Budget 2022-23: Startups Reactions

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Startups reactions on Budget 2022-23: As Finance Minister Nirmala Sitharaman on Tuesday made an announcement outlining the economic growth for India over the next 25 years. 

Here’s what the Startups are saying about the Union Budget 2022:

Aashka Goradia Goble, Co-founder, RENEE Cosmetics:

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The Budget has granted the most popular wish of startups for extension of tax holiday. Now the Hon’ble FM has extended the startup tax holiday scheme to startups incorporated till March 31, 2023. This was also important as the last 2 years have been challenging for those who had just stepped into entrepreneurship and are struggling to keep their startup alive. Additionally, the surcharge on long-term capital gains (LTCG) tax has been capped at 15%. This will reduce the burden on startups in terms of ESOPs and other transactions too.

Ankur Bhageria, CEO and Founder, CashFlo:

As a founder of a startup that is also an MSME business, the Union Budget for FY22-23 is positive for both groups. The COVID pandemic is not yet over, and the liquidity support and incentives provided by the government needed to be sustained into this year as well. 

The extension of the ECLGS to March 2023 will be especially welcomed by the MSME sector, which constitutes 95% of ECLGS borrowers. CGTMSE Revamp and Announcement of MSME RAMP are also welcome moves. MSMEs have been hit hard by the pandemic, with well over 60% of them having faced increase in credit terms during COVID so efforts to speed up payments and move to a 100% e-bill system for central govt. procurement will go a long way towards releasing liquidity to vendors. It is important to both create liquidity for MSMEs as well as ensure that it reaches those most in need, and it is good to see both aspects covered in this budget. 

Extension of tax incentives for startups and new manufacturing companies are also welcome moves, but would have liked to see more support for the startup industry, especially with respect to taxation of ESOPs.

Lastly, the national tele mental health program for counselling is a fantastic step by the government in recognising and providing support to those who need it. This goes a long way towards reducing the stigma around mental health.”

Punit Sindhwani, CEO, Paxcom:

This year’s budget is quite optimistic for the startup sector. Their contribution to economic growth has been recognised, and the tax incentive period for startups has been extended to four years from the date of incorporation.

The retail and e-commerce sectors encompass a sizable startup community, and the allocation of INR 6,000 crore in the 2022 Union budget to rate MSMEs over a five-year period is a commendable move to further encourage and cultivate this community, particularly small and medium-sized entrepreneurs.

Furthermore, the emphasis placed on Deep Tech is greatly appreciated by growth enablers such as ourselves, as our focus has been on the software application layer, which provides real solutions to a plethora of problems and business opportunities. This year’s budget includes a significant emphasis on deep technology, which will provide strategic depth to emerging businesses in times to come. 

Ajay Ramasubramaniam, Co-Founder & CEO, Startup Reseau:

Wearing a startup enabler lens, what is noteworthy is the mention of technologies ranging across AI, IOT, Blockchain and Digital across core sectors of the economy. India @ 75 is setting up a massive road map for India @ 100 to be a technology powerhouse in infrastructure, financial services, agriculture and national defense. Setting up a roadmap for adoption of CBDC and making digital and fintech as the priority of the Gov’t stands out in the Budget 2022 announcement. Allocation of INR 1,500 Crores for development initiatives in the North East is another big one, that should see the startup ecosystem grow in the region.

Vinay Agrrawal, Founder, Hubbler:

The government has made its intention of promoting startups very clear in this budget. Enunciation of the push to the digital economy will ensure exponential growth for startups. With strong government support, I am sure the number of new startups in 2022-23 will far exceed the number in the current financial year. 

According to Economic Survey 2021-22, the government recognised over 14,000 startups during the year, taking the total number of recognised startups to 61,400. With this, India became the third-largest startup ecosystem in the world. The constant support from the government will strengthen the ecosystem further.

The plan to enable startups to manufacture drones will boost the new-age OEMs, while opening up defence R&D to startups will enable more entrepreneurs to strengthen the defence backbone of the country. Extension of tax benefits to startups incorporated by March 31, 2023 will also incentivise new startups.

Sandeep Jethwani, Co-founder, Dezerv:

Budget 2022 has taken away one big challenge investors in startups and unlisted companies face – that of a higher surcharge. The reduction of 22% on surcharge effectively means a saving of around 4-5% on the long term capital gains made from these investments. This is a welcome move that hopefully will further boost investments in unlisted securities. The recognition of “virtual digital assets” is a welcome step – it paves the way for regulation, albeit in time.

The most important feature is the continuing appreciation of the ability of startups to generate employment and boost GDP. This hopefully sets the tone for an even more pro-startup governance.

Abhinav Jain, CEO & Co-Founder, ALMOND Solutions:

“The Government has shown that they are going all-in on India’s start-up dreams, leveraging it as a big economic lever, with tax benefits. We are extremely happy and thankful that the redemption of taxes for 3 consecutive years which were offered for three years will be extended by 1 more year. The economic survey has shown that in 2021 14,000+ new startups have been recognised in India, and the trend shows that it’s up 20 times in five years. This was a clear indication for the government that Indian start-up ecosystem needs the push to fly. Talking of flying, the Drone Shakti program signals government’s growing belief in the power of technology, and for a growing tech start-up like us, it also opens up a lot of opportunities. Our innovation teams will take this as a green signal to enter into the drone space and begin developing solutions

Snehil Khanor, Co-founder & CEO of TrulyMadly, India:

The budget’s increased focus on pushing forward the entire startup ecosystem is admirable. With initiatives, such as a tax incentive for three consecutive years out of ten years from incorporation will continue the early-stage acceleration of startups and fuel the entrepreneurial growth in India. Additionally, the surcharge cap of 15 percent on long-term capital gains from shares of unlisted companies will promote investments in the start-up ecosystem by private equity and venture capital firms. We strongly believe that the entire movement towards digitization supported by initiatives, such as the initiation of digital banks and e-bills will be a fillip for startups as well as the overall Indian economy. This development will help realize the PM’s dream of a 5 Trillion economy.

Aastha Almast, Co-founder, The New Shop:

Looking forward to hearing developments on the GATI Shakti initiative. The Indian government’s move to standardize transit infrastructure is a boost for startups like The New Shop which is building a business around transit retail. 

If we improve connectivity with world-class travel amenities, tourism and businesses will start flourishing outside of urban and metro cities, boosting employment as well.

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Krishna Mali
Krishna Mali
Founder & Editor of TechGraph

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