The local startup industry is seeking the introduction of enabling policies and tax breaks to support and spur the growth of the segment that is rapidly adding to its count of fledgling businesses and entrepreneurs.

“With an aim to aid further development of small businesses, the Union Budget 2022-23 could introduce additional startup friendly policies and tax relaxations that enable spending on innovation, ease-of-doing business and reduce compliance costs,” says Harshil Mathur, co-founder and CEO at Razorpay.

Pratik Kamdar, co-founder at Neuron Energy, a bootstrapped startup which supplies lithium-ion and lead acid batteries for electric vehicles, says that the pandemic has crippled finances of many small firms. Framing conducive policies for the sector will boost capital infusion.

“While the EV industry is gradually gaining momentum in the country, companies providing auxiliary support to the segment like batteries should also be considered in the upcoming Union Budget. Owing to the uncertainties associated with the global contagion, many of these SMEs and MSMEs, dominantly startups, have faced the brunt, resulting in financial and manpower losses and in some cases even closure of business,” says Kamdar.

India houses the third largest startup ecosystem in the world. About 50,000 startups have been recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) as of June 3, 2021. A recent report by Nasscom and Zinnov said that about 6.6 lakh direct jobs and 34.1 lakh indirect jobs have been created by startups between 2011-2021. While the startup space is led by a spate of big players like Byju’s, Ola, Paytm and Oyo, it is also dotted with several small and mid-sized companies across segments.

The startup industry is also heavily segmented and players across categories are pinning hopes on the budget to fuel the growth of the ecosystem. Harsimabir (Harsh) Singh, co-founder at unicorn health tech startup Pristyn Care, says that while increasing the healthcare outlay and bolstering infrastructure will help the space, the budget should also focus on policies that will foster an environment to promote new-age healthcare startups.

“Such a move could bring more people under diagnosis, treatment and extend the current coverage to tier two and three cities, towns and even beyond to provide advanced healthcare facilities,” says Singh.

Agritech firms expect the government to prioritise R&D incentivisation in agriculture besides providing supportive growth impetus to startups. "The emerging agritech ecosystem also requires focus on infrastructure development and governance frameworks to spur more innovation in the sector. Fiscal considerations can be beneficial to facilitate the growth of the Indian agritech sector in 2022,” says Taranjeet Singh Bhamra, CEO and founder at AgNext Technologies.

Logistics startups are batting for a more organised National Logistics Policy (NLP), solid development of multimodal logistics parks and government support for the implementation of digital supply chain networks. “Brands are navigating the shift to digital e-commerce, and omnichannel distribution models to enable immediate final-mile fulfillment. However, due to on-ground logistical bottlenecks and a lack of digitally integrated supply chain infrastructure, fulfilling growing customer demands is a pressing challenge for brands,” says Nishith Rastogi, CEO and co-founder at Locus.

Gaming startups say that the industry will benefit from a fund that can provide capital to talented developers and designers. Such an initiative will help position India as a hub for game development globally.

“Lastly, we hope that this year will bring more clarity from a regulatory standpoint. Online skill gaming suffers from a lack of differentiation from prohibited categories and games of chance. A uniform policy will be welcome and provide much-needed stability to the sunrise sector,” says Sai Srinivas, co-Founder and CEO at Mobile Premier League (MPL).

Startups also expect the budget to relook at ESOP (employee stock ownership plan) taxation. “We’ve seen numerous startups incentivise employees this past year with buying back ESOPs. Deferring tax payments when exercising the option, plus waiving off tax for some ESOP receipts will also be a laudable change in the new budget,” says Razorpay’s Mathur.

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