The Budget lays the foundation towards India being a USD 5 Trillion economy by 2026 and a developed economy by 2047, said Yezdi Nagporewalla, Chief Executive Officer, KPMG in India.

MUMBAI, Feb 1 (The CONNECT) - The Budget 2023 is a progressive growth-oriented budget which balances the fiscal and lays the foundation towards India being a USD 5 Trillion economy by 2026 and a developed economy by 2047, said Yezdi Nagporewalla, Chief Executive Officer, KPMG in India.

“Private consumption and capital formation which have been facilitated by an effective vaccination policy has scripted India’s growth story in an otherwise turbulent global macro-economic scenario.  Budget 2023 intends to fortify India as a key investment destination,” Nagporewala said.

A significant increase of 33% in the capital investment outlay to 10 Lakh Crores, revamped credit guarantee to MSMEs, easing of the credit cycle and rationalization of custom duties would add significant impetus to capital formation and job creation, he said

The Green growth agenda of the Government, especially on energy transition seeks to consider the environmental impact of industrialization. 

Further, the increase of tax rebates and rationalization of tax slabs to individual taxpayers would ensure higher disposable income in their hands, consequently spurring domestic consumption. 

The agricultural credit target of 20 lakh Crores would also lay the direction of addressing food security concerns, while making India a key exporter of food products in the future, he added.

Other reactions from KPMG in India: 

Rajeev Dimri, Head of Tax: The tax proposals seem to be focused on ‘ease of doing business’ in India, augmenting domestic value addition and encouraging use of green energy.

On the direct tax forefront, aiming at reduction in compliance load, a common IT return form is proposed to be introduced which should improve the taxpayers convenience.

The governments extension of 15% tax regime to cooperative sector which commence production till 31.03.2024, can be beneficial in the value chain for industries dependent on cooperative sectors (like sugar, agriculture, dairy etc.). To further give fillip to the start-up community, the Government has extended the date of incorporation from 31 March 2023 to 31 March 2024 in order to qualify for tax relief, along with an extension in the period of set-off of losses from 7 years to 10 years. The rationalization in personal income tax slab rates is certainly a welcome move, adhering to a long pending demand of the individual taxpayers.

On the Indirect Tax part, the government has realigned its focus on make in India and domestic manufacturing, by reducing the basic customs duty on goods, especially on parts used for mobile phone production and televisions – ultimately leading to import substitution. The revised duty structure for electric vehicles manufacturing shall further promote domestic manufacturing arbitrage. Also, to further avoid cascading of taxes, the government has exempted excise duty on natural gases.

From an overall perspective, the budget proposal appear to be progressive and well balanced.

Shivananda Shetty, Partner and Head, ESG: Budget 2023 prioritizes inclusive development and green growth - a marked and welcome direction in the country's policy making - will pave the way for sustainable gains towards India @100. Finance Minister's budget speech shows alignment of government vision to sustainable development goals. In a first, the budget seems to place green considerations as a critical driver and enabler of economic growth.

Saurabh Kamdar, Associate Partner – ESG: Union Budget in a winning strike pegs green growth and allocates over 70,000 crores for specific initiatives : Rs. 19,700 crores for Green Hydrogen, Rs. 35,000 crores for energy transition, Rs. 20,700 crores for renewable energy evacuation. The government's commitment towards climate agenda is evident and notable - a sure point which makes the policy making of an emerging nation standout. This apart proving an enabling mechanism for green credit ensures right amount of push for fast tracking sustainable finance.

Vikas Gaba, Partner and National Head, Power and Utilities: Energy Transition has been reinforced as key pillar of green growth. Viability gap funding (VGF) support for battery storage projects, framework for pumped hydro storage and renewable energy evacuation infrastructure for 13 GW RE are welcome steps.

Abhishek Jain, Partner, Indirect Tax: The Union Budget speech from Indirect tax perspective was customs centric, with intention to boost exports, domestic manufacturing/ value addition. Customs duty rationalization for Green energy sector and exemption extensions to consumer electronics sector are noteworthy takeaways. Specific announcements on further PLI schemes and customs amnesty scheme may have provided further cheer.

Sanjay Doshi, Partner and Head, Financial Services Advisory: Significant announcements around simplification and ease in KYC updation will enable better operations and ease push to further digitalisation of financial services. Capital spending and higher outlay to PM Aavas Yojna is good news for infrastructure financing and affordable housing finance. However, challenges on credit losses for infra financing are to be addressed.

