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Budget 2021: Reactions from Startup Founders & Investors

In a bid to boost the pandemic hit economy, through the multiple investment announcement in the sectors like Health, Infrastructure, Education, Startups, Automobile among others. Finance Minister Nirmala Sitharaman on Monday tabled the first paperless Union Budget for 2021-22 in the parliament.

Here’s what experts from startup founders and investors want to say:

Rahul Raj, Founder & CEO, FloBiz:

“I’d like to commend the government on presenting a comprehensive budget that aims to address some of the most important aspects of how we can build a resilient economy, especially in light of the global pandemic. The budget was clearly pro-growth, pro-technology, pro-infrastructure, and also had an earmarked place for improving healthcare in our country. The initiatives announced will certainly aid economic recovery, whether that’s through capital infusion, change in taxation norms, programs for promoting domestic manufacturing, or development of relevant infrastructure – these will create large opportunities for the MSMEs and is a right step in the direction of building an “Aatmanirbhar Bharat”.

Ratna Mehta, Executive Vice President, Wadhwani Catalyst Fund, Wadhwani Foundation:

“This is a budget of hope, a wand of positivity. This was a critical budget in the face of exceptionally difficult circumstances. A lot of hopes were pinned on the budget to pull the economy back to normalcy. FM was walking a tight rope of managing the deficits and boosting the economy. But she seems to have saved the day, increased the spending to boost employment and thereby consumption, which is a great move and need of the hour.

Also, healthcare needed support where she has increased the allocation significantly. Startups will benefit from the tax exemptions and focus on digitization, especially the startups in healthcare, logistics, education who will see increased growth opportunities. The corporate sector was spared cess and tax increases which will let the recovery continue undisturbed. To sum up, the budget of hope seems to be doing the right things, now the devil will be in the details and execution.”

Shivjeet Ghatge, CEO & Co-Founder, StepSetGo:

“The announcement made by honorable finance minister Nirmala Sitharaman is welcoming. One more year to grab tax holidays by incorporating startups in FY 2021-22 is relieving. Additionally, extending the due date for investing capital gains in startups would indeed motivate a larger number of startups to come into play and generate more opportunities”

Ms. Meghna Suryakumar, Co-Founder & CEO, Crediwatch:

“The proposed plans to spend on infrastructure is fundamentally sound. Over time this will bring down the cost of business and value creation. The huge increase in the overall capital expenditure budget should augur well for mid to long-term growth. Rationalization of some of the customs duties should aid in sustaining these sectors as well as incentivizing offshore manufacturers to set up a base in India. Production linked incentive (PLI) schemes will also aid the growth of MSMEs. Overall, this appears to be a growth-oriented budget that should hopefully enable and empower small and medium businesses as much as the rest of the Indian economy.”

Mr. Vishnu Saraf, Co-founder, and CEO, Possible:

“Overall, the budget is quite positive. A 33% increase in CAPEX to Rs 5.5 lakh crore will boost demand. Also, Rs 64,000 crores Atma Nirbhar Health Program is a good initiative. It’s also good to see no new taxes, especially when the fiscal deficit is so high. Allowing one person company will also help entrepreneurs to start a new company.”

Mr. Nityanand Sharma, Co-Founder & CEO, Simpl:

“Budget 2021 is a Budget of hope towards realizing India’s growth aspirations, strengthening the start-up ecosystem, and boosting the digital-first economy. We believe Budget 2021 aligns to the urgent need of the hour to shift focus from survival to revival of economic growth.”

Mr. Ankit Gera, Co-founder, Junio:

“The Finance Minister and the Government of India have been very supportive in promoting digital payments, which is reflected in the budget speech today. While India has been one of the fastest-growing fintech markets globally, it is also important to note that the digital mode of payments has also emerged as one of the most transparent and trustworthy methods to track payment/credit repayment compliance. This can be reflected even in the budget announcement today wherein the Finance Minister, Nirmala Sitharaman proposed to increase the limit for tax audit for persons who are undertaking 95% of their transactions digitally from 5 crores to 10 crores.

