Budget 2024: What startups and their investors want from Finance Minister Nirmala Sitharaman

We are only three days away from the presentation of Union Budget 2024, and everyone has some expectations from Finance Minister Nirmala Sitharaman. Similarly, entrepreneurs and investors from various industries have certain expectations. Sitharaman will present the budget on February 1, and this will be the last budget of the Modi 2.0 government.
 
Here's what industry experts are saying from the edtech, fintech, and ecommerce startups. Take a look:
 
Milan Sharma, founder and MD, 35North Ventures 
In my opinion, startups in the current ecosystem require streamlined regulations and government support for initial R&D funding to compete globally. 

For investors, better alignment of taxation on unlisted equities would allow better capital inflow.
 
Neha Bagaria, founder & CEO, HerKey (formerly JobsForHer)
As India gears up for the annual budget, I advocate for a targeted strategy to upskill women returnees in future-ready skills. A joint effort by the government and corporate India can pave the way for incentives and tax breaks for companies investing in the training of these women. Aligning with the evolving landscape of future skills is essential for fostering a resilient and diverse workforce.

Let this budget signify a strategic commitment to inclusive growth, where the development of these skills becomes a cornerstone for a dynamic job market, creating opportunities for women on a career break.
 
Srirang Srikantha, founder & CEO, Yethi Consultancy
The digital-first approach by the government is a remarkable step in ensuring quicker resolution and service delivery of public services and initiatives. Aadhar and UPI services are a great testament to this. Now it’s time to take a step further and bring citizen-centric services into the ambit of digital public infrastructure (DPI). We recommend a comprehensive digital strategy that ensures robustness, application reliability, and accountability around the build, test, validation, and uptime of the applications across the entire digital public infrastructure (DPI)."
 
Yogesh Kabra, founder, XYXX Apparels
If investor confidence and fast-maturing markets are any indication, India is poised to become a global hub for innovation and entrepreneurship. I am optimistic about the government's commitment to building the burgeoning startup ecosystem in India and strongly anticipate that there would be significant strategic investments and initiatives towards better tax structures, customised support programmes, easy and simplified access to capital, and incentives for technology as well as process innovation. Ongoing training and upgradation of skilled workers, especially in the manufacturing and retail sectors, needs a massive boost to build a more robust, inclusive, and efficient workforce, especially as Tier 2 and Tier 3 markets witness rapid, unprecedented growth.
 
Ravi Gupta, founder, Guptaji Invests
Tax benefits should be given to startup investors, as they are taking the highest risk by investing in an asset class that has the lowest success ratio. The more strategic investments happen in fundable startups, the more India as a nation will become a better place to live, as what a proper startup does is solve a burning problem. But precautionary measures should be taken so that India will not become a 'tax haven' and investors don't do money laundering.
 
Due to the Angel tax levy, investments are not happening much in the highest-risk asset class startups. Tax benefits to startups should be increased from 3 years to 5 years or more. The government should not consider it a revenue loss but rather an investment from the government side for a brighter future, a better India, and the best-case scenario to make India the best nation of all.
 
Somdutta Singh, serial entrepreneur, founder and CEO Assiduus Global Inc, LP angel investor, and advisor, Govt of India
Startups: The anticipated 2024 budget should try and address credit challenges faced by SMEs. Potential measures should ideally include facilitating government-backed loans and encouraging NBFCs to increase lending to SMEs. In 2023, access to credit was identified as a key growth driver for many SMEs. The budget might propose incentives for SMEs engaged in research and development, such as tax breaks or government grants, to stimulate innovation in this sector.
 
I eagerly await government policies that attract both domestic and foreign capital, fostering growth in India's startup ecosystem. Providing tax credits for early-stage startups is crucial for incentivising innovation, and I hope the government addresses the ongoing concern of angel tax, paving the way for smoother operations.
 
Investors: The budget should consider providing incentives for both domestic and foreign investors engaging in gender-lens investing in India. Efforts should be made to streamline regulatory and policy hurdles, fostering increased involvement of women in the business landscape. Unlocking the potential of women entrepreneurs is vital for India to realise its ambitious goal of becoming a $30 trillion economy by 2047.
 
Jyoti Bhandari, founder and CEO, Lovak Capital
Budget 2024 should prioritise skill training, especially for young women in Bharat, offering vocational programmes after Class 12. Further, it should meet its promise to encourage the evolution of "Lakhpati Mahilas" from Women’s Self-Help Groups. This shift would not only catalyse rural economic growth but also secure substantial growth in SHG networks. The growth of successful women entrepreneurs from these groups must also be encouraged by aiding the transition of their enterprises into larger value chain-focused producer organisations. Focusing on the role of women in agriculture and exploring their potential contribution to various non-farm sectors will also empower women across Bharat, contributing to India's goal of becoming a global economic force. Budget 2024 holds the potential to create a more inclusive and prosperous future for women in the country.
 
