2022 saw startups in mortal danger. Running out of cash and watching venture capital dry out, and teams working on cutting edge technology being disbanded.
Startups need decisive policy action to avoid a catastrophe as entrepreneurs and the enterprises they build are essential to revitalise our economy .
Startups believe they can help define the economy further, by playing a pivotal role for strength and stability, while operating in a changing world.
And with the Indian economy now recovering from the pandemic, and the size of the Indian economy expected to reach $3.7 trillion during this year, according to the Reserve Bank of India (RBI), startups hope that the upcoming Budget 2023 will bring policies that will further support their growth.
Let’s explore the developments industry experts and startups are hoping to see in the last full budget before the 2024 general election.
Anand Ramanathan, Partner, Deloitte India
The central government, under Startup India initiative, has already taken multiple steps towards creating a conducive regulatory environment for the startups. However, there are special needs of the agriculture sector which need to be addressed. Farm data is a major area where agricultural technology players struggle currently. Accurate digital databases along with digital cadastral maps need to be created and made available (open source) to agricultural technology players to help them deal with the large number of small and marginal farmers.
The emerging technologies in agriculture like remote sensing, drone-based monitoring for precision agriculture require huge investments in equipment and licenses. Hence special funds and MoUs need to be planned to help with these credit requirements and suitable common technology infrastructure needs to be created in the country.
A farmer producer organisation (FPO) portal with a list of registered as well as active FPOs along with their area of operations, size and contact details is needed for private players to connect and work with them. Similarly, a list of investible projects from government is suggested to be published regularly for creating interest and competition among entrepreneurs. The vacant, unutilized, and underutilized government land/resources could be provided on lease to private players to reduce time to market. A provision for a single mandi license within a state is needed for startups operating in the output space; they currently need to get a separate license in each of the districts.
The issue of double taxation when produce from outside a state is brought inside for processing purposes needs to be resolved to increase processing. The agricultural technology players need to be facilitated in setting up their stall in mandis for creating awareness about their novel solutions and increasing adoption.
Ankur Maheshwari, Chief Financial Officer, Freo, a consumer neobanking platform
The upcoming budget for the 2023 fiscal year is projected to remain consistent with the policies of the 2022 Budget. India has grown from strength to strength, especially in the middle of the global economic downturn. We are hopeful that this budget will help the country move the needle and pave the way for India to become a global example, especially for the fintech and startup industries.
We hope the budget will focus on the startup community, which has proven itself to be a major growth driver for the country in recent years. Additionally, when formulating the budget, consideration should be given to promoting initiatives such as co-lending to expand financial inclusion and extend reach to underserved customer segments.
Prabhtej Singh Bhatia, Co-Founder, Falcon, an embedded finance startup
We look forward to relaxed taxes for fintech companies and liberalising investments into them. We also hope for further reforms in digital lending, especially some relaxation for allowing the first loss default guarantee (FLDG) model, faster approval for licenses for non-bank entities, monetisation of UPI and incentives for digitisation.
Also, a liberalised tax regime will help more inflow of funds into fintechs allowing fintechs to grow and expand.
Gaurav Jalan, Founder & CEO of mPokket, a lending platform, and member of the Fintech Association for Consumer Empowerment (FACE)
With the Budget just around the corner, the fintech industry is expecting the government to introduce reforms that will further support its growth trajectory.
We are expecting that the finance minister further eases the financial burden on start-ups in the fintech space, along with depreciation on fixed assets that are used by fintech companies to save on taxes. Major tax reliefs were given to startups and employees in the previous budget, so as to resolve the dual taxation issue and the tax burden that employee stock ownership plans (ESOPs) have on employees. However, as the qualification criteria were very stringent, only a very limited number of young Indian companies could reap its benefits. To address the dual taxation issue and lessen the financial burden that ESOPs impose on employees, the government will have to offer substantial tax relief to fintech start-up employees.
There is also a need for improving financial inclusion across the country with the help of digitisation. Fintech will grow at a faster rate if they are able to penetrate deeper into India, which will only be possible if India becomes fully digitalized, especially our rural hinterland. The sector expects more assistance from the government for better partnerships with banks and financial institutions to strengthen the existing model. This would help build a level playing field for both online & offline lenders alike, while fostering inclusion.
Steps towards ensuring that loan borrowers would not be burdened with further rate hikes this year would also be a welcome move. Efforts towards providing some sort of tax rebate for personal loan and education loan borrowers, similar to what home loan borrowers enjoy, would also be welcomed by borrowers since personal loans make up for the majority of the loan market right now.
Sanjay Kumar, co-founder , Rising Bharat Technology, a Delhi-based software development company
As a software development company engaged in developing affordable software and digital solutions for small businesses, we expect hassle-free credit availability, reduced GST, additional regulatory and tax relaxations to boost spending on innovation and propel growth in startups.
For MSMEs, the finance minister should consider addressing the credit gap challenge through GST rationalisation and by reducing compliance burden for ease of doing business.
Shaili Chopra, Founder, Gytree.com (a women’s health platform) and SheThePeople (a digital media website)
I believe the Indian budget needs to specifically focus on allocating funds towards improving healthcare for women. Today,60 per cent of the female workforce drops out because of complex (but easily preventable) health issues such as polycystic ovary syndrome, endometriosis, immunity issues, fatigue and other factors. If India has to become a $5 trillion economy by 2030, how can we not focus on the other half of our population? Improving outcomes for India’s 650 million women can help them contribute $770 billion to the Indian GDP. Today, technology can be a great answer to increase virtual care and health solutions for women, which in turn will empower and enable them to get to work and access opportunities.
Malini Adapureddy, Founder and CEO, Deconstruct (skincare startup)
Any sort of policies/ budget allocation which encourage organisations or companies to promote more women to the top would be very welcome, because we all know how the percentage of women drop as they move onto senior and board positions.