The tailwinds for India’s start-up ecosystem got a further boost in this year’s budget. The governments continued focus on Atmanirbharta, Youth focus and building a culture of innovation lay finely imprinted in the budget. A forward-thinking budget has enabled easier access to resources, shared knowledge and made way to start-ups becoming the backbone of the Indian economy.
The post Covid-era has seen an accelerated growth of entrepreneurial activity in India. The Economic Survey 2021-22 declared India as the third largest start-up ecosystem in the world. It is expected to witness consistent annual growth of 12-15%. The number of recognised start-ups has increased to 84,012 in 2022, up from 452 in 2016. The reasons for the boom are manifold including the governments through fiscal and monetary policies over the last few years. Change in taxation of employee stock options (ESOPs), easing of capital gains taxation, simplification of compliance for capital flows, strengthening of Intellectual Property Rights have been some of the major drivers for this Start-up boost. Budget has rolled out a slew of measures for ease of doing business – reduction of more than 39,000 compliances and decriminalisation of more than 3,000 legal provisions. This will facilitate pace of start-up growth and attract global investors.
Key takeaways for start-ups
- National data governance policy
- Enabling access to anonymised data for research by Start-ups and academia
- Entity Digi Locker
- For use by business enterprises and charitable trusts facilitating secure online storing and sharing of documents with the business ecosystem
- Setting up 100 labs for 5 G services
- For application development on 5 G services, to tap employment potentials and business opportunities.
- PMKVY 4.0
- Covering new courses like coding, AR, Robotics, 3D printing etc
- Tax benefits
- Enhanced limits for micro enterprises and professionals to avail benefits of presumptive taxation; 95% of receipts to be non-cash.
- Deduction on payments made to MSMEs to be allowed only when payment is made up.
- Extension of the date of incorporation by one year of income tax benefits to start-ups
- Benefit of carry forward of losses on change of shareholding of start-ups from seven years of incorporation to ten years.
The government itself has been at the forefront of innovation with developments like UPI (Unified Payment Interface) which has opened up multiple opportunities for ecommerce players in the country. ‘Drone Shakti’, which has now enabled almost 90% of the airspace now being opened as green zone for flying drones upto 400 feet is going to fuel Drone As a Service. RBI’s introduction of digital currency is also going to play a major role in the start-up growth story.
Agri-start-ups continued to be at the forefront of the start-up sector in India. Property Technology –PropTech has also seen new interest backed by RERA, Demonetisation, Internet Penetration, rapid urbanisation and institutionalisation of the Real Estate Sector. According to various reports Real Estate is set to be a USD 1 trillion sector by 2030 and PropTech is set to make a major impact in this. One can see a replication of the FinTech story in PropTech.
The Department of Promotion of Industry and Internal Trade recognized that start-up have created more than 900,000 jobs. “Start-ups are being envisioned as the spine of new India, as they encourage the youth to become job creators rather than job seekers,” the Economic Survey Report 2022-23 read. Backed by the policy and fiscal stimulus India’s start-up ecosystem is poised to break further frontiers and emerge as a global leader.
(The author is Mr. Onkar Shetye, Executive Director, Aurum PropTech Ltd., and the views expressed in this article are his own)