By Rameesh Kailasam

Budget 2025: India has witnessed 73 budget presentations so far and the NDA government led by Narendra Modi presented its 13th Budget that had heavy expectations of masses and industry especially around direct tax and customs reliefs besides scheme related announcements which it seems to have met. While a large chunk of ease of doing business and indirect taxation issues that industry and start-ups face today are still at the hands of the GST council that is jointly administered by the Centre and all the states together, the Union Budget still holds relevance.

An important initiative taken by the labour ministry that is still underway and needs to be carefully structured is the Code on Social Security for gig workers. This got a much-needed boost with the Finance Minister recognising the contribution by digital platforms and gig workers in the new-age services economy.  The FM announced that the government has begun the process to issue identity cards and registration on the e-Shram portal and healthcare coverage under PM Jan Arogya Yojana for nearly 1 crore gig workers. 

Another significant announcement that enhances credit availability with guarantee cover for Startups, from Rs. 10 crore to 20 crore, with the guarantee fee being moderated to 1 per cent for loans in 27 focus sectors. The Budget speech also stated that The Alternate Investment Funds (AIFs) for startups have received commitments of more than Rs. 91,000 crore. Now, a new Fund of Funds, with expanded scope and a fresh contribution of another Rs. 10,000 crore will be set up.

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The announcement of extension for the incorporation of startups by 5 years to allow the benefit available to start-ups which are incorporated before April 01, 2030, is a welcome step apart from the extension of time limit u/s 80-IAC for startups for another period of five years, which will now be available to eligible start-ups incorporated before 01.04.2030.

The increase in threshold to collect tax at source (TCS) on remittances under RBI’s Liberalized Remittance Scheme (LRS) is proposed to be increased from Rs. 7 lakh to 10 lakh will enhance the growth of startups in the fintech and travel space.

The announcement of the Deep Tech Fund of Funds to be explored to catalyze the next-generation startups in the deep-tech space has a huge potential going forward considering we are already witnessing the emergence of startups in the deep-tech space. The budget of 2023 had mentioned setting up of three Centres of Excellence in Artificial Intelligence for agriculture, health, and sustainable cities. Now a Centre of Excellence in Artificial Intelligence for education has been announced with a Rs. 500 crore allocation.

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The National Action Plan for Toys scheme for making India a global hub for toys will boost startups emerging in the toy manufacturing space many of which are already supplying “Made in India” Toys to global brands.  The scheme is expected to focus on the development of clusters, skills, and a manufacturing ecosystem that will create high-quality, unique, innovative, and sustainable toys that will represent the ‘Made in India’ brand. However, a recommendation to the FM here would be that a “Made in India” toy, when imported back to India should not be subject to further import duties that are currently levied on all imported toys irrespective of country of origin.

The announcement of the expansion of UDAN will boost the travel and tourism startups and digital travel service providers. UDAN has already enabled 1.5 crore travelers to meet their travel aspirations connecting 88 airports and around 619 routes. The proposal to expand this to 120 new destinations that will likely carry 4 crore passengers in the next 10 years will boost connectivity and economy in these areas besides encouraging more tourism and hospitality-related startups. 

Another notable aspect for startups in the travel space are the announcements of intensive skill-development programmes for youth in Institutes of Hospitality Management and providing MUDRA loans for homestays. The aspect of providing performance-linked incentives to states for effective destination management including tourist amenities, cleanliness, and marketing efforts is a noteworthy move to nudge the states strongly in this direction.

The July 2024 Budget had exempted BCD on 25 critical minerals that are not domestically available and this budget further exempts more critical minerals to aid manufacturing. The addition of 35 capital goods for EV battery manufacturing, and 28 additional capital goods for mobile phone battery manufacturing in the exempt list further boosts startups and investments coming to this space.

The schemes promoting electric mobility like PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE), Scheme to Promote Manufacturing of Electric Passenger Cars in India (SMEC), PM-eBus Sewa Scheme have all seen increased budget allocations over time while Funding for the Scheme for Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle- (FAME) has witnessed a decline. Overall a forward-looking 8th budget by FM Nirmala Sitharaman. The FM now needs to engage with the States to crack something similar to boost ease of doing issues coming from the GST-related issues for which both the Centre and States are equally responsible.

Rameesh Kailasam is CEO of Indiatech.org. Views expressed are personal. Reproducing this content without permission is prohibited.