Budget 2024: A look at startup industry's reactions on tax benefits announced by FM Sitharaman

While presenting the Budget 2024 today, February 1, Finance Minister Nirmala Sitharaman said, "Our focus is on four major classes for welfare - youth, women, poor, and farmers. In the context she added that PM Mudra Yojana has sanctioned 43 crore loans amounting to Rs 22.5 lakh crore for entrepreneurial aspirations of the youth of the country, saying, "Fund of Funds, Startup India and Startup Credit Guarantee Schemes are assisting our youth."

FM extended tax incentives and exemptions for startups and investments by sovereign wealth or pension funds for one year. "Certain tax benefits to startups & investments made by sovereign wealth or pension funds as also tax exemption on certain income of some IFSC units are expiring on March 31, 2024; to provide continuity, I propose to extend the date to March 31, 2025," she said.

The Fund of Funds for Startups (FFS) Scheme was approved and established in 2016 with a corpus of Rs 10,000 crore, with contributions spread over the 14th and 15th Finance Commission cycles based on implementation progress, to provide much-needed support to the Indian startup ecosystem and facilitate access to domestic capital.

Here's how startup founders are reacting after this announcement. Take a look:

Jay Ranjeet Bhatt, founder & CEO, Airrchip:

"The government's Startup India initiatives, facilitating seamless access to capital, stand as the bedrock for startups—providing the crucial initial funding necessary for product development. In the heart of the fourth industrial revolution, India shines as the next global player with remarkable growth in its emerging market. This capital infusion is the lifeblood of innovative startups, empowering them to craft cutting-edge disruptive technology products. India's youth, a key global contributor, spearheads the development of AI applications at scale. Looking forward, nations embracing AI at scale are poised for consistent high GDP growth, and India is poised to lead this transformative wave in AI adoption."

Somdutta Singh, serial entrepreneur, founder and CEO Assiduus Global Inc"

"Empowering women is not just a vision; it's a reality unfolding through entrepreneurship, dignified living, and educational strides. Over the past decade, this momentum has surged, symbolized by 30 crore Mudra Yojana loans empowering countless women entrepreneurs. With a 28 per cent rise in female enrollment in higher education and 43 per cent participation in STEM courses, women are scripting a new narrative of achievement, one of the highest in the world. 

One more thing, the legal prohibition of 'Triple Talaq', 1/3rd reservation in legislative bodies, and over 70 per cent ownership of houses under PM Awas Yojana in rural areas signify a monumental shift towards dignity for women.

Our Prime Minister's unwavering belief in prioritising the 'Garib' (Poor), 'Mahilayen' (Women), 'Yuva' (Youth), and 'Annadata' (Farmer) is the cornerstone of progress. The government's steadfast commitment to their needs, aspirations, and welfare is evident. As we propel forward, the collective empowerment and well-being of these four major pillars - the poor, women, youth, and farmers - will shift the entire country towards unprecedented growth. Their progress is our progress, and their success is the driving force shaping our country's future."

Sudeep Kulkarni, founder, Game Theory:

"In my view, Budget 2024 is all about supporting our young innovators. Setting up a Rs 1 lakh crore fund with a 50-year interest-free loan is a positive step. It means long-term support for tech-savvy ideas. With this help for startups, our future looks brighter than ever. Embracing the 'First Develop India' ethos, the government aims to forge bilateral treaties with foreign partners, prioritising India's growth. With a development policy centered on social and geographical inclusion, we're charting a path towards a more equitable and prosperous future for all."

Saloni Verma, co-founder and chairperson, Sunshine Corporate Creches:

"This Government’s focus on women as one of the pillars to drive the country forward, as mentioned today, is already strongly backed by recent laws related to Women’s welfare. Compliance with the Maternity Act which ensures higher Maternity leave and mandatory creche facilities for all employees is being driven well. Earlier this week a meeting of various ministries was held, and they released guidelines to ensure easy compliance with the law. We expect that this focus on women highlighted again now, coupled with such measures will help significantly bridge the gender gap in the coming years, and also reduce the percentage of women dropping out of the workforce after childbirth."

Amit Prasad, founder and CEO, SatNav:

"The prediction of unprecedented growth in the next five years is very encouraging and will ensure the vision of becoming one of the top 3 economies of the world becomes a reality. This will help existing companies and new industries tap the humongous opportunities that arise as a result of this growth. The figures on a continued uptrend in the collection of taxes as well as the subtle reference to formalisation of the economy should not be read casually, it indicates how the grey economy that still exists in large numbers is slowly and surely being targeted by the Government to make it mainstream. We are very confident that all these positive signals will benefit Businesses and help them scale their Enterprises faster in the coming years."

Prasoon Chauhan, founder & CEO of JustHomz:

"The Finance Minister's emphasis on new-age technology and data bodes well for the startup sector. The allocation of a Rs 1 trillion corpus, coupled with a 50-year low or interest-free loan provision, signifies a monumental stride in scaling up the startup industry. As a startup company, we applaud these initiatives, recognizing their potential to fuel growth, nurture entrepreneurship, and pave the way for groundbreaking advancements. This budgetary support also aligns with our commitment to innovation, ensuring a dynamic landscape for startups to thrive and contribute significantly to India's economic trajectory."