Abhishek Jain, Partner, Indirect Tax: The Finance Bill proposes to restrict input tax credit paid on goods and services used for CSR activities. While this would be slightly disappointing for the industry, this change would clear the air on the issue which was ambiguous and was subject to contrary advance rulings.

Chandan Bhavnani, Technical Director: Budget2023 reiterates the result-oriented focus of the government through multiple initiatives such as result based financing, waste to wealth for circular economy, comprehensive review of regulatory framework, increased outlay towards MSME revamp and laser sharp focus on FinTech. This will positively impact access, availability and affordability of financing and open up new avenues of integrating ESG through this review and integrate impact as a key factor and lead to development of new products such as development impact bonds.


Manish Aggarwal, Partner and Head, Infrastructure & Disinvestments and Head, Special Situations Group: Budget 2023 doubles down on infrastructure creation with a massive 33% increase in allocation to 10 lakh crore. Strategically, FM has pivoted the path towards huge railways capex and green / sustainable growth. Proposed accelerated dispute settlement around government claims could be a gamechanger for freeing private capital. Creating Urban Infrastructure Development Fund to focus on Tier 2 and Tier 3 cities’ urban development is also a great move. Focus on asset recycling for boosting capex is a key miss.

Waman Parkhi, Partner, Indirect Tax: Recent IMF estimates of economic growth for this calendar year puts India at number one among all countries with a growth rate of 6.1%. However, the global recessionary trends and Russia-Ukraine conflicts can impact Indian growth story. To provide cushion to the economy, government has pushed up its capital expenditure. It will also incentivise States, through a 50-year loan, to undertake capex. This will improve the efficiency of every rupee spent as capex gives better returns than revenue expenditure. Budget also plans to incentivise private investment in sectors like railways, roads, power, and urban infrastructure which would enable the Government to allocate its scarce resources to more needy areas. Customs duties on finished goods are increased while those on components reduced, to promote manufacture in India. The cumulative impact of all these will help the country reach the desired growth rate of 6-7 percent.

Vijay Chawla, Partner and Head, Life Sciences, and Head, Risk Advisory: The Budget has given a great boost to the pharma industry in terms of R&D. Introduction of this scheme through various centers of excellence (CoE) will also help attract industry players to invest in R&D. Dedicated multidisciplinary courses for medical devices in existing institutions will ensure availability of skilled manpower for futuristic medical technologies, high-end manufacturing and research. Over all, this is a much-needed force for the pharma sector.

Himanshu Parekh, Partner and Head of Tax (West): Budget 2023 is a fiscally prudent and growth-oriented budget. The finance minister has given a significant impetus to infrastructure spending, with increase in capital investment outlay by 33% to INR 10 lakh crore. Further, the budget has also set its focus on green growth and fostering tourism in India. A slew of measures were announced on the personal income tax front to promote the new personal tax regime. These include making the new tax regime as the default tax regime, revamp of personal income slabs and tax rates, enhancement of rebate from INR 5 lakhs to INR 7 lakhs and reduction in highest surcharge from 37% to 25%.

The turnover limit for MSMEs to avail of the presumptive taxation regime has been increased from INR 2 crores to INR 3 crores. In order to promote the entrepreneurial spirit, the eligibility for claiming income tax holiday for eligible start-ups is proposed to be extended by one more year. The Finance Minister also gave a boost to ease of doing business by announcing the reduction of 39,000 compliances and decriminalization of more than 3,400 legal provisions. Directionally, it is a good Budget that balances the growth ambition while keeping fiscal deficit and inflation in check.

Abhishek Jain, Partner, Indirect Tax: This year’s budget has been largely customs centric, and a perusal of the fine print of the budget documents clearly exemplifies Government’s intent to promote domestic manufacturing, with special focus on Green mobility. This is evident from Nil rate of Customs duty being introduced for capital goods/ machinery for manufacture of Lithium-ion cell for use in EV batteries, reduction in customs duty rate for import of denatured ethyl alcohol to promote petroleum blending and increase in import tariff rates for petrol/ diesel run vehicles along with EVs manufactured outside India. Solar power projects being excluded from Project Import benefits, while creating some cost related hardship for these projects, will promote in-house solar module manufacturing and reduce dependance on other nations.

Other sectors where some advantage has been extended to domestic manufactures are bicycle and toy manufacturing, where tariff rates have been increased. This change comes at an opportune time when PLI for these sectors seems to be on the cards. Impetus has also been provided to consumer electronics sector with major exemptions being continued for parts used in mobile manufacturing for another year, and Customs duty cut for import of parts used in manufacturing open cell for TV panels.

