India is quickly becoming one of the most robust business environments in the world. The third-largest and one of the fastest-expanding startup ecosystems in the world is in India, and it has played a crucial role in the economic and social advancement of the nation. In addition to bringing a myriad of disruptive innovations to market, startups play a significant role in the creation of jobs throughout India. Most new jobs in every state in the union and in every sector are created by startups intent on growing their businesses. Thus, several entrepreneurs are looking forward to the Union Budget 2023. Let’s look at the few budget expectations and viewpoints expressed by industry professionals.
Taranjeet Singh Bhamra, CEO & Founder, AgNext Technologies says India is home to one of the world’s largest startup ecosystems, accommodating about 1200+ active startups among 6000+ total startups in the sector. However, the proportion of incubation centres in comparison to the existing active startups is significantly low. To empower the growth of startup players, the Government of India should focus on providing the required resources to strengthen the existing 100 incubation centres. Another key area that is demanding sincere support from the government is the tax sops and subsidised credit for startup players to expedite private sector investment in agriculture to draw out supply chain inefficiencies and build a transparent yet profitable Agri ecosystem for stakeholders.
Moreover, government support & interest in initiatives like the one district- one product programs (ODOP) needs to be strengthened as these superlative schemes have proven robust in boosting India’s geographical indication and driving more export opportunities. The government should also focus on introducing and revamping policies to back up the startup players who are working towards providing market linkages, food quality and traceability solutions.
Dr. Vibha Tripathi, Founder of Boon says “Every year the budget comes with hope for all sectors, to bring room for change and improvement across all domains. Women entrepreneurs face many challenges on a day-to-day basis. With Budget 2023, the government must opt for a gender-responsive approach, for the betterment of women and young girls. Women should receive equal assistance for any new businesses or start-ups they undertake. The allocation of funds should be made quicker. To help India raise the standard in the economic world, women-led enterprises need more encouragement and support. To broaden horizons and improve possibilities, strong educational opportunities and assistance must be given to women in fields other than those traditionally dominated by women”.
Ms. Aastha Almast, Co-Founder & Chief Business Officer, The New Shop says that, “Last year saw stagnation in the high-volume mass segments due to disruptive economic conditions and low consumer sentiment amongst the middle class apart from continued cost impact on the industry due to commodity, currency, and regulatory norms. Given this context, a lower GST on appliances will be a relief for consumers this year. The government should also consider a larger stimulus to the middle class to induce spending and lift the overall economy which will further benefit multiple sectors. A strong component ecosystem will also help the industry. I also feel that logistical challenges seem to be one of the common issues that the industry is facing and that relaxation in tax to bring down logistics costs can help the sector in a big way. With the onset of the year 2023, the industry is predetermined to observe changes in consumer preferences, next-gen stores, and revenue models. Hence, lowering the tax rates will definitely help the industry to revive consumption demand.”
Mr. Vijay Yalamanchili, CEO of Keka – Leading HR tech platform for SMEs says, “The SME segment employs about 40% of the total workforce but contributes only around 17% to the GDP.SMEs have the capability to induct a significant part of people entering the workforce every year. Digitization of SMEs will play a key role in uplifting the entire ecosystem and boost unprecedented growth. Tax rebates for SMEs investing in business software is one of the key things that I would like to see in the budget. There are a couple of countries who are doing this such as Singapore. I believe it’s time that we should have it in India as well.
He further added that, Employees are overburdened with the current tax structure and thus from this year’s budget a reduction in taxes for the employees can be expected. With direct and indirect taxes combined effectively the employee is paying 30-40% of his total income. Due to this Employees are constantly looking out for ways to reduce tax, which is unhealthy for the ecosystemThe PF rates can also be increased to incentivize the Employees to save more. The current rate of interest is lesser than the Home loan interest rate, which does not appeal to the Employees. And with most companies adopting a hybrid work mode, the salaried employees are expecting a boost in HRA allowance to accommodate the high rentals and office work set up costs post covid.
