‘Looking forward to additional funding for growth & a tax breather from the govt. for the coming year’
The Tech Panda asked startups, VCs, and entrepreneurs what their expectations are from the upcoming Union Budget 2023.
The Union Budget 2023 is right round the corner to be laid out by Finance Minister Nirmala Sitharaman on 1st of February 2023. Last year, the startup ecosystem was mostly satisfied with especially with the extended tax benefits. The ecosystem also praised the FM’s 15% cap on the surcharge on long-term capital gains (LTCG) tax as a reduction in the burden on startups in terms of ESOPs and other transactions too. The investor ecosystem too welcomed the Budget for 2022, which rolled out several policies for ease of doing business in India.
The highlights of Union Budget 2022 included support for agtech startups, government’s promotion of Drone-as-a-Service, surcharge on long-term capital gains (LTCG) tax capped at 15%, and the establishment of an expert committee for VC/PE funding. Hospitality and F&B though were unhappy with the outcome.
In the Union Budget 2023-24, expectations are that the government will consider announcing a full-fledged integration of different portals, such as e-Shram, Udyam, etc. servicing MSMEs. Last year, e-invoicing was made mandatory for businesses with a turnover above INR10 crores. The government is expected to further reduce the turnover threshold to INR2-5 crores.
Further, the government may consider announcing tax incentives on expenditures associated with expanding and using new-age technology applications for operational and organisational purposes.
The Tech Panda asked startups, VCs,and entrepreneurs what their expectations are from the upcoming Union Budget 2023.
“Despite pandemic-induced inflation, the nation witnessed flourishing entrepreneurial ventures as a consequence of early-stage acceleration and venture capital, as well as a push from the gig economic model to initiate and prepare businesses for the future of work. Given the prospects that the Indian startup ecosystem holds for global investors, this year’s Budget will be worth watching out for.
The urgent priority of the hour is to devise a policy that further encourages a sturdy startup ecosystem through easier loan disbursements, e-approvals, and more government-led incentives in India’s tier-I and tier-II cities
“While this is a promising indicator, the urgent priority of the hour is to devise a policy that further encourages a sturdy startup ecosystem through easier loan disbursements, e-approvals, and more government-led incentives in India’s tier-I and tier-II cities. Although the Fund of Funds for Startups (FFS) has played an integral role in mobilizing domestic capital in the Indian startup ecosystem, government interference should occur directly in this respect to ramp up the startup perks being offered, particularly for early-stage startups.
“Moreover, the government should also recognize relieving angel tax constraints in Budget 2023, as startups are frequently in the early stages of their growth and may not generate the same level of income or revenues as established businesses. Taxing the funds startups secure from investors may demotivate them from advancing creative solutions and developing new technologies.”
“In terms of financing, the seed fund scheme is a great initiative, however, it needs to be more transparent and structured so that startups can easily navigate it. A central database of all possible schemes through which startups can access funding must be established. It will also be beneficial to have a counsellor or guide accompany the startup to the appropriate incubator.
A central database of all possible schemes through which startups can access funding must be established
“Moreover, a single-window policy for all registrations such as incorporation, Pan, GST, MSME certificate, and so on will help save time, effort, and money.”
“The most recent CEDA-CMIE report indicates that there were almost 14 million fewer people employed in October 2022 than there were in January 2020. This means 9.6 million fewer women are employed as a result. As an entrepreneur, I’m looking forward to the union budget with the hope that it is being drafted keeping women’s labour force in consideration. The Indian govt should focus on broadening the domestic economy and creating newer employment opportunities with a special focus on building the female economy.
In order to maintain the growth, it is vital that the budget addresses women’s distinct economic roles, and recognises their constraints and their contribution towards national economic development
“The government has taken some positive steps in last year’s budget to bridge the gender gap in the workforce. Even India Inc. is making an effort to reduce this gap by creating opportunities for women interested in making a comeback to work after a career break. The shift towards digital and taking a tech-driven approach, especially in the past few years is profound. In this fast-paced environment where it is essential to constantly stay abreast with technology and digital skills, relevant upskilling will open bigger and better career opportunities for women, especially if they have been on a career break. Some of these measures include increasing funds for upskilling of women, especially in the STEM domain.
“In order to maintain the growth, it is vital that the budget addresses women’s distinct economic roles, and recognises their constraints and their contribution towards national economic development. It would be great to see the upcoming budget focus on allocating more funding to women-led businesses with attached tax benefits, and incentives for women entrepreneurs. The government should also consider mandating equal pay for equal work, and offering incentives like tax benefits to organisations that hire more women and should come up with strategies to rationalise equal pay for men and women.”
“There has been a global rise in the healthcare industry and India is a key player at the forefront. We expect that there will be measures taken to encourage the startups for the overall growth of the Indian economy.
We expect harmonising the tax rate for resident investors on unlisted shares in registered startups
“One of the ways is to incentivize domestic capital to fund Indian startups in their growth phase. We expect harmonising the tax rate for resident investors on unlisted shares in registered startups.”
“Union Budget 2022-23 will be remembered by all as a landmark “digital budget” for some pathbreaking beginnings made towards leading India into digital transformation. All necessary registrations, such as those for forming a business, opening a store, registering for the goods and services tax (GST), obtaining an MSME (micro, small, and medium businesses) certificate, etc., should be handled through a single window. That will enable MSMEs to make significant time, effort, and financial savings.