On GST front, while most of the changes such as decriminalization of offences, clarity in definitions of OIDAR/ non-online recipient, etc have been largely aligned to Council recommendations, one major change that merits consideration is restriction of ITC on goods/ services used for CSR activities.

Parizad Sirwalla, Partner and Head, Global Mobility Services, Tax: To provide impetus to the Government’s mission to promote a simplified tax regime, Finance Minister introduced a slew of measures to boost the adaptability of the new tax regime. Under new tax regime, income tax rebate income limit has been increased from the existing INR 5 lakh to INR 7 lakh per annum for resident individuals. Further, the basic exemption limit under new tax regime has been increased form INR 2.5 lakh to INR 3 lakhs and consequently, the income slabs and applicable rate of tax has been adjusted wherein the existing slabs have been reduced.

In another move to make the new tax regime attractive, standard deduction of INR 50,000 may be claimed by salaried individuals. Currently, for individuals with income exceeding Rs 5 crore surcharge is as high as 37 per cent.  This has been also been reduced to 25 percent under new tax regime. Also, the new tax regime has become the default tax regime, however, benefits under old tax regime could be also be opted for.

Exemption towards leave encashment has been increased to INR 25 lakhs per annum from existing INR 3 lakhs on retirement. A limit of Rs. 10 crores has been proposed on the maximum deduction that can be claimed under section 54 and section 54F on long term capital gains being reinvested in a residential property.  It is also proposed to tax proceeds from insurance policies (other than ULIP) with a premium above INR 5 lacs in a year.

It would be relevant to analyze the fine print of the finance bill for other announcements on the personal tax front.


Neeraj Bansal, Co-Head and COO, India Global: Budget 2023 has demonstrated the government’s continued focus on synergising Indian economy through capital expenditure spending, green growth, digital infrastructure and ease of doing business. Capital investment of INR10 lakh crore, an increase of 33%, is the biggest highlight as that’s expected to circulate more capital, reinvigorate growth across sectors, increase consumption and attract investments. The special focus on railways (with an outlay of INR2.40 lakh crore) is critical in increasing freight movement and reducing logistics costs. Further, the budget has laid special attention on first and last-mile connectivity, which will be facilitated with the 100 critical transport infrastructure projects announced.  The emphasis on bringing down the fiscal deficit from 6.4% to 5.9% in FY2023–2024 is also expected to vitalise the financial market. However, contrary to industry expectation, there has been no further announcement on the National Logistics Policy.

The last budget had launched the Ease of Doing Business 2.0, and this budget continues to expand on that. The FM announced reducing 39,000 compliances and decriminalising 3,400 legal provisions, which will attract more investments and FDI in the manufacturing sector and improve India’s ease of doing business ranking. While there has been no announcement on the extension of the Production Linked Scheme (PLI), the budget has attempted to address the inverted duty issue by lowering custom duties for sectors like toys and bicycles. Exports, especially mobile and television manufacturing, is also expected to receive a considerable boost from the reduction of custom duty rates announced. Further, the INR9,000 crore corpus for the credit guarantee scheme will be a huge boost to the MSME segment, which forms the backbone of Indian economy. 

Affordable housing remains a strong focus. While Budget 2022 allocated INR48,000 crore for the PMAY, this year’s budget declared an INR79,000 core allocation—a 66% increase—under the affordable housing scheme. The revised tax slab under the new tax regime is also an encouraging move as this will enhance disposable income and drive consumption.


Vivek Gupta, Partner and Head, M&A and PE,Tax, KPMG in India: Budget 2023 is an interesting balancing act by the FM. As the last full budget before the General elections, the focus is on continuity of policy and propelling sustainable growth, with a clear desire to increase investments in the economy.  Manufacturing, agriculture and infrastructure emerge as the 3 focus sectors.  On the tax side, the personal tax reduction is expected to place additional spending power in the hands of middle-class consumers.  At the same time, there is clear focus on ease of doing business without dramatic tinkering on the corporate side. The PE and VC expectations perhaps need more debate and seem to have not been directly addressed in this Budget.

Nitish Poddar, Partner and National Leader, Private Equity: The FM has proposed a balanced budget. While maintaining fiscal prudence, she has focused on increasing the capex both at the central as well as at the state level and also found a way to put more money in the hands of the consumers. Digital economy and start-ups received significant attention. This is likely to continue the growth momentum.

