Budget 2020: Startups, MSMEs hit back at Modi’s Startup India with no alleged benefit; suggest solutions

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Updated: January 30, 2020 7:15:31 PM

Budget 2020 India: Startup India has more than 27,000 registered startups -- tripling from 8,939 registered startups until March 2018, according to the data shared by the Ministry of Commerce and Industry earlier.

Budget 2020, Union Budget 2020 India, Budget 2020 India, Budget 2020-21Budget 2020-21: Only 20 per cent startups and small businesses claimed Startup India scheme benefitting them. (Image: Reuters)

Union Budget 2020 India | Ease of Doing Business for MSMEs: Startup India scheme launched by Prime Minister Narendra Modi in January 2016 to make India a leading startup hub by supporting startups and entrepreneurs with regulatory challenges particularly is perhaps failing to win over such entrepreneurs. A survey by community social network LocalCircles, which received 18,000 responses from its online community of 35,000 startups, MSMEs, and entrepreneurs, said only 20 per cent startups and small businesses claimed Startup India scheme benefitting them while 50 per cent said they haven’t benefited in any way while the remaining 30 per cent couldn’t confirm whether the grand scheme worked for them or not.

Though there is a rule in place that requires Government departments and PSUs to conduct 20% of their total procurement through MSMEs and startups, the same is not being enforced. They request that a mechanism is created through which compliance of various government departments and PSUs to the above rule can be tracked,” the survey said among the key asks from this year’s budget. Delayed payments by the government and large corporates to startups and small businesses even after 45 days of invoice generation on goods purchased has remained among the key bottlenecks. In fact, 58 per cent surveyed startups and SMEs said payment by large customers is delayed by over 61 days while 45 per cent said government delays payment also by 61 days.

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The respondents sought to streamline the shutting down process for a company in India as the “entrepreneur has to struggle with many offices like FCRA, Income Tax, EPF, ROC, GST etc. Moreover, startups and SMEs want the social media companies and search advertising platforms, which they use for advertising and promotions, and are invoiced by their overseas entity should instead be done by their India-based entity This is because startups in current scenario have to pay the full invoice amount along with depositing an equalisation levy on their behalf of approximately 6 per cent. This increases their compliance cost and expenses.

Startups and SME particularly those selling goods on e-commerce platforms have also asked for a single GST registration instead of registering in every state separately “where they intend to keep stock or invoice from, making things complex for them and increasing their compliance cost,” the survey said. The flagship of the Modi government for startups — Startup India has more than 27,000 registered startups — tripling from 8,939 registered startups till March 2018, according to the data shared by the Ministry of Commerce and Industry earlier with Financial Express Online.

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