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The Budget 2022-23 presented by Finance Minister Nirmala Sitharaman on Tuesday was welcomed by the Media & Entertainment (M&E) industry which feels that certain announcements might have a positive impact on the digital media industry.
The industry believes that the 5G spectrum auction and the push towards rural broadband connectivity will help a slew of digital services including streaming and gaming platforms. The proposal to set up an animation, visual effects, gaming and comics (AVGC) promotion task force is being seen as an important step towards unlocking the potential in the animation and gaming sectors. The industry has also welcomed the proposal to extend tax incentives for start-ups by another year. The scheme for the taxation of virtual digital assets at 30% is also being perceived as a positive step.
Elara Capital SVP - Research Analyst (Media, Consumer Discretionary & Internet) Karan Taurani noted that the Union Budget 2022 had a strong focus on digital push and digital consumption. According to him, factors like encouraging rural broadband connectivity, setting up an AVGC promotion task force, and 5G roll-out augur well for boosting growth in digital media.
Taurani noted that the push towards affordable and high-speed fixed broadband internet will boost the consumption of digital content, penetration of smart TV and lead to a shift of eyeballs from TV to digital at a much more rapid pace in smaller towns. He also believes that the AVGC promotion task force will help the sector attract new talent, which will encourage innovation in the gaming and animation industry. The 5G auctions in 2022 and the subsequent roll-out of 5G services in 2023 will bolster the gaming, online video, and social media platforms.
Publicis Groupe South Asia CEO Anupriya Acharya averred that the budget has given a big push to strengthen the digital infrastructure. "The advent of 5G is sure to transform communications for our industry; it will help the creation of better AV, voice, and AR/VR experiences. It will also fuel digital payments, streaming entertainment, gaming, e-commerce, telemedicine, etc which in turn will aid more unicorns! It is also heartening to note that a special task force is being set up for AVGC as this will help us build the much-needed capacity both for domestic as well as global markets.”
“And then there have been no changes in income-tax slabs for people, which many consumer segments were worried about. This in turn boosts consumer sentiment. From e-passports to battery swapping for electric vehicles, setting up of optic fiber in the remotest of villages, setting up of a digital university, and skilling through an e-portal, the is big push is for technology, digital infrastructure, and empowerment,” she added.
KPMG in India Partner and Head, Media and Entertainment Girish Menon believes that the Budget 2022, from an M&E perspective, provides an emphasis on further strengthening India’s digital infrastructure through clarity on 5G auctions, start-up ecosystem, formation of AVGC task force to address domestic and global demands, and 200 TV channels to foster digital education, especially amongst the rural areas. It also envisages to foster the growth of microtransactions through the proposed Indian digital currency.
Blink Digital VP, Head of Strategy Dia Kirpalani said that the rollout of 5G was a much-awaited move as it will bring a further digital push across sectors, including ad agencies. "Content creation will see a huge transformation with the surge in consumer consumption especially in the video, voice, animation format, and the gaming vertical. As a result, I believe you can expect to see a fresh boost in the AR/VR space, and we are already seeing metaverse adoption accelerating. Consumers will be able to engage with media across multiple devices, which will further democratize the entertainment sector. And ad agencies will be seen leveraging this expanded media mix to bolster brand credibility on online mediums."
Thumbs up from digital media platforms
Hungama Digital Media Founder and CEO Neeraj Roy said, "This is a Budget that is welcoming web 3.0. The Indian government has been at the forefront of digital adoption, via initiatives such as Digital India, StartUp India, etc, and now, with the introduction and recognition of 'virtual goods or digital assets', the initiative of a task force for animation, visual effects, gaming, etc (AVGC) and even the introduction of a digital bank that would embrace the blockchain, it is their way of ushering in a New India into the metaverse. We welcome these announcements and look forward to setting a place of leadership for India in web 3.0."
Mzaalo COO Vikram Tanna said that the introduction of the digital rupee and 30% tax on virtual digital assets is a welcome move since it brings much-needed clarity to the government's vision for cryptocurrencies. "As a next-gen blockchain-based entertainment platform, we are pleased to see that the government has prioritized digitization in this Budget. The announcement of the Reserve Bank of India introducing its very own digital rupee is a sign of a future-ready approach for phenomenal growth. The use of blockchain technology further indicates the government’s increasing trust in new-age technology. We also welcome the introduction of a 30% tax on income from virtual digital assets. The move brings much-needed clarity on how the government views cryptocurrencies and should eliminate any fear the user/investor class might have had around the cryptocurrency ban. All in all, it is a growth-friendly budget with a positive outlook. We now await clarity towards the rollout of these measures in the upcoming days."
Chingari Co-Founder and CEO Sumit Ghosh feels that the government's go-ahead to digital currency and crypto transactions will help India become one of the top digital economies in the world. "Investing in and utilizing advanced technologies like blockchain is what helps the nation grow at par with the other countries globally. With $GARI Social Tokens listing on 19 global exchanges and Chingari transforming the Web 3.0 universe for its creators, we are proud to be a part of the digital and crypto revolution. Currently, the information and awareness about crypto/ digital currency are very limited in India, which is also a major challenge that needs to be resolved. Chingari powered by $GARI will be stepping up and taking an initiative towards spreading more awareness amongst the internet users in India."
Pocket Aces CFO Kunal Lakhara said that this Budget has paved the path towards reviving the economy with the decision to keep the fiscal deficit pegged at 6.4% of GDP in 2022-23. He added that the tax benefits offered for startups, by extending tax redemption for another year, are much appreciated and will further encourage the start-up ecosystem of the country to grow and sustain their businesses while recovering from the pandemic.