Bhavik Damodar, Office Managing Partner- Mumbai, KPMG in India

This is a growth propelling budget focused on inclusive development, ease of doing business through further digitisation, significant infrastructure investments, further promoting domestic manufacturing, growth of green and alternative energies whilst achieving the stated long term sustainability goals.


Vinay Narkar, Partner, Transformation, Financial Services Advisory: Budget announcement of Entity DigiLocker to be set up for MSMEs and large businesses will help solve a significant pain point for MSMEs for KYC of entities once this option is enabled by regulator for MSMEs. Further, allowing the sharing of these documents across various authorities, regulators, banks, and business entities will enable them to solve the problem of physical authentication of these documents thereby enabling the ecosystem to further innovate on MSME cashflow based lending use cases.


Vivek Agarwal, Partner and Lead, Industrial and Infrastructure Development- Government and Public Services: A well-balanced budget, a continued commitment to Capex for sustainable growth- 10 lakh crores to the tune of 3.3% of budget, being the highest till date is huge. Coupled with incentives for states to utilize the 50-year interest free loan for another year will speed the current momentum. Harmonized List review is a long-standing requirement that gets addressed in this budget. In addition an increased role of newly created Infrastructure Finance Secretariat is a welcome step as it fulfills the need-gap role as an apex body for developing infrastructure eco-system and catalyzing private sector investment.

The budget seems prepared for the future with focus on (a) correcting the inverted duty mechanism thereby supporting industrial deepening and manufacturing growth (b) number of initiatives on green growth (c) forward looking plan on digital public goods.


Purushothaman KG, Partner and Head, Digital Solutions & Telecommunications Industry Leader: The 100 test labs developing applications for 5G services that are proposed to be set up in engineering colleges will certainly boost the implementation of industry wide use-cases which has seen limited traction till date due to high time-to-market and uncertainty over ROIs. It will also bring in increased collaboration between the start-up ecosystem and business enterprises across industry to co-create and monetize disruptive use-cases.

The announcement on Pradhan Mantri Kaushal Vikas Yojana (MKVY) 4.0 to upskill youths focusing on courses for Industry 4.0, Covid, AI, robotics, mechatronics, IoT and drones is timely and forward looking. As per KPMG Enterprise Digital Transformation Survey 2022, more than 85 per cent of enterprises across multiple sectors are expecting up to 20 per cent ROI on various 5G/industry 4.0 use-cases ranging from non-time critical communication, connected goods, seamless ecosystem communication, remote operations and time critical communications. The skills will help professionals and engineers to build enterprise grade 5G and Industry 4.0 use cases and next generation thinking on automation and AI.

The introduction of the data governance policy is quintessential to effectively drive growth initiatives of startups to monetise non-personal data in a secure and legal manner. The benefits that will derive from access to anonymised data will enable data models in machine learning and AI to be tested across industries. The policy will also be reviewed in conjunction with the initiative of the government on the Data Protection Bill, 2022.

The centres of excellence (COE) for AI as proposed in the budget will help boost research and collaboration across sectors for inter-disciplinary use cases. As per KPMG’s global study on AI, it is changing the way enterprises do business – from improving access to medical care in the healthcare field, to detecting fraud in financial institutions, to improving traffic management systems in transportation, to helping companies run more efficiently in technology, to mitigating customer service issues in retail. To achieve the vision of “Make AI work for India”, the COEs will need to shift focus from experimental to applied technology, take advantage of innovation in ancillary technologies around Automation and low code platforms, drive focus on upskilling and responsible AI. India is well poised to come up with its own thinking through these COEs and enterprises to offer AI as a service in the years to come.


Dalvi, Partner and Deputy Head of Indirect Tax: The Budget 2023-24 continued its journey of Amrit Kaal, with focus on green growth, commitment to laid leitmotifs like ‘Make in India’, ‘Atmanirbhar Bharat’ and ‘Digital India’ and fiscal prudence.

The Budget proposed alignments on duties applicable to imports to support the "Make in India" and ‘Atmanirbhar Bharat’ initiatives like customs duty relaxations on camera lens, parts of camera modules, parts for manufacture of open cell of TV panel and some others. It has also prioritized green growth by extending customs duty exemptions on capital goods used in manufacturing of lithium-ion cells for batteries used in electric vehicles and denatured ethyl alcohol.

To plug loopholes in policies advocating manufacturing of solar modules and cells in India, exclusion of solar power projects has been proposed in the ‘Project Import Regulations’.

Certain amendments like restriction of input tax credit on CSR expenditure and increased tax base for online information and database access or retrieval services could entail higher tax costs for businesses and augmented revenues for the Government.

