Budget 2023: What startups want from Finance Minister Nirmala Sitharaman

India has become one of the favourite destinations for entrepreneurs in recent years. From less than 500 companies in 2016, there are now more than 85,000 companies. The Indian government has been working to establish a business climate that supports the spirit of entrepreneurship. The startups have paid back the government's faith by contributing 2.5–3 per cent of the GDP and are anticipated to contribute more than 4 per cent of the GDP in the following three to five years. Additionally, over 7.5 lakh employment opportunities have been created by startups in recent years.

On Wednesday, February 1, 2023, at 11 a.m., Finance Minister Nirmala Sitharaman will unveil the Union Budget for 2023–24. 

Experts from start-ups have shared their expectations for the upcoming Union Budget.

What start-ups want from Budget 2023

Constancy in policy

Delphin Varghese, Co-Founder & Chief Business Officer, Adcounty Media, said that this funding winter came at a time when India became a serious contender to become the world's next startup capital. Now the question stands if the Budget of 2023-24 will offer a clarification on these policies to encourage investment in startups. 

Promoting entrepreneurship by funding startups which are high on growth potential, via government programmes might also transform into a reality soon. Entrepreneurial education with the aim of improving employability through the transfer of skill sets that are valued by the labour market might also be on the Government agenda.

For the startups in India, the winter chill arrived way too early when the startup funding hit an all-time low in the third quarter (July- September) of the last financial year. 

According to the PwC report, the startup funding in India recorded to be $2.7 billion across 205 deals, which is the lowest in the last two financial years. This clearly reflects the increased selectivity in deal-making and an increasing focus on the profitability and growth of investments.

Incentives for acquiring new skills

Ankur Aggarwal, Group CEO, Veative Group, said that as the year 2022 has been identified as the beginning of a tech-bull market with an estimated 19,000 startups already recognised. 

"We have great expectations from Union Budget 2023 to support and sustain this growth. Especially looking at the Indian edtech industry, which is on the verge of becoming a $30 billion industry in the coming decade, the budget is expected to build a conducive environment for the growth and development of the startup ecosystem in India. Measures like tax incentives, reduction in corporate tax rates and tax holidays will not only help in retaining more earnings for businesses but also encourage investments in research and development. Furthermore, the government's support in improving infrastructure and developing a skilled workforce will play a critical role in the success of startups in India," he said.

Committee for start-up founders should be established to provide a structured entrepreneurship and finance education curriculum for institutions that will support the future generation of business owners, said Deepak Jain, founder, The Fragrance People.

Startups are essential for fostering innovation and job growth, as well as for India to realise its goal of becoming a $5 trillion economy. In order to maintain India's position as the world's economic leader, the Indian government has already taken the lead in promoting a number of new initiatives. Having said that, our main expectation for the Union Budget is an improvement in a number of startup-related taxation-related areas.

Offer a tax relief incentive of 30% of the cost of equity shares set off against the angel investor's income tax obligation for the year in which the investment was made in order to expand the pool of angel investors for Indian businesses at the seed stage. Up to Rs 1 crore invested in shares may qualify for this relief, with a maximum tax savings of Rs 30 lakh. Additionally, a committee made up of startup founders should be established to provide a structured entrepreneurship and finance education curriculum for institutions that will support the future generation of business owners.

Ashish Aggarwal, Director, Spacemantra, said that for some time, the government has discussed allowing nationalised banks to use accumulated GST credit as leverage. There is absolutely no better opportunity to put this into effect and bring in liquidity now than before, considering the concerns of some other pandemic hindering humanity. Not only will this benefit SMEs and startups, however it will also allow banks to deploy underused credit limits from the previous two budgets.

Puhskar Limaye, Co Founder and CTO of Carnot Technologies, said that agriculture is an industry that is witnessing unprecedented growth and yet there is so much more that can be done to ensure that it produces and profits at a massive scale. The upcoming budget needs effective regulatory policies on the Agri tech sector from the government. 

It is a sector that is ripening and many incumbent institutions and start-ups are investing in its growth. Traditional agriculture is plagued by obsolete data, lack of technology, market price volatility, ineffective supply chain, etc. "The need of the hour is to begin looking at this industry as a business and invest in technology that can help elevate this mindset. Effective public-private partnership is key to resolving many issues. In cognizance of the importance of agriculture, there need to be provisions for organic farming, the inclusion of digital services for farmers, financial support for startups, facilitation to raise funds, etc."

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