Startup founders are in a good spot right now. Finance minister Nirmala Sitharaman made it clear during her Budget speech on Saturday when she announced a slew of proposals for the burgeoning startup community, encouraging entrepreneurship in the country.
While presenting the Budget, Sitharaman pointed out that to give impetus to startups, one of the major job creators today, the government would provide funding support and other assistance by setting up an ‘Investment Clearance Cell’ which would offer end-to-end facilitation and support, including pre-investment advisory, information on land banks, and facilitate clearance at the central and state levels. The cell will work through a dedicated portal.
Besides, the government proposed to provide seed funding to support ideation and development of early-stage tech startups in the area of quantum computing. “Quantum technology is opening up new frontiers in computing, communications, cybersecurity with widespread applications. It is expected that a lot of commercial applications would emerge…. in this area,” the finance minister said, adding that the government proposed to provide an outlay of ₹8,000 crore over a period of five years for the national mission on quantum technologies and applications.
Saket Modi, co-founder and CEO of cybersecurity firm Lucideus, said that the proposal to allocate ₹8,000 crore for the national mission on quantum computing and technology will further amplify India’s position in the global market. “The proposal of a national cyber forensic university is also a welcome step and will significantly boost cybersecurity skills within the country and help towards developing a more mature cybersecurity ecosystem in India,” Modi said.
It was a crucial Budget for the Narendra Modi-led National Democratic Alliance (NDA) government, which returned to power in May last year. However, the Budget failed to cheer the markets; both benchmark indices—the BSE Sensex and the NSE’s Nifty—were down drastically. Over the last one year, the Indian economy has faced a tough time. The economic slowdown led to a decline in domestic sales, job cuts across sectors, and trust deficit among investors. While the industry was expecting the finance minister to provide a stronger road map for faster economic recovery, the Budget did little to enthuse.
However, startup founders who were expecting some policy action in this year’s Budget on issues concerning corporate tax, employee stock ownership plans (ESOPs), debt financing norms, and other tax reliefs were quite content.
“The Union Budget provides some important benefits for emerging entrepreneurs. With the corporate tax being slashed to 22%, companies can now have a little more room to breathe and benefit from the assistance in funding through the investment clearance cell that has been proposed. This Budget has certainly addressed some challenges that were being faced by budding startups and has made it easier for them to receive funding from investors,” said Sandipan Mitra, CEO and co-founder of HungerBox, a B2B food-tech startup.
Industry trade body Nasscom said that the issue of ESOPs and allowing scaled-up startups to benefit from the tax incentives was the key concern. “The Budget 2020 has simplified the ESOP policy and extended the tax incentives for up to ₹100-crore startups over a 10-year period. Incentives for MSMEs like audit exemptions for up to ₹5-crore companies will enable ease of business for small companies. The removal of dividend distribution tax was a long-pending request from the industry and will benefit companies that have global operations.”
However, Nasscom pointed out that the Budget lacked focus on accelerating service exports from the country. The technology services sector has been a key contributor to India’s exports and GDP. Nasscom had recommended that new investments by services companies in SEZs should also be eligible for the lower rate of 15%.
On the healthcare front, Meena Ganesh, managing director and CEO of Portea Medical, a home healthcare provider, feels the allocation of ₹9,000 crore for senior citizens in the Budget will be a boon for both the elderly and companies working for their benefit if used in a timely and proper manner.
“The allocation for skill development of teachers, nurses, paramedical staff and caregivers is encouraging and will help improve the standard and quality of care in India’s public health system. While an increase in the import duty on medical devices will help the homegrown medical devices sector flourish, it may negatively impact those living with chronic conditions in the immediate future. Amid the fear of new epidemics around the world, the move to leverage artificial intelligence and machine learning for developing a preventive regime for targeted diseases is a good step,” said Ganesh, adding that the move to set up public-private-partnership (PPP) mode hospitals in areas where there are none is positive, with priority being given to 112 aspirational districts.
“An additional ₹69,000 crore has been allocated to the health sector. We hoped to get some clarity on how this fund will be divided across different domains in healthcare,” Ganesh said.