienc es and health care Telecom and technolo gy Textiles Easing taxcompliance 58% 63% 70% 56% 76% 78% 88% 50% 55% 67% Reducing taxlitigation 42% 21% 55% 61% 47% 39% 53% 50% 40% 47% More clarification on the applicability of tax laws and provisions, such as TDSunder Section 1940 47% 68% 30% 44% 41% 39% 35% 56% 45% 27% Furtherreductionsin corporate taxation 42% 42% 40% 39% 24% 50% 41% 50% 60% 40% Clarity on implementation ofEQL andSEP 53% 42% 35% 33% 35% 33% 24% 50% 35% 47% Extensionof thesunsetclause for Section 194LC andSection 194LD 16% 47% 45% 44% 35% 28% 24% 22% 40% 20% Transferpricing 42% 16% 20% 22% 41% 33% 35% 17% 25% 47%
  • 39. Majority of respondents feel rationalisation of taxrates across all assets and gains indexation would be highly beneficial This is a multiple select question; thesum of percentages will be above 100% Question: What changes in the capital gains taxstructure will be helpful for your industry? N= 181 Capital gains tax structure changes • The industry is expecting the budget to simplify the capitalgainstaxstructureandremove ambiguitiesin interpretation of tax thereby making its compliance easier • Thisbecomes even more relevantas theeconomy is moving towards the digital era where new and innovative forms of instruments are likely to enter andfuelgrowth of theeconomy and especiallystart- up ecosystem • The structural changes in the capita gains tax becomes more imperativeatpresentwhentheglobal economyis slow, andCOVID-19 threatis looming • This step will spur investment and economic growth and willprovidelong-termreliefto thetaxpayersand the taxadministration Others © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 39 Rationalisingmultipleholdingperiods Removing ambiguityin interpretationof tax Gains should be indexed(Inflationaryeffectscan be factoredin) Rationalisationof ratesacross allasset classes 54% 54% 48 % 44 %
  • 40. © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 40 With Energy being in the focus, 61% respondents from the sector hope for reduced ambiguity in taxinterpretation This is a multiple select question; thesum of percentages will be above 100% Question: What changesin the capital gains taxstructure will be helpful for your industry? Measures Automotive Banking, investme nt firms, and insurance Capit al good s Chemicals Electronics manufacturi ng Energy Food processi ng Lifescienc es and health care Telecom and Technolog y Textiles Rationalisation ofrates across all assetclasses 63% 58% 55% 67% 35% 44% 59% 39% 70% 40% Gains should be indexed (Inflationary effects canbe factoredin) 63% 53% 55% 44% 53% 61% 47% 56% 55% 47% Removing ambiguityin interpretation oftax 42% 53% 40% 39% 47% 61% 41% 61% 40% 53% Rationalisingmultiple holdingperiods 32% 37% 50% 50% 65% 22% 53% 44% 35% 60%
  • 41. Three-quarters of respondents support group taxation,with ~80% wanting it to be implemented within ayear Question: Should India move to a “group taxation” concept, wherein taxpayers canfile a single group tax return, similar to group consolidations for financial statements, to promote better private sectorparticipation and speedier infrastructure development? N =181 Moving to group taxation • 75% of theindustryleaders(as comparedto 81% in past year)citethatIndiashould opt for Grouptaxation • In theabove cohort,78% of leadersfeelthatgroup taxationshould be implemented‘now’or ‘inthenext year’ 75% 25% 81% 19% Y es No 2023 2022 Opportune time for movement 22% 55% 23% After a minimumof 5 years In thenext year Now Theopportunetime for movementwas askedonlyto those respondents(136) who feel that India shouldmove to group taxation(“Yes”in previousquestion). Y es © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 41
  • 42. 76% respondents believe thatchanges in GST taxstructure would be most impactfulfor their industries Large majority of respondents from Energy,Telecom,and Lifesciences strongly support the above perspective This is amultiple select question; the sum of percentages will be above 100% Question: What could be some of the most effective changes in indirect tax regulations for your industry? N= 181 • Close to 70% of respondents also highlighted the needfor furthersimplificationof tariffstructureas simplification will lead to fewer interpretational issues, bettercompliance,andless litigation • Simplificationof the tariffstructurefor importand exports and easy compliance rules for FTA agreementswill make compliance easier ,reducing futurelitigations • Close to 55% respondents believe that amnesty schemes for customs would also fast-trackdispute resolution, helping them to reduce time and cost effort on thisfront • 72% Energyrepresentativesmentionedthe need for amnestyschemes forcustoms (relateddisputes) Indirect tax-related changes Others Implementationof DESH Bill/amendmentsto SEZrules Amnestyscheme for customs (relateddisputes)(similar to SabkaVishwas, and Vivadse Vishwas) Ease compliancerules for FreeTradeAgreement (FTA) imports Furthersimplificationof tariffstructure GST tax structurechanges 76 % 69 % 62 % 54 % 3 % 36 % N = 181 © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 42
