By Sandeep Aggarwal, Founder, Shopclues
Entrepreneurs and emerging businesses expected reforms that can act as a catalyst for innovation and growth. The silver lining is the announcement made in favour of women and SC/ST entrepreneurs with Rs 500 crore allotment. However, some reforms turned out to be far from our expectations.
We were hoping more streamlined reforms, in terms of cheap and easy accessibility of capital, availability of R&D credit and lower cost for innovation. Repatriation of capital (R&D credit from foreign countries) was expected to be more accessible. The Budget also missed out on some of the tax benefits, in reference to capital gains and dividend taxes.
Levying equalisation of 6% on gross amount for repayment made to non-residents (exceeding value of Rs 1 lakh a year) in case of B2B transactions would impact the inflow of funds. Changes in customs and excise duties, on certain inputs, to reduce cost and improve competitiveness of domestic industry will encourage entrepreneurship in these sectors. Changes are implied in sectors like IT hardware, capital goods, defence production, textiles, mineral fuel and mineral oils, chemicals and petrochemicals, paper, paperboard and newsprint, MRO of aircraft, and ship repair.
However, for start-ups, the government should have had announced more reforms. Making capital more accessible, giving R&D credits, tax benefits in shape of capital gains/dividends, simplifying listing rules, and simplifying capital repatriation are the areas where the government can bring further reforms. If not through the Union Budget, we hope the government will increase its commitment to start-ups by bringing more reforms.