No announcements for amnesty schemes under Customs or erstwhile laws was disheartening for the larger industry, who were eagerly looking forward to settlement of long pending disputes.

Overall, the Union Budget 2023-24 aims to capitalize on India's resources and maintain a balance between fiscal prudence and Indian growth amid global uncertainties.



Elias George, Partner and National Head, Government and Public Services: Out of the seven ‘Saptarishi’ Budget priorities, the enhanced outlay and focus on infrastructure stands out – at INR 10 trillion, which is an increase of 33 per cent. Amongst the infrastructural sectors, transport infrastructure for servicing, production and manufacture is a key focus area, apart from railways and air traffic. Leveraging infrastructure for small cities through the Urban Infrastructure Development Fund (UIDF) is expected to impart greater vibrancy to India’s tier-2 and tier-3 cities. All told, this booster shot for infrastructure will hopefully have a three-fold impact: acting as a pump-primer for enhancing GDP growth, serving as a catalyst for crowding-in greater private sector investment into the urban and infrastructure domains, and accelerating the pace of employment creation.

Another initiative that stands out is the thrust on green growth, which fortifies India’s leadership position and commitments towards reducing adverse climate impacts. The Green Hydrogen Mission’s INR 35,000 cr investment for energy transition, and the proposed viability gap funding to incentivise private sector investment in battery energy storage systems, incentives announced for farmers to adopt natural farming and to use natural fertilisers, are all measures that will further national objectives towards a greener economy.

These two key initiatives along with the announced financial sector reforms and measures to improve the ease of doing business are expected to be game-changers for promoting India’s aspiration of sustainable, inclusive, and green growth.


Vibhor Gauba, Associate Partner- Deal Advisory: The Budget 2023 has aspects which positively impact the M&E segment in India. Specifically, the customs duty cuts on TV parts and mobile phone components are likely to boost local manufacturing, and help further the penetration of such hardware in the industry, which at ~72% TV penetration and ~35-38% OTT penetration, has a long way to go. The Govt. has also kept up with the push towards digital consumption with the National digital library and 100 labs for the development of 5G apps. In terms of new age technologies, 3 centres of excellence for Artificial Intelligence (AI) will help usher in innovation around M&E use cases. Lastly, more disposable income in the hands of the consumer will find its way to M&E consumption use cases as well, especially amongst the youth.


Naveen Aggarwal, Partner, Tax: The government delivers a growth-oriented budget focused on consumption and capital expenditure to drive the inclusive development agenda, without deviating from the path of fiscal prudence. For Tax, the Finance Minister does it the RRR way. First, the ‘Reduction’ in compliance burden through the proposed simplified tax return forms and single window clearance for IFSCs’ will further the momentum gained on ease of doing business. Second, the ‘Rationalisation’ of tax provisions by way of extending the assessment window and clarifying a timeline for export realisation by SEZs’ will help drive the certainty agenda. Third ‘Revitalising’ the domestic manufacturing and export competitiveness through reduction in Basic Customs Duty on certain products and extending the reduced 15% tax rate for new manufacturing to cooperatives till 31 March 2024 will help the country move up the global value chain. In addition to this, #Budget2023 provides the much-needed fillip to the startup ecosystem by extending the date of incorporation to avail tax benefits and carry forward of losses by another three years. With the ‘completion of recovery’ as indicated in the Economic survey, it is time for India to shift gears and catapult towards the next phase of growth trajectory. 


Harpreet Singh, Partner, Indirect Tax: In line with the trend from past years, to provide impetus to domestic manufacturing, customs duties have been increased on bicycles, electric chimneys, toys, compounded rubber, and reduced on parts for manufacture of TV panels, certain parts of mobile phones like camera lens, capital goods/ machinery for manufacture of lithium-ion cells for use in EVs.

Solar Power Plants

Exclusion of solar power plants/ solar power projects from the scope of project imports could result in driving up costs of solar power projects. This appears to be contrary to the overall objective of promoting green energy.

Impetus to Green Mobility

The Budget lays down blueprint to boost domestic manufacturing for providing impetus to green mobility. Accordingly, customs duty exemption is being extended to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.  


Input tax credit (ITC) restriction on CSR expenditure, restriction on filing of GST returns after 3 years from the due date, ITC reversal on in-bond transfer of goods, penalty on E-commerce operators (ECO) for allowing unregistered/ composition vendors who are not allowed to make supplies through ECO are some key GST announcements, that may not go well with the overall objective of seamless credit and promoting ease of compliances.

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