Sagar Agarvwal – Co-Founder & Managing Partner, Beams Fintech – In the upcoming Budget 2023, we hope to see the government of India implement policy decisions that are motivated towards incentivising funding and employment. This could include deferment of time of payment of tax on stock options for employees (ESOPs) of more startups. Currently, this deferment facility is only available for startups that hold an Inter-Ministerial Board Certificate. We urge the government to extend this service to the employees of startups registered with the DPIIT. This could help the numerous Fintech companies hire and retain talent. The government could further improve the current investment landscape by allowing insurance companies, EPFOs, and others to invest in alternate investment funds. Additionally, there is an urgent requirement for reform in the minimum alternative tax (MAT), which should be reduced from 15% to 9%, as it would help smaller businesses meet their daily working capital requirements. These reforms could go a long way in boosting India’s startup economy. On the business side, we would like to see some changes in agri-space, giving select agri-focused NBFCs access to low cost capital, in a structure similar to NABARD, could help ease the borrowing cost for farmers and accelerate their financial inclusion. Export/Import tax benefits to MSMEs in certain sectors like steel, pharma, chemicals etc. could help in expansion of SME production in the country. From a PE/VC fund perspective, we would also like to see some parity between capital gains taxes between unlisted and listed entities. We would also like to see norms encouraging the flow domestic institutional capital from pension funds etc. towards startups.
Apoorva Ranjan Sharma, Cofounder and Managing Director of Venture Catalysts ++ – The anticipation around the approaching Budget 2023 has been palpable. The union government will need to address various demands that will aid the growth of the world’s third largest startup ecosystem. To begin with, there is a crucial need for a simple and separate tax framework for Private Equity and Venture Capital investors, along with startups. There should be parity for capital gains tax between listed and unlisted securities. The atmosphere for a successful startup ecosystem generating employment must include an easier, single point taxation policy for ESOPs. Further, if Indian startups are allowed to list in overseas markets, it could help improve their valuations drastically. It would also be highly beneficial if a relatively simpler regulatory framework is implemented, enabling PEs and VCs more flexibility in terms of investments. So, if the Budget 2023 is able to introduce and implement these changes, we are certain that India’s vibrant startup culture can grow to become the biggest in the coming years.
Jitendra Chouksey, Co-founder & CEO of Fittr – The previous year presented numerous opportunities for entrepreneurs, which catapulted India further to become one of the largest and most successful hubs for entrepreneurship and new-age startups. For the fitness and nutrition sector, we have witnessed technological advancement with new-age tech like AI and ML ruling over the sector to make it more sustainable and customer-reliable. PM Modi’s support towards the Fit India Movement has been huge, and in 2023 we can expect to see Indians continue to become better versions of themselves with fitness as a priority. We believe that this year’s budget will further bolster startups through new policies and norms that will lend support to entrepreneurs.
Satyajit Mittal, Co-Founder, Aretto “The Union Budget 2023-24 is expected to focus on supporting the thriving startup ecosystem in India by providing a separate taxation system for startups and helping Indian startups to get listed on international bourses. Additionally, the expectation is that the focus this financial year will be on funding startups with high growth potential through government programs, providing a much-needed boost for the startup industry and driving overall economic growth.” Satyajit Mittal, Co-Founder, Aretto
Road travel time between metros in Tier I and Tier II needs to be reduced in order to promote more essential travel and offer alternate modes which are comparable with travel time on trains. The construction of numerous new highways inside the country has provided a significant boost to the mobility sector. There are still certain locations with weak connectivity that demand the government’s attention. Concentrating on building and improving national highways will cut distance and travel time while increasing connectivity. While 2022 has witnessed a healthy revival with COVID slowly vanishing, and players maintaining safety protocols better than ever, we further expect the Government of India to dedicate more attention on targeted measures to promote shared mobility for long travel routes. Our expectation from the government would be to create a policy boost towards creation of multiple boarding points in every city that are safe, hygienic, and well-lit. This way, the boarding process would become more convenient for women and senior citizens.
