Finance Minister, Arun Jaitely Gears Up To Present Third Budget With Lots of Expectations Riding On his Back
As Arun Jaitley, Finance Minister, Govt. Of India, winds up to present his third budget for the session 2016-17, market is getting heated-up with speculations and expectations from the Union Budget. The startup industry is looking for some miracle from FM this time as recently a lot has been said and promised for this booming sector. Though it is very early to comment what Mr.Jaitley will have in his kitty, certainly a few positive shots are around the corner for startup sector. In order to measure the pulse of the market, Techstory’s Nitin Konde spoke to some of the experts and sheds light on the expectations of the startup industry from this budget.
With the Union Budget 2016 knocking the door, entire country gears up with the hope of getting some breather from the government this time. Prime Minister, Narendra Modi had already waved a green flag for the country’s startup industry under the campaign ‘Startup India, Standup India’. Supporting the campaign, The Reserve Bank of India (RBI) has also given some positive indications that it will be easing out few foreign investment norms to back up the startup sector of this country. All these developments have generated lots of speculations for the startup industry .However, the clear picture will be revealed soon on 29th February when our finance minster announces the budget.
The budget session of parliament will begin on February 23. The railway budget will be presented on February 25, the economic survey a day later and the general budget for 2016-17 on February 29, stated the government of India in a statement.
Commenting on the upcoming budget, M Venkaiah Naidu, Minister of Parliamentary Affairs opined, “The government favoured a normal and full-length session with sufficient recess in between to enable the work of the standing committees.”
While focusing on the startup sector, Jaitley had commented earlier, “The government will soon introduce a tax regime for startups to foster innovation and create a conducive ecosystem entrepreneurs in the country.”
Assuring minimum interference from the government, Jaitley had said “The Centre will only play the role of a ‘facilitator’ for startups. It (government’s startup campaign) is going to be the eventual freedom from the state that Indian entrepreneurship will now enjoy. It will only be limited support of the state in terms of its programmes so that there is an easier availability of Capital. A friendly tax regime will be available to ensure there is an unleashing of the energies of an Indian entrepreneur.”
Apart from aforementioned commitments, recently PM Narendra Modi had launched International Solar Alliance(ISA) on 30 November, 2015 with the French President, François Hollande, at the Paris COP21 climate summit. This move was welcomed by 120 countries across the globe and it has put India up front in the solar energy sector. However, it also means that the country’s solar MSME’s will be expecting a big ticket in the upcoming budget. Techstory tries to find out the sentiments of the market by speaking to some of the experts of the startup business.
The Startup Tax Regime
Shedding light on the startup tax regime, Akhil Gupta, CEO and Founder, Bumper said, “A start-up friendly tax regime, minimum interference, easy access to capital and reduced bureaucracy are some of the key factors that can drive the startups into the new era of entrepreneurship. Government should ease the qualification of angel money, often the lifeline for entrepreneurs. Tax breaks and incentivization to individual investors will be a welcome move. Waiving off service tax for a period of three years will give a huge relief to Bootstrapping startups. Scrapping unnecessary paperwork and a fast track documentation process will help save precious time of an entrepreneur, allowing him to expend his energies on the right things.”
Walking on the same line, Suman Howlader, CEO and Founder, CarZippi shared his views, “As a startup our expectation is to have a startup-friendly tax structure for new ventures i.e. slab based tax structure and Service Tax exemption ceiling to be increased. Apart from that we are looking forward for flexibility to decide on the contributing amounts in the areas of provident fund and ESI both for employees and employers. If organizations are allowed to choose ESI vs other health plans, it will be a boon for the startups as they can choose options based on budget and available funds.”
Government has been looking very positive about implementing uniform tax structure that is GST (Goods and Services Tax) and the market pulse suggests that GST is the demand for the hour.
