Boost for blockchain & clear laws for crypto, web3: Digital India’s Budget wishlist

While TV continues to dominate the media landscape in India, like much of the rest of the world, it should come as no surprise that digital is making swift inroads. As per industry reports in 2021, India’s digital media market was valued at over Rs 30,000 crore with estimates projecting it to spike to Rs 53,700 crore by 2024.

And with the general elections coming around the same year, the 2023 Union Budget, set to be released this Wednesday, is the last boost to the economic policy of the government, as it aims for a third consecutive term in power, with industry watchers paying close attention to plans for emerging tech in the digital space.

Keerthi R Kumar, Business Head-South, FoxyMoron, notes that the Indian government has already taken several measures to promote digital media and technology, such as the introduction of the Digital Media Ethics Code Rules 2021, and the Digital India initiative.

He says, “To further promote digital media and technology, especially blockchain and its applications, in 2023, the Indian government could consider the following measures: launch of the digital rupee (the digital rupee is the central bank’s digital currency, and it is widely accepted as a safer alternative to cryptocurrencies); relax cryptocurrency regulations; and invest in research and development.

Kumar adds that the Indian government could consider providing tax breaks and subsidies to companies that invest in blockchain technology as this would help promote the use of blockchain technology in India even further.

The budget proposal defines virtual digital assets as “any information, code, number, or token (that is not Indian currency or foreign currency)”. According to Kumar to encourage the use of blockchain technology in India, the Indian government may consider relaxing cryptocurrency regulations.

Amer Ahmad, Director of Technology, Blink Digital, asserts that regulation and clarity are all that is needed from the government.

“India is amongst one of the biggest adopters of web3. Despite this, we have no clear regulations about crypto and the web3 space. This means that even when we look to create campaigns for brands involving activities with NFTs or the metaverse, this lack of regulatory clarity makes brands highly apprehensive and unwilling to enter the space,” Ahmad said, adding, “More so, the current taxation and TDS regulations are hugely detrimental to the space. If we wish to become a web3 hub and allow for it to flourish, the government needs to come out with clear and constructive regulations and move away from its current flip-flop stance.”

“We have entered this new year with high hopes and substantial growth expectations of blockchain applications for crypto and web3 with the rollout of 5G along with the booming metaverse. Our country will strengthen further with this developing industry with more streamlined regulatory measures in the play. Well-defined crypto laws will provide clarity and encouragement to brands and agencies to explore further,” noted Mitesh Kothari, Co-founder and Chief Operating Officer, White Rivers Media.

“The advanced blockchain technology also comes with the sizable potential for the public sector applications like digital payments, land registrations, notarization, supply chain traceability, healthcare, education, data management, auditing, taxation, voting, etc. It would also benefit if we can achieve international collaboration to regulate laws surrounding crypto with an evaluation of the risks and benefits,” Kothari added.

The potential of blockchain comes into sharper focus upon remembering that the Modi government’s roadmap to India becoming a five trillion-dollar economy by the end of the decade is predicated on, among other things, digital assets created and exported to the world from within the country.

Vivek Kumar Anand, Director – Business and Innovation, DViO Digital, also believes that blockchain technology has a huge potential to not only bring efficiencies to various government initiatives but also create massive employment opportunities and position itself as a global leader to attract businesses, entrepreneurs and talent across the world, enabling economic growth of the country.

According to him, there are three essential steps that the government can take and include in the coming budget. The first is the adaptability of blockchain in its various programs, such as ownership transfer records of the vehicles to enable the incorruptible, decentralized and transparent log, taxation, and unified health IDs to encrypt and exchange patient data effectively.

The second is industry creation, with Anand noting, “Given the growth we have seen in digital and IT-related services, where we are among the leading countries in this segment, it makes sense for India to take charge and lead the blockchain revolution by providing an ecosystem, infrastructure and policies that support this industry. Thus, making it a haven for blockchain entrepreneurs worldwide will eventually result in employment and economic growth.”

“And third is talent creation, given that there is going to be a surge in demand for talent having expertise in blockchain, AI, and meta, and it is an opportunity for India to park a budget to support the training and education in this domain in terms of the scholarship or even as government-backed skill-based programmes. It will help create a talent pool that is not only employable but also helps take our education system to the next level and position us as a global leader.”

The Digital India initiative of the government includes a programme to encourage collaboration between industry players and academic institutions in the development of innovative solutions. Furthermore, the government has issued the National Digital Communications Policy 2018 to encourage collaboration between industry and academia in the development of digital communications technologies. To promote the use of blockchain technology in the country, the government has already launched the National Blockchain Framework.

Rajagopal Menon, Vice President, WazirX, suggests the government can establish a blockchain mission that brings together industry leaders, academics, and government officials to share knowledge, collaborate on research projects, and improve governance quality.

“The government has the ability to create a regulatory environment that promotes the growth of digital media and technology. For example, the Reserve Bank of India’s (RBI) guidelines for the use of digital payments and mobile wallets have aided in the growth of these services in the country. The government, for example, could issue guidelines for the use of blockchain technology in financial services, supply chain management, and land registration,” he says, adding that other measures could (and should) include tax breaks, incubation and acceleration programs, and of course more R&D.

Bharat Patel, Chairman and Director, Yudiz Solutions Ltd, believes that a major priority for the central government should be establishing a task force for cybersecurity and increasing spending in that area. “While recognizing the growth of lucrative sectors such as the metaverse, gaming, and blockchain, we also need to focus on skill development, start with basics, institute infrastructures, and keep exploring the sectors broadly. The AVGC (Animation, Visual Effects, Gaming, Comics) sector should get a tremendous boost as there is huge scope.”

He adds that the country has the expertise and talent to become proficient in the game development category and publish those games on a global level. “The concepts and ideas should be inspired by our mythological stories like the Amar Chitra Katha, the Mahabharata and the Ramayana. We have talent, concepts, and capability to utilize advanced technologies, it just needs a little push from the government bodies to acknowledge it and take necessary decisions,” Patel noted.

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