  • 43. Question: What could be some of the most effective changes in indirect tax regulations for your industry? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 43 Most sectors opted for simplification of the tariffstructure as the most significant indirect taxchange This is amultiple select question; the sum of percentages will be above 100% Measures Automotive Banking, investme nt firms, and insurance Capit al good s Chemicals Electronics manufacturi ng Energy Food processi ng Lifescienc es and health care Telecom and Technolog y Textiles GST taxstructure changes 74% 79% 75% 78% 59% 94% 59% 83% 85% 73% Further simplificationof the tariffstructure 79% 58% 65% 83% 82% 44% 71% 72% 65% 67% Ease compliancerules for Free Trade Agreement (FTA) imports 74% 53% 65% 44% 65% 56% 71% 56% 75% 67% Amnesty schemefor customs (related disputes) 32% 63% 65% 39% 53% 72% 65% 56% 40% 53%
  • 44. Ease of availing Input TaxCredit (ITC) and removal of GST credit restrictions are the top GST-related changes expected from the budget Energy,BFSI,and Lifesciences and Health Care amongst the top sectors to expectso Expected GST related changes N= 138 • Existing GST procedures need to allow for rectificationof previouslyfiledreturns,establishment of centralAAR etc.to ease compliance • More than 40% respondents highlighted easing removingambiguitiesanddecriminalisationof GST laws as importantstepsin promotingease of doing business 3% This is amultiple select question; the sum of percentages will be above 100% Question: What changesin GST canbe beneficial for your industry? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 44 23% 30% 36% 41% 41% Others 1% 58% Clearguidelineon taxpolicyfor digitaleconomy, i.e., source income from crypto,online gaming,casino Set up of appellateforumsfor GSTmatters Reduction inthe numberof slabs Decriminalisation of GSTlaw Ease complianceburden Removal of GST creditrestrictions Ease of availingInputTaxCredit(ITC) This question was asked only to those respondents (138) who feel that a changein GST canbe beneficial (selected GST changes in last question).
  • 45. This is amultiple select question; the sum of percentages will be above 100% Question: What changesin GST canbe beneficial for your industry? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 45 CapitalGoods and Chemicals amongst top sectors against GST credit restrictions Measures Automotive Banking, investme nt firms, and insurance Capit al good s Chemicals Electronics manufacturi ng Energy Food processi ng Lifescienc es and health care Telecom and technology Textiles Ease of availingInputTax Credit(ITC) 64% 73% 47% 64% 60% 88% 70% 73% 65% 45% Removal of GSTcredit restrictions 64% 53% 73% 79% 50% 41% 60% 53% 47% 64% Ease complianceburden 21% 47% 60% 29% 50% 41% 40% 33% 53% 36% Decriminalisation ofGST law 29% 33% 40% 29% 30% 41% 40% 60% 65% 36% Reductioninthenumber of slabs 64% 27% 40% 36% 40% 41% 30% 40% 18% 18% Set up of appellateforums for GSTmatters 36% 27% 27% 43% 30% 29% 40% 13% 24% 45%
  • 46. About 40% of industry leaders think that granting indirect taxbenefits to businesses and accelerating the expenditure deduction will boost priority industries’ growth Anticipated tax incentives for priority sectors N = 181 Benefitof indirecttaxes to enterprisesintheform of anexemptionwindowon customs dutyor GST Accelerated deduction of expenditure incurred on investmentinbusinesses in these sectors, especiallyin areas such asR&D Incentives forexports 202 3 202 2 40 % 34 % 26 % • Along with PLII, furthertaxincentivesare expectedfrom theindustryleaders.40% of leaders(down from 53% last year)believethatbenefitsof indirecttaxes should be providedto firms in theform of GST or customs dutyexemptions,such as manufacturingbonds • Comparedto 52% of industryleaders last year ,34% of leaders favouredexpediteddeductionof expenses relatedto company investmentthisyear • Incentivisingexportsis also an equallyimportantmeasure as cited by27% of theleaders Question: What other tax incentives, along with PLI,canthe government consider for enterprises in priority sectors? © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 46 53 % 52 % N= 163
  • 47. Over 55% respondents feel thatsimplifying taxregulations and reporting demands canremove ambiguities and improve compliance,leading to reduced litigations These aremultiple select question; the sum of percentages will be above 100% Question: What aspectsin compliance should the government focus on to ease the taxation process? How do you think tax litigation canbe reduced? • Over 51% respondentsexpressedtheneedforstable laws andnewercomplianceprotocols • Furthermore,~50% also feelthatavoidingdualinvestigationsby multipleauthoritiescan ease theircompliance • In additionto simplifyinglaws, majorityof respondentsalso feelthatensuringthesmooth andtimelyfunctioningof disputeresolutionmechanisms such as faceless appeals, AdvancePricingAgreement(APA) mechanism, BoardforAdvanceRuling(BAR) andDisputeResolution Scheme(DRS) will reducetaxlitigation 56 % Simpletaxregulationsand reportingdemands 51 % Stablelaws Avoiding dual investigations bymultiple taxauthorities 49% Ease of availing credit with vendors,accountpayablerules 43% Others 1% N= 181 Aspects to ease the compliance in taxation process Measures to reduce tax litigation Simplified laws that create no ambiguity in interpretation Ensuring smoothand timely functioning of 56% dispute resolution mechanismssuch asfaceless 53% appeals, APA mechanism, Board for Advance… Legislate the newfast-trackconciliation process that benefits both thetax department and 46% taxpayer Notsure • Invoking resolutionatall Others levels • Flexible taxregimes 3% 21% © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 47 N = 181
