Budget today: Start-ups counting on FM to keep the momentum going

India has emerged as the third largest start-up ecosystem after the US and China, despite the challenges thrown by the pandemic and the economic conditions. Bolstered by the positive track record, the start-ups are now optimistic that the finance ministry will look at continue to support them while ensuring overall economic growth.  

We spoke to experts about what they were expecting from today’s budget and how the rise of start-ups is essential for India’s manufacturing and other sectors. 

Employment boosters  

Speaking of the need to strengthen the skilling infrastructure, Subramanyam Reddy, Founder & CEO, KnowledgeHut UpGrad, said: “The FY23-24 budget is a much anticipated one, post two years of the pandemic. The Centre is likely to target a nominal GDP growth of about 11% in this budget. The creation of a skilled talent pipeline is crucial if India is to hit this target. Multiple policy reforms are required from an education and up-skilling perspective to achieve this vision. In fact, the government can also adopt measures taken by the German and Singapore governments. For instance, citizens in Singapore receive several government subsidies for acquiring skills in key areas like finance and technology. These can go up to 90% of the course fee. The government must start looking at technology skills as crucial for overall economic growth. Measures like these will not only encourage more employment for the youth but also contribute to the local and national economy.

Incentives to survive & thrive

With a string of layoffs, inflation and predictions of a recession in 2023, industries and the citizens across the country are waiting for today’s budget, says Anshuman Sarda, Co-Founder, NEWJ. “A relief for taxpayers is high on the wish list this time. This could come in the form of a hike in the basic exemption limit from Rs 2.5 lakh to Rs 5 lakh, or a reduction in tax rates. It has been 8 years since there was an increase in the 80C limit in FY 2014-15. With the current inflation level, a hike in this limit will be a welcome measure. To facilitate the growth of small businesses, the Budget should also consider giving special tax incentives for start-ups.”

Tax reliefs 

Sharing budget expectations in the context of the central government scheme Jal Jeevan Mission-Har Ghar Jal, Vijender Reddy Muthyala, Co-founder and CEO of DrinkPrime, said, “Lowering or eliminating GST on water purifiers, as consumer durable, will help treat them as an essential service required by all Indians.”

Reddy also mentioned that the rejuvenation of lakes and groundwater regeneration is the need of the hour. Several NGOs and startups would benefit greatly if the government would sanction some budget for the same or launch initiatives that serve the purpose.

On the taxation on ESOPs, Reddy said, “It should occur at the final sale of shares rather than when they are offered. This makes attracting good talent difficult in an already competitive market with a severe talent shortage. If this is addressed, organisations will be able to offer additional benefits to potential or high-performing employees.” 

As for Nishant Behl, Founder, and CEO of Expand My Business, “Reducing the current 18% GST slab to 5% will increase the ease of doing business and transparency amongst start-ups, leading to an even robust start-up ecosystem in the country. Also, there should be a special incentive for e-commerce businesses to establish warehouses and infrastructure in Tier-2 and Tier-3 identified locations, in a bid to enable seamless operations” 

Implementation of National Retail Policy

Praising India’s startup ecosystem which drives the country towards building the $5-trillion economy, Nitya Sharma, CEO & Co-founder, Simpl, said, “In India, the retail and e-commerce segment has gained renewed prominence post-pandemic and has witnessed an accelerated pace of sales and profits in the last year, may it be online businesses or offline stores. The Indian retail market is expected to surge to $1.4 trillion by 2030. This would account for a whopping 57% increase as compared to the $ 0.80 trillion in 2020. Much of this expansion can be attributed to government initiatives focused on technology and digitisation, new payment models, and improvements to local logistics infrastructure.”

Sharma further mentioned that with the upcoming budget, there are certain expectations in terms of changes in policies as well. “The retail sector expects the government to implement the National Retail policy, which focuses on ensuring easy and quick access to affordable credit. It would also facilitate the modernisation and digitization of retail trade by promoting modern technology and superior infrastructural support. Additionally, the retail space would benefit greatly from the implementation of the National e-commerce policy that aims to foster inclusive growth in the digital space and the e-commerce sector, along with Make in India and Digital India programs. As the retail market is still in the process of coping with the setback caused by the pandemic, it expects the government to restructure the GST policy to incorporate certain relaxations for the retail and e-commerce sector,” she said.

Digital Push 

Talking of how the government can further support economic growth, Gaurav Arora, Co-Founder, of Social Panga, said, “The government’s financial investment in Indian businesses will extend into 2023 with the Union Budget 2023. This will allow growth to happen locally and expand globally. Regulations in the start-up ecosystem will also help this steadily developing sector take a step in the right direction. In my opinion, the fiscal policies this year must also focus on India’s booming growth in the digital infrastructure space. The biggest example of our digital adoption can be found in the form of UPI even in the smallest kirana stores. More financial backing can be expected in the e-commerce and D2C markets in India to ensure its expansion into the rural economy. This, I believe, will be led by the government-driven Open Network for Digital Commerce.”