“India is the third largest ecosystem for Startups and ranks 2nd in innovation quality amongst middle-income countries,” suggests Nirmala Sitharaman. From innovation to the promotion of startup culture in India, Sitharaman touched upon several sectors of the Indian economy in her Union budget speech.
During her historic speech in the parliament, the Finance Minister, Nirmala Sitharaman highlighted the need to maintain continuity and stability of taxation, further simplifying and rationalizing various provisions to reduce the compliance burden on startups. The new budget promotes the entrepreneurial spirit and provides tax relief to startups.
Various reports suggest that, Despite the funding downturn, DPIIT-recognized companies generated almost 2.7L jobs in 2022, an astounding 64% more than in 2021. Moreover, India’s Tier II and III cities account for 48% of its startups.
She has further proposed the extension of the date of incorporation for income tax benefits to startups from 31.03.23 to 31.3.24. Indeed, the benefit of carrying forward the losses on change of shareholding of start-ups from seven years of incorporation to ten years has also been recommended. For three consecutive years out of the first ten years following incorporation, tax incentives have been offered to eligible businesses founded before March 31, 2023. Startups that were incorporated on or after April 1, 2016, may seek an exemption from paying income taxes.
The seven priorities of the budget 2023: reaching the last mile, youth power, financial sector, green growth, unleashing the potential, inclusive development, and infrastructure & investment have been considered as the key opportunities for Indian startups building for the future.
The Budget places a greater emphasis on green growth and includes several initiatives to speed up India’s transition to net zero, such as INR 35,000 crore for priority capital expenditures toward net zero and energy transition goals, an additional year of subsidies for EV batteries and a reduction in customs duties on lithium cells from 21% to 13%, and a green credit program to reward ecologically responsible and responsive behavior.
The Finance Minister also emphasized the setting up of the Agriculture Accelerator Fund to encourage agri-startups by young entrepreneurs in rural areas. The Fund’s goal is to provide farmers with creative, cost-effective solutions to their problems. Additionally, it will introduce contemporary technologies to alter agricultural techniques and boost productivity and profitability.
Encouraging the startup culture more, she plans to make it easier for startups to receive Inter-Ministerial Board (IMB) certification. She emphasized the importance of enhancing cooperation and collaborations with reputable private organizations to create best practices and cutting-edge start-up mentorship platforms. She also focused on facilitating improved collaboration and partnerships with established private entities to develop the best practices and state-of-the-art start-up mentorship.