Budget 2023: A Nudge For Startups To Continue Succeeding
India has emerged as a leader in innovation and entrepreneurship, consisting of the third largest startup ecosystem in the world. The critical role played by startups in the development of the Indian economy, which has risen to become the fifth strongest in the world, has been echoed by Prime Minister Narendra Modi, and more recently, by the Finance Minister Nirmala Sitharaman during the Budget 2023-2024 announcement.
The recent developments in the startup ecosystem have been recognised by the government of India, which has led to the formulation of a new legislative policy (National Data Governance Policy), tax reforms that extend the date of incorporation for tax benefits, along with providing relief to startups for carrying forward losses and setting them off at a later period.
Here we take a look at some reflections on the Budget for the next fiscal year from industry leaders, CEOs, founders and entrepreneurs from India’s vibrant startup ecosystem.
Satyajit Mittal, Co-Founder and CEO of Aretto – The government’s sharpened focus towards making India Atamnirbhar cannot go unnoticed. At Aretto, we welcome this decision because it would strengthen India’s entrepreneurship ecosystem. The creation of the knowledge economy is going to be supported with boost to tech, innovation and manufacturing capabilities in India. Today, Our Nation is home to some of the most cutting-edge and thriving start-ups, which are fuelling economic growth and value creation. Upward growth empowered by employment opportunities, innovation, ease of doing business and up-skilling force is a positive onlooking focus.
Chetan Rexwal, Co -Founder Ekank Technologies
“The Budget 2023 shows the impetus of the Indian Government toward technology and innovation. We welcome the announcement by FM Nirmala Sitharaman about the ease of doing business and the adoption of AI. The reduction of compliances will help the startups like to flourish more. The union budget in the past has boosted the entrepreneurial spirit by taking a number of measures for start-ups and they have borne results. We are elated to witness that the budget 2023 is also aligned with Ekank’s vision of promoting art and culture by setting up a ‘Unity Mall’ in the State capital or the most popular tourist destination in the state for the promotion and sale of ‘One District, One product’ and GI products and other handicraft products.”
Jitendra Chouksey, Co-founder and CEO of FITTR
To encourage a culture of development and entrepreneurship in the country, the Indian government has implemented a number of institutionalized policy measures and programs. Digitization and Atamnirbhar Bharat has been the two of the main pillars of reforms announced by Nirmala Sitharaman today during Budget. Being a Fit-tech company we welcome both these announcements by the government as they will lead and boost the entrepreneurial spirit. With government support, we are optimistic that the culture of startups with new technologies will make new roads for all the aspiring entrepreneurs in India.
Mr Amrit Singh Co-Founder and CRO at Loop
“The budget has focused on improving India’s R&D capability in pharma and medical devices while increasing vocational training on nursing. In their approach to sickle cell anemia eradication they have shown a preventive healthcare framework of health education, proactive testing and treatment that should be the cornerstone of all healthcare in India, which is currently only focused on last mile sick care. We hope future Budgets will cater to preventive care”
Govind Sankaranarayanan,Co-Founder and COO, Ecofy
It is heartening that green growth was identified as one of the “saptarishis” or pole stars that provide direction to the economy. The 35,000 crore allocation for the green capital expenditure is a large and explicit affirmation of the Government’s commitment to net zero. The customs duty exemption on inputs for lithium ion batteries manufacture and the plan to replace central government vehicles will help EV growth. Choosing to extend the credit guarantee scheme for SME’s will enable these companies to be a part of the green transition. Also the excise duty exemptions on biogas blended CNG will accelerate the waste to energy sectors growth.
I have always believed that in a developing country the Government has to drive capital expenditure so the 33% increase in capex should be an engine for much needed post pandemic job creation. The reduction in direct taxes should help us grow at the 6.5% predicted.
Nandini Mansinghka, CEO of Mumbai Angels
India has emerged as the third-largest hub for startups in the world. While no specifics on the PE/VC space were mentioned in the Union Budget, it has directed the regulators to undertake a comprehensive review of the rules and compliance that govern the investments in ventures. This is a welcome move and we are expecting more details to come out soon, and at Mumbai Angels, we will be actively participating in this dialogue. Furthermore, apart from the extension of income tax benefits specifically for startups, the budget also talks about several beneficial schemes across several sunrise sectors, which we see as key drivers of the startup economy in the next few years, like Agritech, Healthtech, AI/Tech and sustainability. Having invested in startups like Falca (Agritech), Sunfox (HealthTech), TurboHire, Kredily, Travel Buddy (AI/ Tech), Bambrew (sustainability), we feel these moves will create a lot of traction and encourage more entrepreneurial ventures in these sectors.
Apoorva Ranjan Sharma, Cofounder and Managing Director of Venture Catalysts ++
This budget is focused on harnessing technology in each and every sector to boost entrepreneurship and creating more job opportunities. The brief but concise budget announcement delivered by the finance minister marks a milestone moment in the development of India’s startup ecosystem. To start with, the initiative to develop a digital public infrastructure for agriculture is a step in the right direction, which will prove vital for the growth of India’s emerging AgriTech sector. The foresight displayed with the establishment of an Agriculture Accelerator Fund to support startups and entrepreneurs in the country is striking, and will go on to further strengthen India’s largest industry. Moreover, the emphasis to promote on-job training, industry partnerships, and alignment of courses with the various needs of respective industries under the Pradhan Mantri Kaushal Vikas Yojana 4.0 reflects a progressive and resourceful outlook for encouraging and developing India’s resplendent startup ecosystem. The importance given to the development of Artificial Intelligence ecosystem through Make AI In India and Make AI Work For India, along with the transformative measures for ease of doing business and boost for urban infrastructure, all will convene to ameliorate India’s global status as the leader in economic development, innovation and entrepreneurship, and will promote the startup culture to produce companies of the future. With the new budget, prospects of India’s entrepreneurial ecosystem seem bright and inexorable.
