The government is anticipated to take action to advance the startup ecosystem in the budget for 2023.
Entrepreneurship is one of our greatest characteristics, and India is quickly becoming one of the most robust business environments in the world. India now has the third-largest and one of the fastest-growing startup ecosystems in the world. It has been vital to the country’s economic and social development.
Most new employment in every state in the union and every sector is created by startups intent on growing their businesses. To support small companies and empower entrepreneurs, India is working on launching and creating a multitude of new businesses, such as semiconductors, manufacturing, renewable energy, and electronics. Attracting and motivating entrepreneurs and investors to engage in and spur growth in these new-age sectors is essential for the prosperity of the nation.
Therefore, several business executives are interested in what the Union Budget’23 has to offer this year. The following are a few requests and recommendations made by business professionals regarding the budget: Taxpayers should gain from the budget for 2023–24, with a focus on possible economic advantages.
The service class may also anticipate long-term benefits like medical insurance, pension payments, post-retirement benefits, maternity benefits, and so on in the forthcoming budget. Furthermore, the present administration will concentrate on its major objective of developing a budget that encourages general economic development now that the Indian economy has started to recover from the financial effects of the pandemic crisis. Companies from the IT industry believe that the manufacturing industry will benefit from the adoption of sustainable business practices and the deployment of innovative technologies.
According to official sources, Finance Minister Nirmala Sitharaman is anticipated to make announcements in the upcoming budget regarding initiatives to further improve the startup ecosystem in the nation and address issues with inverted duties in specific industries to support domestic manufacturing. In the past several years, the government has prioritized the startup industry and implemented several initiatives. As per sources in the finance ministry, the government may think about funding infrastructure projects that were authorized by the Network Planning Group (NPG), which was established as part of the PM Gati Shakti program.
The Gati Shakti National Master Plan, introduced by Prime Minister Narendra Modi in October 2022, aims to build an integrated infrastructure and lower logistical costs. For uniform planning and integration of the ideas, the NPG consists of numerous connectivity infrastructure ministries/departments and their heads of network planning divisions. Before creating a DPR (detailed project report) during the planning stage, each of these departments must first get clearance from the NPG.
Inverted tariff structures charge inputs more heavily than completed goods, which lead to credits building up and cascading costs. The government has already implemented several initiatives to support startups in the nation, including the Startup India initiative, The Fund of Funds for Startups (FFS) scheme, the Startup India Seed Fund Scheme (SISFS), and the Credit Guarantee Scheme for Startups (CGSS), which are all designed to provide funding at different points in a startup’s life cycle. To foster innovation and encourage private investment in the startup ecosystem, the government introduced the Startup India program in January 2016.
What startups might anticipate from the FinMin in the Union Budget 2023?
Budget 2023, Expectations for Indian Startups: With an increase from the present 2.5 to 3 percent, Indian start-ups are anticipated to contribute four to five percent to the GDP of the nation. The number of start-ups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) has increased by more than 190% in India since Startup India’s 2016 inception.
According to the sector’s report, 8.6 lacks direct employment is supported by it. Industry participants are now turning to the Union Budget of 2023, which will be delivered by Finance Minister Nirmala Sitharaman on February 1 before the Lok Sabha, for assistance in the form of funding and a tax reprieve.
By 2025, India wants to have an economy worth $5 trillion, and the Ministry of Micro, Small, and Medium Enterprises (MSME) and SMEs will play a role in this (MSMEs). This change will result from the economy’s growing digitization and the general public’s increased access to financial services. According to Amit Tyagi, CEO of Payworld, “While we have invested in significant digital infrastructure initiatives like UPI, Aadhaar (which permits running AePS among other things), and the RuPay network, among others, it is time to concentrate on improving last-mile connectivity.
The sector anticipates benefits in the form of tax cuts under the Goods and Services Tax (GST) and Tax Deducted at Source (TDS) for this expansion. According to Tyagi, banks are essential for delivering financial services, but their reach is constrained by their ingrained cost structures and other issues. The influence of these activities will reach their intended beneficiaries faster and more efficiently if inclusion measures are expanded to fintech enterprises, he noted.This aims to extend services to cities and towns in rural and semi-urban areas.
Companies anticipate that the forthcoming budget will simplify regulations in line with the Digital India strategy, which was launched in 2015. This will make it easier for Indian businesses to conduct business. “The budget can support continuing efforts to streamline the whole tax code and spur economic development. According to Arpit Jain, founder, and CEO of GreedyGame, “We would want to see the government adopt laws that especially assist startups who produce goods and services needed by multinational corporations.
Being involved in the app monetization sector, he suggested that to democratize the app economy, the advantages of the sector should be taken into consideration. He said, “At the same time, we wish for welcoming policies that foster app developers’ ability to expand their unique ideas into sustainable and successful enterprises.
According to statistics published by market research firm Statista, 38% of all startups in India in 2021 will be in the enterprise IT industry. The government should start recognizing the startup community, according to industry professionals in the field, since it has the potential to help India become a worldwide economic giant.
Agnishwar Jayaprakash, founder and CEO of Garuda Aerospace, stated, “From a manufacturing startup standpoint, the government has laid out the production-linked incentive (PLI) schemes, but I feel that a service-linked incentive (SLI) should also be implemented, especially for the drone industry.
Jayaprakash thinks that government organizations like Invest India, Startup India, and Make in India should communicate more with the startup community and create a distinct ministry for startups to meet the expectations that the industry has from the Union Budget. The legislation and incentive program aimed at startups and their stakeholders should be made simpler, according to the budget expectations for startups.
With the expansion of remote learning alternatives during the pandemic, the ed-tech sector expanded. According to the sector, the government should plan a structure that encourages startups and government organizations to work together to create capacity, share expertise, and assure the overall growth of the country for the Union Budget 2023. According to Gaurav Goel, co-founder, and CEO of Toprankers, “the sector expects to oversee big announcements from this budget to stimulate investment in this field, combined with favorable regulatory steps to develop a suitable climate for digital learning.
Experts claim that the need for co-working office spaces has increased significantly, particularly in 2022, and that the post-lockdown situation is creating a slew of new chances for co-working players. The government could recognize the business under specific programs like REITs (real estate investment trusts) and offer certain tax incentives, according to Arjun Gulati, co-founder of Easydesq.”It is essential that the co-working industry be covered by the TDS rate. Because we offer to rent both movables and immovables, the TDS rate for the co-working category is now 10%, he continued.
A reduced TDS rate will significantly benefit the shared space market as it expands, enabling businesses to offer customers affordable real estate options and improving the flow of working cash. The demand for a lower GST rate for start-ups is said to arise from the fact that co-working spaces charge a GST of 18% to all clients, which is a lot for new business owners. This is an extension of the tax obligations by the start-up sectors.
Edited by Prakriti Arora