Budget 2022 expectations: What Startup & Tech industry wants from FM Sitharaman's Budget—Wishlist and suggestions
Ahead of the Budget 2022-23 to be presented by Union Finannce Minister Nirmala Sitharaman on February 1, startup and Tech Industries have put forth their demands and expectations.
Ahead of the Budget 2022-23 to be presented by Union Finannce Minister Nirmala Sitharaman on February 1, startup and Tech Industries have put forth their demands and expectations. Experts from the sector want the government to give incentives to the sector in order to brave the pandemic challenges, which have re-occurred with the rise of omicron variant across the globe.
In line with the government’s ambitious ‘Make in India’ and Atmanirbhar Bharat, they want the government to further push digitisation drive through incentives, tax SOPs, and by expanding the ambit of the Start-up India Seed Fund Scheme. They also seek extension of 100% tax exemption to start-ups incorporated between April 1 2016 and April 1, 2023 and Capital Gains exemption on investment in start-ups till March 31, 2023. Below is the expectations and recommendations from industry experts.
Ram Shriram, Founder BharatATM.
Founder of BharatATM, a FinTech startups, is of the view that as the economy has slowed down due to the pandemic, we need some some incentives too. Exemptions on procurement of point of sale terminals, GST rates for rural banking agents remitting funds among households and subsidies to compensate for merchant discount rate (MDR) waiver are among some of the measures industry executives are keeping an eye out for.
The growth in the digital payments sector and its adoption is the result of gentle taxation for self-serviced digital customers. To ensure that the same benefits reach the less tech-savvy citizens, our government should look at GST & TDS relaxation for the financial inclusion services offered through the Business Correspondent (BC) outlets across India. Waver of the GST and TDS will help the industry to reduce the cost of offering seamless financial services.
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In this budget, we also expect the government to possibly extend the ambit of the Start-up India Seed Fund Scheme to promote startups that have achieved a remarkable feat over the pandemic-hit period. Growth-oriented startups with proven capabilities could be aided with financial assistance for R&D, prototype development, and product or services trials.
Ayush Aggarwal, Founder & Director Rasayanam.in
There are a number of government schemes that can help grow a startup, however, the compliance requirements are so strict that startups are not able to utilize them.
For instance, Startups that are seeking income tax exemptions under Section 56(2)(viib) require an appraisal from an Inter-Ministerial Board setup by the DPIIT that has led to major delays & long waiting times. We hope the IMB clearance would be eliminated and exemptions are granted to all startups registered with the DPIIT, given the required undertaking is provided.
Amit Relan, Director & Co-Founder, mFilterIt –
The startup ecosystem in India has already emerged as the third-largest in the global market, which highlights the massive growth of the sector in the recent years. In this view, one of our key recommendations for the upcoming budget would be that the government should subject digital advertising expenditures to auditing in the same way that it subjects other expenditures, which goes beyond determining if procedural regulations were followed and include auditing for results as well.
The government, with a vision of a $1 trillion digital economy and the massive shift to digitalization in recent years, should also pay attention to the ad-tech industry and take financial steps to help India's existing ecosystem chart progress that will not only make India Atmanirbhar in the domain but also globally. Moreover, launching unique output-linked initiatives for the sector is crucial for India to position itself as a worldwide leader.
Rajiv Bhalla, MD, Barco India
The Indian Government is strongly focused on growth and development, and this trend has continued even during the pandemic. We look forward to a budget which offers a roadmap for heightened economic revival, with greater spending on infrastructure and enhanced incentives for corporate capex. We believe that the country is still on track to achieve the $5-trillion vision by 2025 and expect a host of reforms aimed at empowering the start-up and entrepreneurial culture while augmenting healthcare and allied sectors. Technology, manufacturing, and R&D comprise the future of India and we look forward to initiatives aimed at making India a global super-power in these frontiers.
Bibhuti Bhusan Dash, Founder and CEO, Louoj
Without a doubt, India needs intense strokes as far as both development and recuperation. Zero in on the startup area is particularly significant. It will assume an essential part in the revival and accomplishment of the economy and business, other than situating India as an innovation center.The development of India's startup scene has been staggering, ascending as it did into the world's third-biggest in under twenty years. Be that as it may, Covid-19's path of obliteration didn't leave the startup system untouched.
Fashion and textile industry needs a similar repetition of policies set-up in “Budget 2021” to give the industry a major boost. Schemes such as textile parks, PLI schemes, vocal for local, reduced customs duty on nylon and withdrawal of exclusion of certain leather was very much welcomed by the community.
While then again an expansion in custom obligation on import of select parts is probably going to give impulse to the government's PLI plans, advance domestic manufacturing and make India a fundamental piece of worldwide supply chain. Textile industry expects the total grants to be increased by 20% more compared to 10% jump in Budget 21-22 from ₹3,300 to ₹3,614 crore.
Ashish Jain, CFO, LoanTap
While the government did take a supportive stance in 2021, the expectation from budget this year would be more backing in terms of easy availability of funds, tax SOPs and enhanced regulatory framework. In spite of making a big impact on the overall economy, Fintech Industry doesn’t enjoy the level of liquidity which is otherwise available to large traditional Financial Institutions. We need the government to encourage banks to work alongside Fintech NBFCs and resume funding for them and look for parameters beyond ratings. Allowing refinance benefits to Fintech NBFCs can be a step towards the right direction. The government must continue to supplement its credit support programs to continue to empower the NBFC segment.
Nitin Bindlish, Founder & CEO, Mom's Belief
Given the pandemic’s anticipated and extended impact on mental health and general wellbeing of children, it’s the right time for the government to plan for and boost expenditure on development of resources and solutions in the area of Mental Health & Development of kids. The time is ripe to explore all possible models, including Public-Private Partnerships (PPP) etc in the space along with enhanced fund allocations for the sector.
Paras Lohani, CEO & Founder, B2B Sales Arrow
With the Coronavirus pandemic cloud still looming large due to the emergence of Omicron variant, the Budget 2022 must make significant efforts to embolden India’s technology start-up ecosystem. In light of the above, the government may consider the following recommendations:
*Extend 100% tax exemption to start-ups incorporated between April 1 2016 and April 1, 2023.
*Extend Capital Gains exemption on investment in start-ups till 31st March 2023
*Increase allocation to R&D to 2% of GDP: Start-up nation Israel spends 4.3% of its GDP on R&D, which is the highest in the world. While India has been steadily climbing up on Global Innovation Index, we are still lagging in its gross expenditure on R&D, which is just 0.7 per cent of GDP currently.
*Extend work-from-home tax benefits
*Provide tax benefits outside SEZs to companies working remotely
Ambud Sharma, Founder & CEO Escaro Royale
Fashion and footwear start-ups incurred a lot of damage due to Covid-19. In the budget 2022, the government should support start-ups, especially from the fashion and footwear industry as they need immediate assistance. The government should prioritize policies and support mechanisms that encourage domestic capital participation for start-ups, a favorable investment climate , incentives to establish incubators in every state, tax exemptions on foreign direct investments, and a strong focus on start-up infrastructure development.
Hareesh Mothi, Founder, Breakout Escape Rooms
Startups in the entertainment segment have been amongst the most impacted businesses over the past 2 years. Ironically, people lack exciting, safe, fun options on the one end, businesses are collapsing due to the absence of funds. It would be of great support to startups if there were a reduction in the GST rates across board to make experiences affordable and meaningful.
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