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Union Budget 2021: What startups expect from the govt?

Jan 29, 2021 11:03 IST

With India gradually coming out of the Covid-19 pain, the sectors which were hit hard are now looking at the Union Budget for a booster shot. 

India's startup ecosystem -- which is the third largest in the world -- witnessed an unprecedented situation last year with their funds running out. 

Almost 40% startups halted operations in May 2020, as per a Nasscom report. 

India is home to 21 unicorns valued at $73.2 billion and as per some estimates, more than 50 startups might join the unicorn club as early as 2022. 

The county's startup ecosystem has the potential to create up to 12.5 lakh direct jobs by 2025, from around 4 lakh direct jobs in 2019, as per a Nasscom report.  '

In the pandemic stricken 2020, India witnessed a sharp 44.4% drop in the total number of tech start-ups being founded at 3,061, compared to 5,509 in 2019.

All eyes are now on budget.

Startups expect the taxation scheme for MSMEs to be revised and reduced to help them escalate more rapidly. Additionally, the loan approval process for MSMEs should be simplified.

Experts expect the government to incentivise startup funding and focus on relaxing policies to motivate angel investors to invest more.

The current threshold to be labeled as a startup -- which is ₹100 cr -- should be increased to leverage the exemptions allowed under this tag.

The sector is seeking changes in regulations that presently prevent large enterprises, such as the LIC and pension funds, from investing in alternate investment funds (AIFs). This would encourage more domestic investors to participate in the startup ecosystem.

Direct international listing is something startups with some scale would prefer.

Clarity is needed on exception-based approach for applicability of angel tax.

Electric vehicle startups expect the government to make EVs affordable through retail financing, just like conventional two-wheelers.

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