Union Budget 2010: Inclusion of An Unique Innovation

With in-between power outages, I kept on watching Pranab making his budget speech. I am doing this for many years. Perhaps it started in 90s when I was working for the corporate project planning in Hindustan Motors, as I was expected to know the budget’s impact on the project costs.

Pranab Mukherji impressed me with his reference to an innovation and his support of that:

The humble cycle rickshaw is now being acclaimed as an environment-friendly means of transport. CSIR has developed an innovative product called ‘soleckshaw‘ to replace manually-operated rickshaws. It runs on batteries which are charged by solar power. I propose to provide a concessional excise duty of 4 per cent to this product. Its key parts and components are also being exempted from customs duty.

I wish he would have named the hero, behind the innovation, Dr Pradip Kumar Sarmah from Guwahati, the real brain behind this project. I don’t know how and why Mr. Mukherji selected to refer to this sole innovation. Was he impressed by the innovation or CSIR approached him for excise relief?

I came to know about Dr. Sarmah’s innovative ventures recently through media.

Ashoka Lemelson Fellows from India along with over 100 entrepreneurs from across the globe, converged at the Indian School of Business (ISB), Hyderabad, recently to showcase their innovations that affected social change under the aegis of Tech4Society.
One of the innovations was that by 47-year-old veterinarian, Pradip Kumar Sarmah of the NOIDA-based Centre for Rural Development, who has innovated Deep Bahan – a lightweight cycle rickshaw priced at around Rs 10,500.

Pradip Sharmah collaborated with IIT Guwahati to design this rickshaw called Deep Bahan. Sarmah’s rickshaw is 20 per cent lighter than the traditional 100 kg one, but sturdier. The same Sharmah is currently collaborating with Central Mechanical Engineering Research Institute in Durgapur, to create solar battery operated rickshaws.

But more unique is the business model of Mr. Sharmah. The rickshaw comes gift-wrapped with a loan from Sarmah’s Rickshaw Bank as well as vehicle insurance, licences and uniforms and even Hawaii chappals for the pullers. The ‘pullers’ become the owners of his vehicle in just 18 months at a nominal repayment of Rs 25 per day. As claimed, the owners earn up to Rs 500 per day, after paying the daily loan installment. Deep Bhahan has improved the lot of nearly 5,500 rickshaw pullers in 12 cities including Guwahati, Varanasi, Allahabad and Lucknow.

Interestingly, as reported, the IIT Guwahati-designed and CSIR-supported Deep Bahan is now all set for a world class makeover, with a Massachusetts Institute of Technology (MIT) design team working on it to make it even stronger, lighter and more user-friendly.
It is the same Sarmah who is carrying out a pilot project on solar battery-operated rickshaws branded as Soleckshaws. Nine such rickshaws already ply in Delhi’s bustling Chandni Chowk and get their charge from solar panels installed atop the Delhi Metro railway station. If they run successfully over a period of time, more Soleckshaws will hit the road.

This social entrepreneur’s voice has finally reached the government.

Pranab Mukharji has tried to further encourage R&D across all sectors of the economy. He has proposed to enhance the weighted deduction on (1) expenditure incurred on in-house R&D from 150 per cent to 200 per cent; and on (2) payments made to National Laboratories, research associations, colleges, universities and other institutions, for scientific research from 125 per cent to 175 per cent.

Currently, any payment made to an approved scientific research association is eligible for weighted deduction. The income of the approved scientific research association is exempt from tax. Pranab Mukherji has expanded the scope of the benefits. The ‘payments made to the approved associations engaged in research in social sciences or statistical research would be allowed a weighted deduction of 125 per cent. The income of such approved research associations shall be exempt from tax.’

Will the provisions motivate Indian companies to invest significantly more in R&D in the India’s ‘Decade of Innovation’?

I don’t know if it’s mandatory to report on the R&D work in the annual balance sheet of the company. I wish it is made. However, the companies do get the tax benefits. Unfortunately, the private sectors except for some have hardly focused and contributed on R&D and product development as much as it is desired by the competition because of globalization encompassing all the sectors.

Will the government report the impact and outcome of the incentive and provisions of the budget to the companies, institutions, and associations for accelerating R&D?

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