Mr. Sagar Agarvwal, Co-Founder & Managing Director, Beams Fintech
This year’s budget has been fairly positive for the startup ecosystem. The extension in time-limit of incorporation for IT incentives gives an additional push to the Indian Startup ecosystem. More importantly, the extension of carry forward period on change in shareholding from 7 years to 10 years makes startup acquistions more attractive, supporting consolidation in the industry and hence enabling exit opportunities for founders and investors. Announcements around PAN being the common business identifier and expansion of Digilocker’s scope will further lead to some reduction in compliance cost for Banks, NBFCs and fintechs. Given that multiple startups today are focusing on SMEs, we are also excited about the Rs. 9,000 Cr revamped credit guarantee scheme. Access to low cost finance will help SMEs grow faster, which will create immense value for the startup ecosystem that exists around it.
However, we were also expecting to see a few more changes specific to the PE/VC investment industry, hoping to get favorable changes around LTCG, carried interest etc. We are hopeful that the Indian Government would follow-up with some relaxations for investors in the coming financial year
Mr. Sunil Kharbanda, Co-Founder & COO, Trezix
The spirit of resilience has been proven by the 6.3 crore micro, small, and medium firms, which account for 30% of GDP and employ approximately 11 crore people. With sales in numerous industries throughout the MSME sector surpassing 90% of pre-pandemic levels, India’s small firms are rewriting history with enhanced import-export trade and driving business globally. The budget shows positivity and has reduced import duties on raw materials to support Make in India and MSMEs, enhancing competitiveness in global markets and leading to a rise in exports.
Jaideep Kewalramani – Head of Employability Business & COO, TeamLease Edtech
The move to setup AI centers in top education centres is a great step forward. This must be augmented by a brain trust to share the research with the entire eco-system. A thrust to develop AI tools that work across all our vernacular languages will be a priority. Integrating Generative AI as a part of the technology stack for enhancing higher education and skill development is important.
Attributed to Rikant Pittie, Co-founder, EaseMyTrip
One of the striking features of today’s Budget 23 announcement was the echoing of India’s global recognition as a powerhouse of entrepreneurship and innovation. This was mirrored in the government’s initiative to support the vibrant ecosystem by extending the date of incorporation for income tax benefits from 31 March, 2023 to 31 March, 2024. This will provide opportunity for several startups to flourish, especially in the travel and tourism industry, which are yet to recover from the blows that were dealt during the pandemic. The foresight shown with the proposal of extending benefit of carry forward of losses on change of shareholding of startups from seven to ten years, along with an enabling regulatory framework introduced by developments in GIFT IFSC will further provide employment and entrepreneurial opportunities within the tourism industry, and provide an impetus to budding entrepreneurs in the space. With the commencement of India’s Amrit Kaal, the future of India’s startup ecosystem appears bright, and the travel and tourism industry is all set to play a major role in the economy’s development.
Ms Divya Jain, Co-founder, Seekho
The Union Budget 2023 encourages and helps our youth realise the importance of Upskilling by establishing skill India international centres across states. Even establishing a national digital library for children will be helpful to build a solid infrastructure.
Giving priority to regional languages and collaborating with non-governmental organisations will also help to improve rural education. This year’s union budget also provided a ray of hope for the education sector, with the finance minister announcing the recruitment of 38,000 teachers for Eklavya Model and Residential Schools, which will provide opportunities for tribal students.
Aakrit Vaish, CEO and Cofounder at Haptik
The government has true intent to create a Centre of Excellence in Artificial Intelligence as the country moves to the next stage of technological development with the introduction of 5G. The use of conversational AI technologies has been pioneered by a number of industries, including e-commerce, retail, healthcare, BFSI, real estate, education, and travel. Through its developing capabilities and specialised solutions, conversational AI is being used by other organisations to help India become a country that prioritises digital development.
The budget report placed a significant emphasis on digitization and adopting AI technology. It also assesses how AI would be utilised to strengthen India’s economy and makes recommendations for a wide range of applications for AI. According to the budget, 100 labs will be established in engineering colleges to develop applications employing 5G services, and three centres of excellence for artificial intelligence will be established in major educational institutions. This initiative by the government will spark a productive AI ecosystem and develop skilled labour in the industry.
Vinod Nair, Global VP of Sales and General Manager at Noventiq India
In recent budgets, India’s government has shown itself to be both imaginative and effective when it comes to deploying policies and incentives which will continue to attract innovators and incentivise them to draw on India’s spectacular talent pools. Of course, these have mostly been life-support measures to help those companies which took a hit during the COVID-19 pandemic, but, this year, we can expect more positive incentives, aimed at encouraging foreign investment, and creating a business-friendly environment which will propel the startup ecosystem on to new heights.
Many companies in India, even those who are not categorised as IT companies, are struggling to find the right balance for employees who are working remotely. One of the policies that would be welcomed with open arms would be a working from home allowance, essentially allowing employers to mitigate the costs of recruiting and running a predominantly remote workforce. We also anticipate that incentives may be on the cards in the form of tax breaks and grants for implementing platforms and tools to level up those working from home.”