Amit Relan, co-founder and CEO, mFilterIt
We expect to see a significant focus on transparency, data protection and privacy, and AI technology. With the world adapting to artificial intelligence, we expect to see swift adoption of technology and leveraging it for further digital advancements. Alongside that adequate funding for cybersecurity measures is crucial for fortifying the digital infrastructure. The balance between innovation and protection will ensure the holistic development of the digital ecosystem.
 
Hyder Khan, CEO, Godawari Electric Motors
I eagerly anticipate the upcoming budget with optimism and a fervent hope for increased support for the electric mobility sector. The extension and enhancement of the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme would be instrumental in propelling India towards a sustainable and eco-friendly future. Substantial subsidies for electric vehicles and related infrastructure would not only incentivise consumers but also bolster the growth of our industry. These measures will not only promote cleaner transportation but also stimulate innovation and job creation. I look forward to a budget that recognises the pivotal role electric mobility plays in achieving environmental goals and economic development, and I trust that the government will continue to foster a conducive ecosystem for the electric vehicle industry to thrive.
 
Amit Jain, founder, Paaduks
As Paaduks, a pioneering MSME sustainable footwear manufacturer, we eagerly anticipate the upcoming Interim Budget 2024 with hopeful optimism for the growth and sustenance of our industry. The MSME sector has been the backbone of our economy, and we look forward to policies that further support our growth, such as streamlined access to credit and incentives for innovation. Furthermore, corporate tax reforms play a pivotal role in fostering a conducive business environment and enabling businesses to reinvest in research and development, thereby promoting sustainable practices in our manufacturing processes.
 
In conclusion, we look forward to an Interim Budget that not only acknowledges the significance of MSMEs but also fosters a holistic and sustainable ecosystem for the growth of businesses like ours.
 
Vinay Gupta, chairman, Acquaviva India Pvt Ltd
As the eagerly anticipated budget approaches, sanitaryware retailers articulate their aspirations for taxation policies that could significantly impact the industry's dynamics. With a keen focus on exports, retailers are advocating for pragmatic measures that would fortify the global competitiveness of domestic sanitaryware manufacturers.
 
On the imports front, retailers seek a reduction in customs duty on essential raw materials and components not readily available domestically. This move aims to lower production costs, making sanitaryware more affordable for consumers. Furthermore, by advocating for temporary duty suspensions on imported machinery or specialised equipment, retailers envision a technologically upgraded and modernised sanitaryware industry.
 
Amit Mishra, co-founder of 91Squarefeet
To catalyse the spirit of entrepreneurship in India, the upcoming Union Budget 2024 should pave the way for a progressive and inclusive capital gain regime for startups, like the ones enjoyed by listed companies. This move will stimulate increased investment in the startup ecosystem and unlock unprecedented growth opportunities. Addressing ESOP taxation for startups is vital to attracting and retaining top-tier talent and fostering innovation and excellence.
 
A holistic review of the regulatory framework is essential to creating a more conducive and less stringent environment, empowering startups to thrive and contribute significantly to the nation's economic landscape.

Ankit Agrawal, CEO & co-founder, InsuranceDekho
In the interim budget, we want the government to support the startup ecosystem by further easing the ease of doing business. While it’s easy to start a business in India today, it is paramount to ensure that it strives and thrives. The majority of startups fail, and hence it’s equally important to not only ease starting up but also make it easier for entrepreneurs to move on in case they are not able to establish a market-fit product. While the government is taking initiatives to promote entrepreneurship in India, we request that the government set aside more funds, provide access to newer technologies, ease tax rules, and further simplify regulatory requirements to encourage people to start their businesses.

Kumar Abhishek, CEO & founder, ToneTag
A thriving Fintech ecosystem is crucial for driving digital adoption and innovation in India. We would like to see policy implementations around regulations, streamlining licensing processes, and offering tax incentives for Fintech startups in the upcoming budget. This will foster a dynamic environment where cutting-edge solutions like AI and Voice can flourish, propelling India's digital transformation.

Aditi Handa, co-founder & head chef, The Baker's Dozen
Anticipating the Union Budget 2024, I look forward to a budget that actively supports women's entrepreneurship. I hope to see a focused effort to encourage women-led businesses where the government can play a key role by creating an environment with equal opportunities for women entrepreneurs and addressing gaps in funding, mentorship, and networking.

Encouraging policies tailored to the unique challenges faced by women in startups will be crucial. This could include financial incentives, mentorship programs, and initiatives to enhance the skills of women entrepreneurs. This should range across the spectrum ranging from small-scale home-based businesses to larger institutions. An earning woman is the pride of the family and can be pivotal to our success as a nation!

In essence, the Union Budget 2024 has the potential to be transformative for women in the business. By fostering an inclusive environment and implementing measures that empower women entrepreneurs, the government can drive economic growth and social progress simultaneously.