“The government should promote manufacturing, consumption & export of Made In India products. Digitization will also help in widespread e-invoicing implementation and administration for SMBs, helping in efficient business processes and operations. At present, the GST, with the full input tax credit, is 18 percent for all software products produced and sold in India. This rate must be tapered down to support indigenous creators of software intellectual property (IP) in India.”
Union Budget 2022-23 will be remembered by all as a landmark “digital budget” for some pathbreaking beginnings made towards leading India into digital transformation
“Speaking of startups, they may find it easier to fulfill their daily working capital needs if the minimum alternative tax rate (MAT) for qualifying enterprises is reduced from 15% to 9%. This is especially true in the early stages.
“Indian MSMEs are witnessing constant push from the government towards digitisation of business functions. Announcements with respect to providing MSMEs with a flexible line of credit is one of the essential requirements. Existing mechanisms such as Factoring and TReDS have not been very successful in facilitating credit access to micro enterprises. Micro and small enterprises face severe short-term capital needs because of challenges in the supply chain and delayed payments. There is an expectation that the government in Budget 2023-24 may come up with different targeted interventions to resolve supply chain finance concerns. Further, it may consider providing an inclusive regulatory framework and ease in regulatory burden for NBFC-fintech partnerships involved in supply chain finance.”
“Impending recession and negative sentiments in the market has been a great concern for growth stage startups. Demands for higher margin and lean structure from stakeholders and investment ecosystem making startup journey tough for any charismatic results. This could be the time where Govt. could do best for boosting startups, MSME sectors and entrepreneurs vying for growth post pandemic.
We strongly support GST regime, however at the same time MSMEs/startups also need flexibility in filings
“We strongly support GST regime, however at the same time MSMEs/startups also need flexibility in filings. Working in B2B environments and long-standing contracts makes regulatory filings difficult, which needs more freedom in terms of time and options.”
“Industry players in the new-age tech startup ecosystem are looking forward to additional funding for growth and a tax breather from the government for the coming year. If more funds and credit facilities are provided for technology adoption, IT and Cloud infrastructures, and upgradation, this will go a long way for home-grown startups.
If more funds and credit facilities are provided for technology adoption, IT and Cloud infrastructures, and upgradation, this will go a long way for home-grown startups
“More focus should be on facilitating data centre setups that are more environment-friendly and require well-defined infrastructure in terms of accessibility like roads, power, and other aspects. Any factor that can impede this space needs to be addressed, like some archaic and unrelated laws.
“More startup-friendly policies and tax breaks in GST and TDS are required and welcome too, especially with economists warning of the imminent recession. Government should also focus on and support skill development to further increase employability. As we know this industry brings in huge capital and we with our talent pool can do wonders here.”
“As a startup builder, we would expect some bold initiatives by the government to encourage more participation of small check investors as angel investors in the ecosystem. This could be in the form of tax exemptions on returns from investments, as already the investment is risky in this asset class, so an incentive in the form of tax rewards would work as a catalyst.
More active participation of government supported Incubations and seed funding would bring a lot of pace in the Tier 2/3/4 cities startup innovation
“Also, for startups, a tax exemption slab increase in GST would be a big step. Moreover, more active participation of government supported Incubations and seed funding would bring a lot of pace in the Tier 2/3/4 cities startup innovation.”
“The increased adoption of cloud computing and the proliferation of affordable internet access have been key drivers for the growth of the SaaS market in India in the past few years. The SaaS market in India is driven by the need for cost-effective solutions among small and medium-sized businesses, as well as by the government’s “Digital India” campaign, which has helped increase the adoption of digital technologies in the country.
I expect that this year’s budget will facilitate ease of doing business with other countries by reducing regulatory requirements and enabling SaaS startups to navigate compliance and legal requirements faster
“In the upcoming Union Budget for 2023, the government should continue to take the momentum of last year’s growth ahead. I expect that this year’s budget will facilitate ease of doing business with other countries by reducing regulatory requirements and enabling SaaS startups to navigate compliance and legal requirements faster. We expect the budget to strengthen the startup ecosystem and assist in booming its affluent future, even outside India.”
“In light of the upcoming Union Budget for 2023-24, India is eagerly looking forward to the policy announcements and allocations designed to support startup ventures and the entrepreneurship sector in the country. With the ongoing funding winter, it is especially crucial for organisations to receive comprehensive support from the government in streamlining and easing funding avenues and increasing accessibility for all.
With the ongoing funding winter, it is especially crucial for organisations to receive comprehensive support from the government in streamlining and easing funding avenues and increasing accessibility for all
“To reinvent the technology-based underwriting experiences and infrastructure and shorten the time to funding underprivileged MSMEs, Indian fintechs would require more collaborative partnerships with banks and NBFCs, similar to consumer fintechs. When dealing with such requests, regulatory authorities must design policies and initiatives for fintechs with a nuanced understanding of their position as regulated organizations, in order to fully appreciate their potential.”
“We need regulations that support the acceleration of home grown web3 startups as India is one of the leading global hubs of web3 talent and the right support can make us leaders of this sector. Apart from that, initiatives that involve government backing or accreditation and funding can be a catalyst to augmentation of startups and projects that have real world applications and solutions.
We would like to see policies that encourage government involvement at the early stages itself to give opportunities of web3 growth and global competitiveness for India
“Several government bodies such as the Government of Telangana, Kerala, Andhra Pradesh, etc, have been vocal in their support for web3 and a prominent figure in conducting regular activities that foster Indian web3 development. We would like to see policies that encourage government involvement at the early stages itself to give opportunities of web3 growth and global competitiveness for India.”
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