From the dreaded ‘Angel Tax’ to sops for electric vehicles, a host of measures that have a bearing on startups found expression in finance minister Nirmala Sitharaman’s budget for financial year 2019-2020. Here’s a quick look at what various stakeholders had to say about the budget with respect to its impact on the startup ecosystem.
Aditya Ghosh, CEO, India and South Asia, OYO
“The budget breaks away from tradition and nudges the public and policymakers to think outside the brown briefcase. It sets a vision for the next decade for India with an intent to bridge the socio-economic and urban-rural divide. The boost to infrastructure, labour reforms, access to capital and talent for start-ups and MSMEs alike will drive productivity and consumption, which is also good news for the hospitality, travel and tourism industry. The real test of this vision, however, will lie in its realization, which is essential to deliver on the government’s mandate of providing ease of living and ease of doing business. This will be possible only through concerted efforts from all stakeholders.”
Vivekananda HR, co-founder and CEO, Bounce
“This is a start-up positive and pro-mobility budget with greater emphasis on job creation, cleaner transportation, connectivity and funding towards R&D. The government's agenda is clearly to empower the common man with environment-friendly transportation and seamless connectivity. The continued focus on EV adoption through FAME II, provision towards charging infrastructure, reduction of GST and IT deduction will be a game changer. This budget is a boost for mobility players like Bounce to make stronger and faster inroads into EV. The proposed e-verification mechanism to make the angel funding process hassle-free is a welcome initiative. Additionally, the funding towards R&D will help propel the country’s technology ecosystem and pave the way for innovation-led growth."
Tarun Mehta, co-founder and CEO, Ather Energy
"Government has already moved GST Council to lower GST on EVs from 12 percent to 5 percent and the additional income tax reduction is a major boost for end consumers to purchase EVs. It addresses the concern of the upfront cost of purchasing electric vehicles. This is the best example of a consumer driven change and is also how Ather envisions the EV sector to achieve scale and growth. It now becomes imperative that OEMs chalk out plans that allows the industry to scale up and meet the demand for compelling products."
Aakrit Vaish, co-founder and CEO, Haptik
“The demand for specialised skills in niche technologies such as artificial intelligence and machine learning has increased drastically. The government has recognized and addressed this schism by pledging to train 10 million youth in industry relevant skills like AI, IoT and Big Data.
Bhaskar Majumdar, managing partner, Unicorn India Ventures
“This has been a good budget for the startup community. Apart from angel tax, the launch of ASPIRE incubators will broad-base and foster the spirit of entrepreneurship in Tier 2 and 3 cities. Overall, the push to the digital economy by removing charges on digital transactions and putting surcharge on companies withdrawing more than Rs 1 crore every year will have a positive impact on accelerating the digital economy and bring more transparency in transactional data. Bharat Net focus on Tier 2 and 3 cities will also boost the digital economy. I think two aspects that may have gone unnoticed is the social stock exchange through which social entrepreneurs will be able to raise money and the global investors meet which the government is planning will obviously boost early stage investment ecosystem here.”
Avinash Saxena, co-founder, Roposo
“With startups being a major focus in Budget 2019, the government has proved its seriousness towards the growth of startups in India. The Global Investors Meet will lead to investors now looking at India as an open market, directly leading to advancements in every sector. With the focus on resolving the angel tax issue and not subjecting startups to any scrutiny in terms of valuation of share premium, the youth of India have seen a massive encouragement to become entrepreneurs of their own startups.”
Ashneer Grover, co-founder and CEO, Bharatpe
“Removal of MDR is the most welcome step for me in the current budget - it's a positive demonetization and will help drive the credit growth that India needs. As individuals and organisations will have no disincentive to transact digitally under the new norms, the economy will make a swift transition from cash as well.”
Sampad Swain, co-founder and CEO, Instamojo
“With India set to become a $3 trillion economy this year, the budget by the Modi 2.0 government has introduced several benefits for the MSME sector. Over the years, MSMEs have been battling to get loans, given their inability to produce relevant assets as evidence. In fact, the current gap between the demand and credit supply within the Indian MSME sector is about $230 billion. The introduction of the 1 crore – 59 minute MSME loan brings great relief to small business owners, making easier accessibility and processing of loans through a single portal. This in turn will translate into the stability and growth of the sector, with the sustenance of existing business and the birth of new ones.”