Another encouraging factor has been 1,500 crores investment for a proposed scheme that will provide financial incentives to promote digital modes payment. This will further strengthen the buyer and provider market sentiment, and we are optimistic that a lot of market consolidation will happen this year. Also, The extension of tax holidays for start-ups and capital gains will also spark greater capital activity in the investment landscape and serve as an enabler of robust early-stage venture funding for start-ups.”

Gaurang Sinha, Director of Go-to-Market Strategy, Flock:

“We welcome the Finance Minister’s announcement to introduce the scheme allowing 1-person company(s) for start-ups and innovators to be exempted from paid-up capitals and turnover norms, in the Union Budget today. This will enable India to develop new technologies and boost employment like never before. Additionally, the government’s move towards boosting emerging technologies such as the internet of things (IoT), machine learning (ML), artificial intelligence (AI), and data analytics, will accelerate the growth of our digital economy.

Further, the adoption of video conferencing for various tasks by the Government will encourage the use and demand for professional communication and collaboration platforms. We believe that with all of these measures, this new decade looks great for the Indian start-up ecosystem.”

Vinayak Nath- Founder and CEO, My Place Coworking:

“Industries like restaurant chains have suffered the pandemic blows the most. Even more, if they were startups. In this situation, Budget2021 has provided little support in terms of the tax holiday. However, benefits like easy loans at better interest rates with simpler procedures could make it a lot easier. The input tax credit was expected to be brought back into the restaurant system. Without which we are paying more than GST to the government and we end up increasing our operations cost by 15 %.”

Mr. Vivek Sharma- Founder and CEO, Fixcraft:

“The budget has slightly opened the window for startups by allowing OPCs for NRIs. This might indirectly attract investors which is the need of the hour for the entire startup community. Further, incentivizing OPC is going to help startups at an early stage. Extension of tax validation for startups is definitely a step that was needed as a lot of entrepreneurs and businesses have been starving due to pandemics and this brings some relief to them. However, there was definitely a wider scope of financial support given that everybody is on the road to recovery.”

For Limited Time

Mr. Neeraj Tyagi- Founder and CEO, We Founder Circle:

“The funding in the startup ecosystem has been dry in the last one year. To support the community it was imperative to attract investors. Extension of capital gains exemptions on startup investments and allowing NRIs to establish OPCs are two announcements that might water the dry field for entrepreneurs. This will also widen the possibilities for startup investment platforms that are used to scout for angel investors outside mostly. This is going to make domestic investments market healthier.”

Mr. Kumar Gaurav- Founder and CEO, Cashaa:

“Strengthening the financial scenario definitely stood at the top of the priority list. Hence, the announcement of the ease of establishment of the financial institution is a great move. Also, embracing the technologies like AI and ML is the need of the hour. However, we expect the government to enhance the financial system and create more jobs by welcoming blockchain and cryptocurrency. India has become a key crypto market in less than a year since the Supreme court uplifted the ban. The Indian government can be at the forefront of crypto regulation, to be adopted worldwide. Smart regulations can help eliminate scams and enable the legitimate business to thrive, assisting the government’s ambition for a digital India to flourish.”

Kushang, CEO and Co-Founder, SupplyNote:

“The budget does provide ways that could attract talented entrepreneurs and investors by allowing OPC for NRIs. However, the startup market requires immediate financial support too. Extension of Tax Holiday provides relief but the pipeline that could provide more cash in the ecosystem is still missing. Nevertheless, relief from capital gains is a welcome move. It has been a balanced budget 2021 overall.”

Mr. Keerthivasan Subramanian- Founder & CEO, Playtoome:

“Early-stage startups have been looking for opportunities to grow. Post pandemic it became more challenging to get financial support for many entrepreneurs. Plans had come to a halt for the ones at the concept stage. A lot of Indian startups would look for investors outside India. As per the budget 2021 announcement, NRIs can now incorporate a one-person company. This means that it would be easier for NRI investors to operate and fund the budding entrepreneurs within India. This is good news.”

