Startups expectations from Budget 2022: As Union Finance Minister Nirmala Sitharaman is all set to present her third Union Budget on February 1, 2022.
Here’s what the Startup founders expects from Finance Minister Nirmala Sitharaman:
Shruti Aggarwal, Co-Founder, StashFin:
In the last Unicorn Report of 2021, there were as many as 13 female unicorn founders. To encourage more women to not only enter the fintech space, but also thrive, it will be encouraging if the budget generates avenues and an ecosystem for them by introducing tax incentives such as standard deduction, and easy accessibility of funds, especially for early-age women run ventures that have less than 10 employees. This will give an impetus to the overall community, allowing every woman entrepreneur to be financially empowered by these solutions.
Sanya Goel, Co-founder, Humsafar Diesel:
The Diesel Door Delivery Startup Sector initiated in 2019, MOP&NG and DPIIT have enabled investment of approximately Rs 400 crores, including 1000+ bowsers. However, diesel sales are yet to take off in a big way and that is making investors desperate. To initiate the second phase of deregulation the Government needs to liberalize, add more categories of customer segments, and nudge oil marketing companies in the right direction. As a Startup, the Government needs to do much more to let the startup blossom, and nurture and use the scope for employment they offer. India has huge strength in terms of skilled Tech workforce which few countries can boast. We need to let Tech applications proliferate usage in a much bigger way if the country benefits from it. We also need larger booster funds for early-stage startups or a different tax regime for startups.
There is a need to put a curb on taxes collected as prices go up. The industry has suffered very badly because of ad valorem taxes on petrol and diesel as crude prices have climbed up in the last couple of years. It was a double whammy as it created pressure on demand and margin for Petrol pump Dealers and cost pressure on customers at large. It needs to be reversed immediately
Navneet Gupta, Founder & CEO, YPay:
Extension of the tax holiday for startups would be a great way for the government to show its commitment towards building a robust and dynamic startup environment. Investment into infrastructure that would promote digital payments needs to continue rapidly. There is so much unexplored potential in Tier-2 and 3 cities, let alone villages. The pace of investment only needs to go up if this potential is to be meaningfully utilized. For Neobanks and PPI companies such as ours, the idiosyncrasies of and changes in KYC requirements are actually a major nuisance. KYC norms lead to several problems such as registration issues for customers. And finally, the government needs to see the fintech industry as a partner in helping formalize the economy and getting banking services to those who do not have access to them.
Lalit Mehta, Co-founder & CEO, Decimal Technologies:
We have also seen a rise in the number of start-ups who have turned unicorns in the last year that showcases the potential of the startup ecosystem in India.
We expect the government to introduce regulatory changes that would create an easy line of access for start-ups & MSMEs to secure credit from online lending players. This will further help in boosting our economy.
Punit Sindhwani, CEO, Paxcom:
The last two years have been challenging, especially for SMB, but have also provided opportunities for businesses that were able to successfully embrace eCommerce and Digital Payments. For SMB to survive and thrive, a greater impetus is needed to provide digital tools, training and guidance. Our expectation from the union budget is financial support/incentives, particularly for small and medium-sized businesses, to help accelerate the digital India vision.
Chayan Mukhopadhyay, Co-founder & CEO, Qandle:
Our current tax system in a way penalises investing in unlisted companies for long term capital gain when an investor is actually taking higher risk, and eventually his investment is creating more jobs in the market. We need a more friendly capital gain tax system that also encourages easy access to capital. Additionally, the reforms should be such that Indian startups do not feel the need to incorporate outside India, which otherwise is a rising trend.
Sushant Gupta, Founder & CEO, SG Analytics:
In order to make startups an equally lucrative opportunity for job seekers, we suggest the government revisit the definition of start-ups and ESOP Taxation. It might be more relevant if ESOPs are taxed only during the time of sale. In addition to this, exception of SEZ from long-term capital gains would boost the stock market, and encourage foreign investments inflow in the country.
Dr. Rashi Gupta, Chief Data Scientist and Co-Founder, Rezo.ai:
It was amazing to hear India’s Prime Minister, Narendra Modi, speak about startups in one of his recent national addresses, so close before the budget. The National Startups Day, which was celebrated on January 16th, was a wonderful initiative to celebrate entrepreneurship. We are encouraged by Shri Narendra Modi’s leadership qualities and his goal to transform India into an economic superpower. We anticipate a next-generation reform budget in this year’s budget, which will boost startup confidence in the country. We urge the Indian government to consider launching more incubator and accelerator programs to help companies across the country. We also request them to look at FDI tax relief measures so that startups all throughout the country can access foreign capital with more ease.
Abhishek Gagneja, Founder, Yoga Brands:
Not undermining the death and devastation Covid-19 has caused, it has been a key driver for Digital and D2C Start-ups which have thrived despite the lockdowns and attracted massive funding in 2021. These disruptive business models have great potential to lead India towards economic growth, innovation, ease of living, livelihoods, and a digital economy. At the same time, it could lead to a bubble if not supported by tax and administrative reforms as sooner or later Investors will expect these companies to become profitable.
While the societal thinking shift is happening from job seekers (be it private or Government) to job creators, the Indian Entrepreneurs need to be celebrated rather than demonised by tax sleuths and media. A significant number of issues need to be addressed and rationalised GST compliances, costs of compliances, speed of IP & trademark approval these issues hinder growth of start-ups and MSME. LLP and Partnership firms are preferred by entrepreneurs because of lower initial cost and compliance, however higher direct tax and exclusion of them in several scheme’s need to be relooked. For funded ventures, capital gains (short term and long term) need simplification and revision, a lot of businesses are forced to set up controlling entities overseas to avoid these.
Vivek Banka, Founding Team, Goalteller:
As the old adage goes “No News is Good News”. As a startup founder, I think there are a lot of tailwinds that exist in terms of ample liquidity, regulatory changes and broad based digital adoption. Other benefits have also been passed on over the last many years for startups and small businesses and hence my expectations towards this year’s budget is status quo which in itself would bode well for everyone in the ecosystem.
Whether it be personal taxes, corporate taxes or capital gain taxes the regime should be made easier and progressively lower as the government has themselves stated earlier. Focus we believe should continue to remain on more transparency, greater compliance and finally easier rules of doing business, whether it be relaxed norms or government portals working smoothly every single thing that helps empower startups with easier processes eventually helps us save time and money.
Himanshu Periwal, Co-founder, Unlu:
The government has of late surpassed expectations of entrepreneurs with their acute focus on the Indian startup ecosystem. We have high expectations from the budget, especially with regards to the edtech and creator tech segments, which are allowing innovation in learning during these distressed times of pandemic! With regards to learning amongst college students and young professionals, we expect the government to encourage universities to integrate new-age skills in their curriculum and to allow startups to become part of the Skill Development governing bodies, such as NSDC (national skill development corporation), MSDE (Ministry of Skill Development and Entrepreneurship), etc.
This will ensure the innovations of new age startups are able to impact the learning ecosystem in India at scale. Overall for the edtech ecosystem, which is still in its nascent stages and expanding at a high growth rate, we expect the government to support the same with lowered GST and a higher FDI allowance, which can further help boost its growth.
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