Atul Rai, co-founder and CEO, Staqu
“We would specifically like to highlight the government's strong focus on research and development with the establishment of National Research Foundation. This will promote indigenous technology development, particularly around globally scalable technologies such as artificial intelligence, Big Data, and robotics. We believe that this will pave the way for cutting-edge indigenous solutions."
Vivek Gupta, co-founder, Licious
“The Government’s vision of building a $5 trillion economy by 2024 and $3 trillion by the end of this year, encourages positive sentiment. The aim of making economy more investor friendly, improving infrastructure and increasing impetus on developing industry relevant talents are all encouraging developments. The impetus on digital payments is encouraging for the entire cashless ecosystem. As a digital native platform, we welcome the move.”
K Ganesh, co-founder, Growth Story
“It is extremely heartening to see startup issues being addressed and several steps to encourage entrepreneurs to create jobs and become employers rather than employees. The draconian ‘devil’ tax has been comprehensively addressed including some relief for pending cases that were causing a lot of angst. One of the best moves is the delinking of calculation and the justification of share premium since deciding a premium is not an exact science, and it is impossible to justify. Now, only the identity of the investor and source of income needs to be proven. This is fair and a straight-forward process. Having supervisory approval of the Assessing Officer is welcome as it will reduce arbitrariness and prevent unwanted harassment.”
Kalyan Krishnamurthy, CEO, Flipkart
“It is good to see the government renew its commitment to boost ‘digital India’ in the budget presented by finance minister Nirmala Sitharaman. The government’s vision on bridging the rural-urban divide with internet penetration will be pivotal in transforming India into a $5 trillion economy. It is good to see the impetus given to startups, MSMEs and FPOs, which form the backbone of our economy and also to electric vehicles. As the government continues to push for ease of doing business for MSMEs and industries, we at Flipkart will be happy to continue connecting millions of MSME sellers, manufacturers and artisans with consumers efficiently and in a cost effective manner.”
Ashish Sharma, CEO, InnoVen Capital India
“This budget has higher than usual focus on startup related initiatives, which is a positive development. Annulment of tax scrutiny for funds raised by startups that file declaration is a welcome step and will ensure that genuine startups that raise capital from bona-fide investors don’t get bogged down with administrative paperwork. The interchangeability of Aadhaar and PAN for tax purposes is also a welcome step and will ease the KYC process for fintech startups. While details on all the announcements will become clearer later, what’s often more important will be to see how these policies are executed.”
Anuj Golecha, co-founder, Venture Catalysts
"The government has resolved the raging issue of Angel Tax by eliminating scrutiny around valuation of share premium. It will also put in place a mechanism for e-verification to eliminate tax scrutiny around funds raised by startups. This will act as a catalyst in driving investment towards our startup segment and promote cutting-edge technological solutions.”
Saurabh Srivastava, chairman and co-founder, Indian Angel Network
"The measures proposed by the Hon'ble finance minister in the Union Budget 2019 today, regarding the Indian start-up ecosystem are extremely encouraging. Regarding angel tax, startups and investors who file requisite declarations will no longer be subjected to any kind of scrutiny with respect to the valuation of share premium. The introduction of the e-verification mechanism for the same is also a welcome step. With this, FM Nirmala Sitharam has addressed the regulatory elements that currently harass both startups and angel investors. A robust implementation of the proposed measures should eliminate virtually all the issues plaguing the angel investment landscape.”
Raman Roy, founder, Quatrro, and co-founder, Indian Angel Network
“The e-verification mechanism proposed by FM Nirmala Sitharaman is an enabling one for both startups and angel investors. This, coupled with the exclusion of startups and investors who file requisite declarations from tax scrutiny, is an uplifting step taken by the Government. The ‘requisite declaration’ clause, though, requires a closer inspection. In any case, the overall development looks extremely optimistic for the Indian startup ecosystem.”