As the world of blockchain and cryptocurrencies continues to gain traction in mainstream finance, more and more investors and innovators are drawn to the lucrative returns and potential of the technology. India is no exception, with its tech veterans and new-age innovators alike taking an active role in the blockchain space. However, the lack of clear regulations and the imposition of an unreasonable tax on cryptocurrencies have been major deterrents for those who are interested in the technology.
As the Indian government prepares to finalize its annual budget, many stakeholders in the crypto space are hoping for some much-needed relief. In this article, we will explore the issues facing the blockchain industry in India and how the government can take the necessary steps to address them. With the right measures in place, the blockchain industry in India could be set to reach new heights.
The Grievances of the Indian Blockchain Industry
The Indian blockchain industry has identified several key issues that they are hoping the government will address in the upcoming budget. Here is a list of things that are discouraging innovation and driving away potential investments in the Indian blockchain space.
There is a dire need amongst innovators and investors for clarity on the legal status of cryptocurrencies. As there are no laws in place, stakeholders are always afraid of the loss of their time and effort if things go otherwise.
Even though blockchain technology is being accepted as the future of global supply chain management and transparency in financial operations, there is no encouragement from the government for blockchain innovation. India, being the hub of tech innovations deserves an incentivized mechanism to promote blockchain innovation in the country.
Future blockchain innovation will require more investment in infrastructure and research.
The industry is also requesting the government to provide more support for startups and small businesses, as well as to create a more favorable environment for foreign investors. Cryptocurrency businesses are being labeled as extremely risky and do not get any support from the government as of now.
Indian Financial Budget 2023: A Ray of Hope?
After concerted efforts from industry players, there is hope that the government is taking steps to draft appropriate regulations for cryptocurrencies. Although no guarantees have been made by the government, it is essential that proper rules governing regular crypto transactions are established.
The upcoming budget is eagerly anticipated by blockchain and crypto stakeholders, who hope that the government will take their interests into account. Furthermore, the International Monetary Fund has requested the Indian government to draft laws regarding blockchain and cryptocurrencies, in order to facilitate better international collaboration. The Indian government has also consistently advocated for a global consensus on crypto regulations, rather than calling for a direct restriction on cryptocurrencies.
Unfortunately, the high tax slab and 1 percent TDS deductions on each crypto transaction have had a detrimental effect on the Indian startup ecosystem. As a result, a large number of innovative blockchain projects have been forced to relocate to Dubai, Singapore, and Wyoming, which goes against the country's aspirations. The government will be taking this into consideration when drafting the crypto regulations.
In brief, there are high hopes for the budget of 2023, and the finance ministry is burdened with the responsibility to strike a balance that does not hurt anyone in an extremely diverse economy.
Expectations from the Government of India
Here is a list of the things that the blockchain and crypto community wants the government to incorporate into the national budget for 2023.
Reducing the extremely high rate of tax on crypto gains along while also minimizing the TDS on crypto transactions to feasible levels
Special attention towards developing regulations on blockchain and cryptocurrencies, making it a safe space to operate in
Working with crypto businesses in India to develop a regulating mechanism for their financial operations
Proper regulations will also clear the doubts about the legal status of cryptocurrencies in the country, assuring the investors that their funds are safe and legal
Adequate allocation of resources toward educating the masses about blockchain, cryptocurrencies, its use cases, and safety from related frauds.
Why Should India Embrace Blockchain Technology?
India has always been at the forefront of software development with the largest talent pool in the world. It is no wonder that Indians are occupying prominent positions in renowned tech companies across the globe. The Indian government has consistently demonstrated its commitment to technological progress, providing not only ample attention but also the necessary resources.
However, the government’s hesitancy in corroborating blockchain tech could cost India a competitive edge in the tech ecosystem. Understanding the grievances of all the stakeholders should be prioritized by the government of India in the upcoming budget of 2023. We as a nation need to understand blockchain and embrace it. We cannot oppose an inevitable technology just because it is not comprehensible as of now.
The Way Ahead
Cryptocurrencies are here to stay and it is also true that they cannot be prohibited to operate as there are no central agencies controlling the transactions. The great decentralization of power is something that could be the reason for the governments but its rise is inevitable. It is high time that governments all around the world accept the potential of decentralized finance and leash it to gain fair control rather than rejecting its whole existence.
Indian government should also bring the regulations as soon as possible to ensure investors' security and restrict the mass movement of Indian money to foreign crypto exchanges. The budget 2023 could be the perfect platform for the government to clear its intentions and incorporate the inevitable blockchain tech in the Indian economy.