Elaborating on the subject, Mukesh Singh, Founder and CEO, ZopNow stated, “We have been eagerly waiting for a uniform tax structure that GST was expected to bring in. Other than that, simplification of tax laws for startups operating in e-commerce, tax Incentives for employees working in small scale enterprises including startup, policy framework on supporting startups trying to list themselves with an IPO, would be few of the things we are looking forward to in Budget 2016”.
‘Smart City Project’ is another most talked about project of the central government. With India becoming one of the IT hubs of the world, these cities can provide a platform for the startups from where they can mint a healthy business.
Expressing his expectations from the budget, Anand Navani, Country Manager, Verint Systems, India said, “The Security and Surveillance market is looking increasingly positive post the BJP government’s focus on the 100 Smart City initiative. The budget allocation for this initiative is currently at 48,000 crore and while this is a modest beginning, for the proper implementation of the same, the sector is looking at the Union Budget 2016-17 for a detailed road map and greater funds allocation. The Modi government has indeed done a stellar job in boosting the country’s economic development, generating employment for both skilled and unskilled labour as well as increasing the country’s exports. This along with the focus on homeland security and safety of citizens, goods and property has imbibed a positive vibe in the economy. The Industry also expects significant reduction in import duties of security equipment and facilitation of import to make these items within the reach of common man so that surveillance in India becomes a community initiative.”
“We are hoping to see increased funds allocated for smart city initiatives thereby helping startups in this space,” said Greg Moran, Co-founder & CEO, Zoomcar.
Lot have been said about the ‘Startup India, Standup India’ initiative. The campaign is welcomed by the industry with great enthusiasm and positivity. Now as the ‘Budget 2016-17’ strikes the calendar, the industry awaits for some encouraging moves.
Lokesh Bevara, CEO and Co-Founder,360Ride expands, “Keeping the positives of ‘Startup action plan’ event into consideration, I strongly feel government should allocate a decent amount of budget for startups. The fund which will be allocated should vary from startup to startup based on the stage in which they are in. Early stage startups need more support with fund. The funds which are allocated should reach startups on time and the process should be clear and transparent without having any hurdles”.
Elaborating on allocation of funds, Rajeev Pathak, CEO and Co-Founder, Funtoot said, “A startup like us would very much like to see execution of funds which were announced earlier. I would suggest that government creates a special venture fund for social sectors like education and healthcare. India is massively challenged on quality of teachers in education and health care infrastructure. I believe that indigenous technology innovations can help transform millions of lives in India.”
“Further to the announcement of the “Startup India Initiative” last week, the startup environment in India has become a lot more favorable. As an entrepreneur, I would suggest simplification of statutory compliances and procedures. the removal of direct and indirect taxes would also enable faster growth of companies,” says Pushkar Singh, Founder, LetsTransport.
Empowering the IT Sector More
IT sector has become the backbone of the Indian economy and with PM, Narendra Modi emphasising more on this industry, it is expected that the Union Budget 2016 will have some supportive policies for the IT industry.
“In India, the Information Technology (IT) sector is the corner stone of the entire Indian economy and hold unquestionable relevance across all sectors. The sector believes that the government should announce special monetary inducements so that software companies can capitalize in research and progress and can develop software products at par with the global standards. The e-commerce and IT sectors are expecting big things in the 2016-17 budget and expectation is that government balances growth with policy and regulatory outline which will in turn provide sustainable development opportunities. Greater funds allocation for Digital India as well as increasing access to internet connectivity in rural India will also fuel economic growth by creating income-generating activities which in turn will boost domestic spending,” said Anil Chawla, MD, EIS, Verint Systems.
Though the budget expectations are rising high, but still it is believed that it is impossible for Arun Jaitley to pull the rabbit out of the hat and impress each and every sector of the country. Startup India, Stand Up India initiative had fumed positive energy in the startup industry but the picture is not clear until the budget rolls out on 29th February. If speculations of the market are to be believed, this budget can play a vital card for the Modi government if they manage pull out impressive and lucrative policies for the startup industry.