Dinesh Arjun, co-founder and CEO, Raptee Energy:

"Various initiatives announced by the FM today clearly demonstrate the government's intention to further accelerate EV adoption and also generate significant employment opportunities for the youth. It is encouraging to see the focus on research and innovation to further grow the EV ecosystem. We believe that as the govt rolls out details of the scheme in the coming days for growing the EV public charging infrastructure, the availability of public chargers across the country will significantly grow and EV companies like ours will find higher market acceptance from its consumers and also attract investor interest. This will also break the ‘range anxiety’ , the biggest barrier for EV adoption in our country.

The government's support in providing financial assistance and support to EV manufacturing will encourage entrepreneurs to do deeper innovation in the battery management segment and other technologies. Growth in EV charging infra will also generate employment opportunities for the youth as companies will be on a look out for people with technical know-how of running and maintaining charging infra. EV companies will also enjoy a deeper vendor ecosystem providing battery and other components for building make in India EV vehicles."

Nishant Kumar, CEO, Earthy Tweens:

"PM Modi and his government have been highly positive towards startups. In the last financial year, a total loan of Rs 43 crore was given under PM Mudra Yojana. These loans of about Rs 22.5 lakh crore were given to industries, including schemes like startups, funds, etc. The Finance Minister has reiterated the government's stance on this budget. With the government's support, startups are continuously contributing to the GDP and providing employment. It is expected that in the forthcoming July budget, a larger share will be allocated for startups.The budget proposes to extend the tax holiday for startups by an additional year, until March 31, 2025. This will provide much-needed relief to startups and encourage innovation."

Amit Relan, co-founder and CEO, mFilterIt:

"In the election year, the interim budget was expected to offer some illustrious announcements. However, the government remained focused on maintaining consistency, developing infrastructure, and encouraging entrepreneurs. For budding entrepreneurs, this is a golden period of growth. A corpus of Rs 1 lakh crore with a 50-year interest-free loan will be a major boost for the start-up ecosystem. The long-term financing and re-financing will encourage the private sector to scale up research and innovation to chart new horizons." 

Amit Vasistha, founder and CEO, GALF:

"As a growing venture in the wellness-tech sector in India, these budgetary developments offer both opportunities and considerations. The extension of benefits and tax exemptions for start-ups provides a favorable environment for growth and innovation. The creation of a significant corpus for long-term financing aligns with our sector's focus on research and innovation, potentially facilitating access to funding for expansion and development. The extension of healthcare coverage to include ASHA workers, Anganwadi workers, and Helpers under Ayushman Bharat is a positive step, as it broadens the reach of our wellness-tech solutions. 

The increased infrastructure outlay signals potential collaborations and partnerships for technological advancements in healthcare. Overall, the budgetary measures seem supportive of our industry goals, presenting avenues for growth and collaboration. Acknowledging it's an interim budget, we remain optimistic, anticipating more strategic measures in the full-year budget post-election results."

Yogesh Kabra, founder, XYXX:

"The Union Budget 2024 solidifies the state's intention to upscale business opportunities across domains and empower communities and sectors. The fast maturing markets and government’s initiatives towards development with policies applied to uplift the Tier 2 & 3 sectors is a boon towards deep rooted expansions not only in the urban geographies but also introducing marketplaces in developing cities. With multifold policies for the young achievers ironed out, the commencement of 2024 will mark a turning point for the newer generations as they embark their journey to become forerunners within their respective expertise with superior quality skills."

Akash Gupta, co-founder and CEO, Zypp Electric:

"We applaud the government's commitment in the budget to nurturing the Electric Vehicle (EV) ecosystem. The allocation of resources towards the development of a robust infrastructure signifies a pivotal moment for our nation. This budget not only encourages entrepreneurship but also opens doors for a multitude of vendors, providing ample opportunities for supply and installation services. The emphasis on supporting manufacturing and charging infrastructure not only aligns with our company's mission but also ensures a sustainable future for the entire EV industry.

Additionally, the focus on creating employment opportunities for the youth, particularly those with technical skills in manufacturing, installation, and maintenance, will catalyze innovation and growth. We look forward to collaborating with the government in realizing this shared vision and contributing to the electrifying transformation of our nation's mobility landscape."

Startup investors' commented:

Yagnesh Sanjharka, founder and CFO, 100X.VC:

"Today's Honorable FM Budget speech left me wanting more for the forthcoming year. While there was a comprehensive recap of past achievements, there was a noticeable absence of concrete measures for startups, founders, and investors. The emphasis on macro measures such as EV adoption in public transport, increased focus on tourism, rooftop solarisation, and infrastructure development is appreciated, as it indirectly benefits startups in these sectors. However, there was a missed opportunity to outline specific initiatives and incentives to foster innovation and entrepreneurship. Looking ahead, we hope for a more targeted and supportive approach to fuel the growth of the startup ecosystem in the coming year."

Milan Sharma, founder and MD, 35North Ventures:

"In my opinion, it is a very balanced budget, keeping in view that it was an election year. The fiscal deficit has been reigned in 5.8 for FY-24 and projected at 5.1 for FY25. The increased allocation towards capital expenditure by 11.1 per cent will enhance India’s infrastructure, further propelling growth for the nation. The infrastructure sector will play key role in achieving $5 trillion economy. Schemes for rooftop solarisation for electricity generation, affordable housing, and medical infrastructure will allow the nation to grow on the regional level. Overall, the budget is well balanced and focusing towards the major pain points such as infrastructure, medical infrastructure, and agriculture. Prime focus has been on building a self-sustainable economy."