Akash Gupta, co-founder & CEO, Zypp Electric
Prioritising the electric vehicle (EV) sector is crucial for a sustainable future. The inclusion in the priority lending scheme will fuel growth by facilitating easier access to capital. To accelerate the adoption of EV-led delivery services, a reduction in GST for EV services from 18 per cent to 5 per cent is imperative. While EV purchases enjoy a 5 per cent GST rate compared to 28 per cent for internal combustion engine (ICE) vehicles, a similar distinction must extend to services. 

Furthermore, establishing industry standards, supporting gig delivery partners with tailored schemes, and implementing standard operating procedures (SOPs) will enhance efficiency and foster growth in this vital but often overlooked segment of the logistics industry.

Akshay Verma, co-founder, FITPASS 
FITPASS urges the government to include fitness center services in eligible categories for the composition scheme under GST (Section 10) in the 2024 budget. This benefit is available to restaurants but not to fitness services. This aligns with Prime Minister Narendra Modi's vision for a healthier India and aims to enhance accessibility and affordability, contributing to the population's well-being. FITPASS also seeks government support to permit tax breaks under Section 80D to include individual fitness expenses.

Furthermore, FITPASS emphasises the need to include fitness center services in the eligibility list of the composition scheme, similar to what has been done for restaurant services. The current GST structure adds to the overall cost of fitness center services, acting as a hindrance to the growth of the industry. Therefore, the proposed inclusion in the composition scheme is crucial for alleviating this burden and fostering the expansion of the fitness sector in line with the government's vision for a healthier and more productive India.

Kumar Ritesh, founder, Cyfirma
We would like to see the upcoming budget carry a strong focus on helping businesses overcome the threats of cyberattacks and other digital risks. Indian businesses are adopting digital solutions at an accelerated pace yet their cybersecurity maturity remains low. A budget that supports SMEs' and startups' growth while ensuring their cybersecurity needs are taken care of is much needed in the current AI and digital age. The government’s approach needs to move beyond building compliance frameworks to providing tangible subsidies for cybersecurity protection solutions.

Soham Thacker, founder, Gamerji
Bifurcation of taxes is an important aspect to focus on as one cannot club anything which revolves around gaming in one particular basket. There has to be something for real money gaming, casino types of games, and the gaming industry in general which can involve playing video games. Along with that, the budget should focus on the startup scenario in general, we keep talking about how India is a startup-friendly country and India Startup programmes but still lack awareness and penetration from the incubation and government.

Dinesh Arjun, CEO & co-founder, Raptee
As the electric vehicle (EV) industry gears up for substantial growth in the coming years, the government must foster a supportive ecosystem. To stimulate investment opportunities, there should be encouragement for potential investors, coupled with essential reductions in GST rates for electric vehicles and charging stations.

Additionally, easing the burden on the industry can be achieved through a decrease in import duties on electronic components. The industry is particularly hopeful for a significant GST reduction, aiming to bring it down from 18-5 per cent specifically for lithium-ion battery packs and cells, given their pivotal role in the EV sector. A concerted effort in the budget towards enhancing the ease of doing business and facilitating the entry of local players into the market is crucial. Addressing aspects like component localisation and ensuring easy access to necessary components will empower Indian companies, both large and small, to develop competitive products at competitive prices, further solidifying the sector's growth potential.

Nishant Kumar, CEO, Earthy Tweens
The forthcoming budget holds immense significance for the startup sector in India, which is facing a downturn in funding due to various challenges. Recent data points to a concerning 30 per cent decline in investments in Indian startups during the last quarter of 2023. Despite a 20 per cent reduction in startup investments throughout 2023 compared to the previous year, the sector still boasts considerable growth potential. Projections suggest a potential market size exceeding $100 billion by 2025.

As we eagerly await the budget, I expect it to introduce pivotal policy changes, especially related to tax policies concerning carry-forward losses and employee stock options. These changes can attract more investment, fuelling growth within the startup sector. The budget represents a critical opportunity to reignite the startup ecosystem in India, tapping into its capacity for driving innovation and economic development. The budgetary decisions will set the stage for a vibrant and thriving future for startups in the country.

Madhusudan Ekambaram, co-founder & CEO, KreditBee
As we look ahead to the upcoming interim budget announcement, two critical areas warrant attention for the continued growth and resilience of the financial sector. Firstly, we urge the government to consider easing rules towards reverse-flipping foreign holdco entities, fostering a more conducive environment for international investments. Secondly, addressing the challenges faced by NBFCs due to increased Risk-Weighted Assets (RWA) is paramount. This has inadvertently elevated the cost of borrowing from banks, impacting the crucial role NBFCs play in extending credit to various sectors of the economy. Streamlining RWA norms will not only ensure a more efficient lending ecosystem but also contribute significantly to the overall economic stability, fostering a more conducive environment for listing in Indian Markets.