"The startup sector growth coupled with the promotion of AVGC is bound to create a multiplier effect for the economy through the creation of jobs and an overall increase in GDP. Launching our digital currency using blockchain and other technologies is a welcome move. Providing support under the PLI scheme for 5G is another step in the right direction and will help enhance the content consumption experience. Overall, the Union Budget 2022- 23 is a step towards a successful future and a significant milestone in the growth story of the country," Lakhara said.
Gaming companies gung-ho about Budget
Both Dream11 and Dream Sports CEO and Co-Founder Harsh Jain and Mobile Premier League (MPL) Co-Founder and CEO Sai Srinivas feel that the gaming industry will get a big fillip due to the proposed AVGC promotion task force and the 5G roll-out.
"We welcome the Budget's focus on promoting start-ups and giving impetus to the digital economy. Our aim at Dream Sports is to keep growing India’s digital sports tech ecosystem to become the largest in the world, just like the Indian fantasy sports industry has become the world’s largest with 12 crore users. The task force for promoting the AVGC sector will provide the much-needed clarity and certainty for the fantasy sports and e-sports sectors by providing more upskilling and career opportunities for the youth to be a part of India's sunshine sectors. The rollout of 5G services will further accelerate the adoption of online sports engagement platforms and promote investments, innovation, and wealth creation while contributing to the Hon'ble Prime Minister's vision of making India a sporting superpower both in the real and digital worlds," Jain stated.
Srinivas said that the Union Budget has taken into consideration some of the long-pending suggestions for the AVGC sector. "The Budget rightly mentions that promoting the digital economy and sunrise sectors will be a priority in the next 25 years (75 to 100 years of India's Independence)—the Amrit Kaal of India. With a renewed focus on the AVGC sector, blended financing for deep tech and IT, hardware, and electronics manufacturing combined with the deployment of 5G and affordable internet in underserved areas, it is clear that the government is committed to taking the Indian startup ecosystem to the next level. We are hopeful that with the positive support of the government, the coming years will see online gaming, VFX, and esports startups leading the charge in the global economy. By developing deep tech intellectual property and exporting services, they can help cement India’s position as a world leader in the sector.”
For JetSynthesys Vice Chairman and Managing Director Rajan Navani said the AVGC task force and 30% tax on the sale of virtual digital assets are the key takeaways from the Budget. He believes that the 30% tax is slightly on the higher side.
"I strongly welcome the formation of an AVGC task force for promotion, something that we as an industry have been pushing for a long time. It is high time that animation, visual effects, and gaming are recognised as an industry because of the sheer potential that they carry. Skyrocketing further owing to the pandemic, these industries have the power to create large employment as well as allow Indian gaming companies to become globally competitive and play an increasingly larger role at a global level. Building a task force that will address the needs of this industry across various ministries would be a very proactive approach towards strengthening this industry, in my opinion. While the tax of 30% could have been a little lower to encourage more of the Gen Z and young earners who are investing in these assets, the fact that digital virtual assets will now be taxed and recognized sets a roadmap for the vision of what young people and new age, technology-first generations in this country are looking for," Navani said
Zupee Founder & CEO Dilsher Singh Malhi said, "For gaming companies, many of which are homegrown startups, the extension of the existing tax benefits from three to four years will further accelerate growth in the sunrise sector. The industry, which is already expected to have 657 million users by 2025, should now look to break the billion-user barrier by 2030. The creation of the AVGC promotion task force is a welcome move. The initiative with industry participation will help in establishing uniform, progressive policies that will promote growth and investments in the sector, which in turn, will lead to job creation, revenue generation, and engagement opportunities. This will be a crucial step towards bridging the digital divide and unlocking a fully connected and empowered digital India. We believe that this initiative will pave the way for the Indian gaming industry to establish itself on a global stage.
Start-ups welcome tax benefit extension
StepSetGo CEO Shivjeet Ghatge said that the Union Budget 2022 has projected an encouraging mega push to the start-up economy in India. "Some of the transformative policies such as the 100% tax rebate on the profit made for three years can help us tackle our working capital requirements and grow steadily. This will also largely expedite the start-up revolution in the country."
He added that the focus on 5G connectivity as a part of the 'Digital India' initiative will pose as a game-changer to players like StepSetGo and will enable it to contribute more significantly to the economy while leading India to a healthier way of living. "Moreover, it will help us change the face of fitness in the country and will allow us to make fitness more inclusive and infrastructure-agnostic. It will provide us the opportunity to mitigate any tech-related inadequacies caused due to data speed and help us augment our product offerings by aiding comprehensive R&D in smaller pockets of the country."
Ghatge believes that the Union budget has taken into consideration the plight of the entrepreneur and is focussed on both relief and recovery. "The extension of the tax incentives till 2023 and the impetus to digitalization will give us the financial freedom to focus on innovation and scale up operations. We are glad that the government is extremely enthusiastic about fuelling the aspirations of young entrepreneurial India as we believe that we have it in us to become the start-up superpower of the world."
Logicserve Digital Founder and CEO Prasad Shejale said that the FM has announced a very progressive Budget to widen India's horizons and outlook in the next five years. "The government has addressed some urgent priorities underpinning the digital sector, including the launch of digital currency, API-based skill credentials, digital learning channels, digitization of manual processes, etc. On the digital connectivity front, the 5G spectrum auctions will finally make the dream of a tech-savvy India a reality, further boosting the country's digital infrastructure. Additionally, the launch of a design-led manufacturing scheme for the 5G ecosystem as part of the PLI scheme will ensure affordable broadband and mobile communication even in far-flung areas. The availability of high-speed internet connectivity in urban as well as rural areas will encourage marketers to experiment with blockchain, AR, VR."