Rajat Jadhav, Co-founder, Bold Care:

“The budget has rightfully taken into account the heath of the scathed startup ecosystem in India and has simultaneously acknowledged their potential to change the face of the Indian economy. The extension of the tax holiday by a year is a welcome move that will provide relief and have a positive effect on the start-up sector. The increased focus on capital infusion and ‘Make in India’ initiatives will encourage start-ups to innovate and expand their folds in a non-strenuous and nurturing environment.

Paid-up capital for enterprises with a turnover of up to Rs. 2.5 crores will inspire newer investors in the start-up space while the focus on FDI will help existing players to transform themselves into global case studies. Also, the increased impetus given to skill development and R&D will enhance the investment climate and spur growth leading the path for start up’s of today to emerge as MNCs of tomorrow.

Additionally, the technology-driven measures along with simplification of the GST structure will add a new dimension to the long term development of this sector. With a connectivity focussed approach and a digital transaction inclined culture, the union budget has made it easier for startups to deepen their hold over the geographies of the country. Also, ease of business will help startups maneuver the marketplace and flourish in a competitive economy.”

Bhaskar Majumdar, Managing Partner, Unicorn India Ventures:

The Union Budget 2021 delivered on many parameters like healthcare, infrastructure, education, banking reforms but the distant cousin — startups — were more or less left out of the key announcements. The tax holiday and LTCG exemption are definitive positive initiatives but their impact remains limited to DPIIT recognized startups (tax break exemption).

The funding in the startup sectors currently comes from foreign funds, so while LTCG will give a boost to domestic money finding its way into the sector, the numbers still won’t match up to the scale where impact can be made. However, we can’t ignore the fact that the govt has rolled out many positive initiatives outside the Budget like the Rs 1,000 crore seed fund announced recently, and even setting up OPC will give a boost to new startups getting launched. It will also give them credibility in raising seed or angel money.

The simplification of zero return GST and filled tax returns is overall good for the small entrepreneur. The digitization of the Census is in the right direction of overall digitizing all government processes as this would enable census within months and not years as it takes now. Overall, a good budget but not much for the startup community.”

Prof. Amitabha Bandyopadhyay, KENT Entrepreneurship and Innovation Chair Professor, Professor – In-charge, Innovation & Incubation, Startup Incubation & Innovation Centre ( SIIC), Indian Institute Of Technology, Kanpur (Nominated Member of National Startup Advisory Council):

“Provisions such as the incorporation of one-person companies and revision of definition for small companies under the Companies Act 2013 provide a well-deserved incentivized boost to the startup ecosystem in India. The country’s flourishing entrepreneurial fervor has made this ecosystem the 3rd largest globally, with a fleet of 38 unicorns under its belt. As the Government paves the way for ease of doing business for startups and establishing critical R&D networks, we expect further such reforms which are domain-specific and focused on the manufacturing sector to boost indigenous product development.”

Mr. Sanjeev Singhai, Founder of WellnessTA & National VP of MSME and Start-up forum – Bharat:

“Kudos to our bold Prime Minister, under whose leadership the Hon’ble Finance Minister continues to steer the Indian Economy through difficult times of the pandemic. The stamp of commitment to make India a $5 trillion economy is very evident in this budget as the FM continues with her economic reforms. New announcements to support MSMEs and Startups with policies and reliefs are welcome steps.”

“The announcement of Rs. 10,000 cr fund to support private equity and Rs. 5,000 cr VC Funds for distressed MSME assets along with Rs. 15,700 cr provisions MSME sector showcases Government commitment to support these two sectors. Extension of tax holidays for a year and capital gain exemptions are a welcome step. This will significantly help MSMEs and Startups to regain the lost grounds due to pandemic, step up manufacturing, exports and to create more employment in the country.”

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