Budget 2023, Indian Startups Expectations: Indian start-ups are expected to contribute four to five percent to the country’s domestic product (GDP), a hike from the current 2.5 to three percent. Since the launch of Startup India in 2016, the country has seen over a 190% increase in the number of start-ups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT). The sector contributes to 8.6 lakh direct jobs, as per its report. Henceforth, industry players are looking for help in terms of funds and a tax breather from the Union Budget of 2023, which will be presented by Finance Minister Nirmala Sitharaman on February 1 at the Lok Sabha.
Fintech start-up expectations
India is targeting to become a $5 trillion economy by 2025 and part of this will be propelled by the Small and Medium Enterprises (SMEs) and Ministry of Micro, Small and Medium Enterprises (MSMEs). This shift will come at the back of the increasing digitisation of the economy and expanding the reach of financial services to the masses. “While we have invested in large digital infrastructure projects such as UPI, Aadhaar (which enables running AePS among others), RuPay network, among others, it is time to work on expanding last-mile connectivity,” Amit Tyagi, CEO, Payworld, said.
For this expansion, the industry is expecting incentives in form of tax breaks in Goods and Services Tax (GST) and Tax Deducted at Source (TDS). For Tyagi, banks play a critical role in providing financial services but they are limited in their reach owing to the inherent cost structures amid other concerns. “Expanding inclusion initiatives to fintech companies will help deliver the impact of these initiatives to intended beneficiaries faster and more conveniently,” he observed. This is aimed at permeating the services to rural and semi-urban cities and towns.
Digital start-up expectations
Following the Digital India plan which began in 2015, the upcoming budget has companies expecting simplification of compliances to ensure ease of doing business for Indian companies. “The Budget can add to the ongoing effort to simplify the overall tax regime and boost growth. We would like to see the government make policies to specifically help startups that make products and services used by global companies,” Arpit Jain, founder and CEO, GreedyGame, commented.
Being a part of the app monetisation sector, he recommended that the benefits of the app monetisation industry must be kept in mind to democratise the app economy. “At the same time, we hope for friendly policies for nurturing app developers to grow their innovative ideas into viable and profitable startups,” he mentioned further.
Technology start-up expectations
In 2021, the enterprise tech sector accounted for 38% of all startups in India, according to data released by market research firm Statista. As per industry players in the sector, the government should start recognising the startup community as it has the potential to aid India to become a global economic superpower. “From a manufacturing startup perspective, the government has laid out the Production Linked Incentive (PLI) schemes, but I believe that a Service Linked Incentive (SLI) should also be introduced as well, especially for the drone segment,” Agnishwar Jayaprakash, founder and CEO, Garuda Aerospace, observed.
For the expectations that the industry has from the Union Budget, Jayaprakash believes that government organisations such as Invest India, Startup India, and Make in India, should connect more with the startup community and develop a separate ministry for startups. The budget expectation for startups would be to simplify the regulations and incentives scheme aimed at the startups and their stakeholders.
Ed-tech and career counselling start-up expectations
The ed-tech industry grew during the pandemic with the growth of remote learning opportunities. As per the industry, for the Union Budget 2023, the government should envisage such a framework that promotes the collaboration of startups with government agencies to build capacity, share knowledge and ensure the nation’s holistic development. “The industry expects to oversee significant announcements from this budget to drive investment in this space along with favourable regulatory measures to build a conducive environment for digital learning,” Gaurav Goel, co-founder and CEO, Toprankers, stated.
Co-working space start-up expectations
As per experts, the demand for co-working office spaces has seen tremendous growth, especially in the year 2022, and the post-lockdown scenario is bringing in a wave of new opportunities for co-working players. For Arjun Gulati, co-founder, Easydesq, the government should recognise the industry under special programs such as REITs (Real estate investment trusts)and provide some tax benefits to promote the growth of this sector. “It is imperative that the TDS rate is applicable to the co-working sector. Presently, the TDS rate for the co-working segment is 10% because we provide renting of both movables and immovables,” he added.
As the shared space industry grows, a lower TDS rate will give this sector a major boost to help companies provide real estate solutions to clients at economical rates, which will further help in a better flow of working capital. Expanding on the tax requirements by the start-up sectors, it is believed that there is a need for a reduced GST rate for start-ups, as co-working spaces charge a GST of 18% to all clients, which is a lot for new business owners.