Startups look for booster dose in Union Budget
Startups feel many things left to be done by the government for them as they often hit the regulatory roadblocks under the heavy hand of archaic laws
When any government takes reformative policy initiatives, SMEs and startups are the ones which bear the brunt first due to limited access to resources and capital.
When the note ban followed by goods and services tax (GST) were introduced last year, many startups and SME sector companies faced difficulties, some even shut up shops as many of them dealt in cash.
Now, after a year the economy seems to be returning to the normalcy and the sector players which retrenched workers are taking back those who lost jobs. In the past six months, the government has taken various steps such as bringing down tax slabs on some goods and services and simplifying GST filing procedures to make things easier for them.
However, startups feel many things left to be done by the government for these segments as they often hit the regulatory roadblocks under the heavy hand of archaic laws. Sector players are hoping that the upcoming Union Budget will iron out some of the policy imbalances mooted by the government.
Manu Jolly, CEO, Digiperform, a digital marketing training platform, said the government is promoting skill development, but it has put the same under 18% GST slab. I feel there should be no indirect tax on any private institution which are working on skill development.
“These skilled resources are going to add to the gross domestic product (GDP) in coming times, hence it needs to be promoted,” he said.
GST on skill development programmes need to be abolished or reduced considerably. In fact, traditional education systems are proving to be ineffective when it comes to providing jobs. New-age skills are helping people getting employed, therefore, the government should look at it in the coming Budget, Jolly added.
YourQuote, a startup co-founded by Harsh Snehanshu, is a self-expression platform for the Indian mass market where people broadcast their words (written + videos) in 15 plus languages.
The company has started employees stock ownership plan (ESOP), making employees part-owners of the company.
"We have given stock options to most of our employees and we expect the budget to become more friendly towards the ESOPs taxation," said Snehanshu, the company's CEO.
"If the Budget could allow deferred taxation on SOPs and sweat equity, it would come as a boon for both employees and employers. I will increase retention and help everyone in the startup benefit rather than just the founders."
In the last few Budgets, we have seen huge amount of budgets being allocated to management and engineering colleges, however, basic education has been largely neglected. Private school are charging exorbitant fee in the name of good education and infrastructure.
"There should be public-private partnership in education. It is a quasi-government kind of a model that we are looking for. I look forward to such steps in this Budget. SMEs contribute to almost 45% of manufacturing output and 40% of total exports and employs 40 million people," said Dinesh Agarwal, founder & CEO, IndiaMART.com- For Education.
However, when it comes to policy making these SMEs are completely ignored. This might be because of the unorganised nature of SMEs or due to a large number of SMEs and the fragmented associations.
There is no common platform for interaction. For instance, even a good initiative like GST got rejected by the SMEs of Gujarat and this is just one sector and one geography. My recommendation is to setup an empowered committee which can represent the Indian SMEs, Agarwal said.
"I would want the govt to come up with steps that could promote the usage of Rupay cards in the country and thus lower the cost of transaction. Mastercard and Visa are not only costly but also outdated and causing a delay in Digital India to take off."
He also pointed out that private and public health insurance providers are now more competitive and cost-effective than ESI.
These ESIs have now become a burden on employees with the limited freedom to choose from. Even the Finance Minister promised in the FY16 budget that he will make ESI optional but that didn't happen. Currently, many medium-sized enterprises pay both ESI and a secondary private/ public health insurance which results in dual burden, Agarwal said.
Aditya Loomba, managing director, Eco Rent a Car, said GST is higher for luxury hotels and therefore, I feel there should be a common slab for all hotels regardless of which categories they fall. The rate should be comparable to other tourism economies like Thailand and Sri Lanka so that Indian tourism business gets a level-playing field in regional tourism arena.
Tourist vehicles (with all-India tourist permit) pay heavy inter-state taxes to enter another state. "We expect these issues should be addressed," Loomba said.
Gurinder Bhatti, founder of MakeMeStudyAbroad.com, said my expectation from the Budget as an overseas education expert is to lay down more quality institutes across India and attract students to these institutes from across the globe. Due to lack of support from the government very few top institute featured in top 500 institutes in the world from India.
Take example of China which now attracts third highest number of International students and is moving from one of the major source country to a host country.
"I strongly believe in what US, UK, Australia is to India in terms of International students, India can be to South East Asia and Africa in terms of attracting international students to India."
Sudeep Singh, co-founder and chief evangelist at GoWork, said Co-working has become a thriving ground for startups and is encouraging their growth within its ecosystem. To make this growth upbeat and continuous, we look forward to further developments in government’s smart cities initiative, as occupiers are looking for improvement in infrastructure in these cities to be able to make a move towards Tier II and Tier III cities.
Also, keeping in mind that startups do not make profit in their primary years, the government should rather lower the income tax slabs for startup employees which will aid startups reduce costs.
"This year, we look ahead to some important tax exemptions that would give boost to all existing and upcoming startups."