Budget 2019: Piyush Goyal kept startups and its investors out of purview from this year’s pro-farmer and middle-class budget apart from acknowledging the startup ecosystem to be the second largest in the world.
Budget 2019: Piyush Goyal kept startups and its investors out of purview from this year’s pro-farmer and middle-class budget apart from acknowledging the startup ecosystem to be the second largest in the world. The contentious angel tax too didn’t find mention in the speech. Nonetheless, Goyal talked about the impact across various sectors that experts feel will indirectly help startups grow.
Below are the 7 areas that made news among startup community for its hits and misses in the budget.
Logistics – Startups in the logistics sector have welcomed the announcement in the budget that Indian customs is fully digitalizing export/import transactions and leveraging RFID technology to improve export logistics. “Using RFID to enhance export logistics was a much-needed initiative. This will ensure seamless movement of goods, drastically improve visibility and reduce transportation costs. Digitizing core logistics processes is a key when it comes to building a sustainable supply chain,” said Kushal Nahata, CEO & Co-founder, FarEye – a SaaS platform for e-commerce and supply chain logistics operations. FarEye has been among India’s 50 fastest growing technology companies by Deloitte since 2016.
Nahata said that developing 27 kilometres of highways every day will enable faster long-haul deliveries and will reduce the burden on existing roadways while abolishment of duties on 36 capital goods and single point of approval under section 65 of the Customs Act will help manufacturers.
Sunrise sectors – Some of the forward-looking announcements made in the budget, says investors have been the government’s plan of setting up a National Artificial Intelligence portal. “The same is going to also boost investments in the AI start-ups, contributing towards India’s emergence as one of the global hubs for AI research and development, said early-stage fund Venture Catalysts co-founder and president Apoorv Ranjan Sharma.
The other area spoken in the budget includes digitization of one lakh digital villages in the next 5 years. “I foresee the hinterlands of India becoming breeding grounds of opportunities for Indian start-ups. Ventures in the field of agriculture, digitalisation, etc. will also find handsome prospects due to these announcements.”
Compliance – Tax reliefs for start-up investments has not been addressed in this budget, much to the dismay of angel and VC community. “Startups generate the highest number of new jobs per unit of invested capital compared to private or government investments. In most western economies, therefore individuals are encouraged to invest into startups by providing 33%-100% write-offs of the amount invested every year,” said Sushanto Mitra, Founder & CEO, Lead Angels – angel network based in Mumbai.
The government of India, said Mitra, could encourage investments into startups by considering such investments being included in the list of investments covered under 80C thus encouraging startup investing.
Travel – In 10 “most importunate dimensions” of the government’s “Vision 2030”, little was there around pushing the travel sector. The expectations were around boosting the digital and payment infrastructure for sectors with big-ticket transactions like travel and tax relief, especially for indirect taxes, said Cleartrip’s CFO Indroneel Dutt. “For a market that expected a tax reduction basis promise in 2014 to bring it down to 25% in a phased manner, the corporate direct tax rates were left untouched which comes as a disappointment,” he said.
Healthcare – Government’s focus on improving tertiary healthcare has been visible in the budget along with the earlier announcement of National Health Protection Mission. The move is expected to boost access to high-quality healthcare in rural areas. “Healthcare is one of the key priority areas in the National Artificial Intelligence Program, which will help in evolving the ecosystem and create a larger talent pool of AI professionals and improved innovation in the industry. With villages becoming digital villages, we expect an increased penetration of technology products in general, healthcare providers and insurance providers would also be able to help the population far and wide in the country, said Gaurav Gupta, co-founder at Delhi-based health-tech startup Navia Life Care.
Real estate – Budget 2019 had quite much in its kitty for the real estate sector and has looked at easing some of the challenges. Biggest one being exemptions under Section 54 for capital gains up to Rs 2 crore for two properties purchased. “This will be a game changer even as the zero taxes on notional rent on self-occupied second homes would be. The exemption from tax of personal income up to Rs. 5 lakh will scale up budgets of first-time homebuyers, especially of the salaried class,” said real estate aggregation and transaction startup Square Yards co-founder and CEO Tanuj Shori. The startup is backed by Anil Ambani-led Reliance Group’s private equity arm.
The extension of benefits, he added, under Section 80 (i) BA for housing projects till 31st March 2020 and extension of the period for tax levy on notional rent on the unsold inventory to two years are some of the much-required measures to help the developers.
Hospitality – The announced tax breaks, together with low average inflation, are likely to spur domestic demand and spending, and inject liquidity in the market. “This is great news for sectors such as hospitality and travel. The announcements on bridging the digital divide and improving efficiency through technology are also welcome,” said OYO’s founder and group CEO Ritesh Agarwal.