  • 48. 70% respondents expect changes in personal taxation;over 60% expect increase in exemption and deduction limits These aremultiple select question; the sum of percentages will beabove 100% Question: Do you think any changein personal taxation would help increase demand in your industry? If yes, whatdo you think canease individuals’ tax burdens? • Most respondentsbelieve thatincreased exemptionanddeductionlimitsin personaltaxeswilllead to increasedconsumerdemandfor theirindustry. • Increasingyearly NPS contribution (under Section80C and Section80CCD(1b)) and rationalisingincometaxslabs and rates have alsobeen citedas effective by a significantnumber of respondents • The survey also assessed theeffectivenessof the New Tax Regime and found that the response was divided.However,mostrespondentscitedthat the New tax regime needs further simplification Changes in personal taxation, effective? Expected changes in personal taxation N = 125 Increasingtaxexemption limitto boostliquidity and increase demand(consumer) Enhancement of the deduction limit, for example, for interest on home loans under section 24(B) Increase in the yearlyNPS contributionunder Section 80C andSection 80CCD(1b) Rationalising income taxslabsand rates Exemption in provident fund contribution already taxed Makingthe employee’s contributiontoEPF voluntary 61% 67% 60% 51% 47% 44% 37% 45% 2023 2022 69% 2023 88% 2022 © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 48 N= 163 N= 181
  • 49. Further simplification of new taxregime is expected by the majority of respondents Implementation of the New Tax Regime 42 % 24 % 15 % 6 % 13% More simplificationof newregime Two regimes—Old and New Regime—are working fine New regime is betterthantheold regime Old regime is betterthan thenew regime Notsure N= 181 © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 49 Thisisamultiple selectquestion;thesum of percentageswill be above 100% Question: The New Taxregime was introduced in Budget 2020-21.How do you see its implementation in the future?
  • 50. © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 50 Respondents across sectors expect enhancement of the deduction limit, such as interest on home loans This is amultiple select question; the sum of percentages will be above 100% Question: The New Taxregime was introduced in Budget 2020-21.How do you see its implementation in the future? Measures Automotive Banking, investme nt firms, and insurance Capit al good s Chemicals Electronics manufacturi ng Energ y Food processi ng Lifescienc es and health care Telecom and technology Textiles Increasing tax exemption limit to boost liquidity and increase demand 53% 56% 64% 50% 53% 44% 70% 85% 73% 56% Enhancementof thededuction limit, for example, for interest on home loans under section 24(B) 47% 69% 55% 50% 80% 56% 40% 62% 80% 44% Increase in the yearly NPS contribution under Section80C and Section80CCD(1b) 47% 31% 55% 75% 47% 44% 70% 62% 33% 67% Rationalising income taxslabs andrates 67% 56% 36% 50% 47% 67% 50% 31% 20% 56% Exemption in providentfund contribution alreadytaxed 67% 56% 27% 33% 33% 56% 20% 31% 53% 56% Making theemployee’s contribution to EPFvoluntary 20% 31% 64% 42% 40% 33% 50% 31% 40% 22%
  • 51. Thank You © 2023 Deloitte Touche Tohmatsu India LLP. Pre-Budget Survey2023 51
  • 52. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UKprivate company limited by guarantee (“DTTL”),its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL(also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTLand its member firms. This material is prepared by Deloitte Touche Tohmatsu India LLP(DTTILLP).This material (including any information contained in it) is intended to provide general information on a particular subject(s) and is not an exhaustive treatment of such subject(s) or a substitute to obtaining professional services or advice. This material may contain information sourced from publicly available information or other third party sources. DTTILLPdoes not independently verify any such sources and is not responsible for any loss whatsoever causeddue to reliance placed on information sourced from such sources. None of DTTILLP,Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this material, rendering any kind of investment, legal or other professional advice or services. Youshould seek specific advice of the relevant professional(s) for these kind of services. This material or information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult aqualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person or entity by reason of access to,use of or reliance on, this material. By using this material or any information contained in it,the user acceptsthis entire notice and terms of use. © 2023 Deloitte Touche Tohmatsu India LLP.Member of Deloitte Touche Tohmatsu Limited