Budget 2024: ‘Key priorities remain unchanged’, says start-up sector about its expectations

Interim Budget 2024: All eyes are on Finance Minister Nirmala Sitharaman who will present the Interim Budget 2024, the last one before the upcoming general elections. The start-up sector, for one, has said that its key priorities remain unchanged. It is mostly looking for measures that will enable further ease of doing business, financial inclusion as well as growth of start-ups. 

110X.VC founder and CFO, Yagnesh Sanjharka, said, “In addressing the unmet needs of start-ups and investors from the previous budget, key priorities remain unchanged.” Start-ups are looking forward to reforms in taxation of ESOPs on the sale of shares by private companies and parity in taxing unlisted and listed entities. 

“Lowering the GST rate to 12 per cent for start-ups, coupled with a push for digitisation, is crucial for fostering growth. A significant ask is the implementation of a single window approval system covering company incorporation, income tax, patent filing, start-up registration, GST registration, and more. This streamlined process would alleviate the burdens of time, effort, and costs,” said Sanjharka about Budget 2024. 

He added that start-ups are also looking towards extension of taxation benefits under Section 80IC for two more years. Recognising the growth of angel investors, providing tax benefits in the year of investment will encourage early-stage investors to take risks, said Sanjharka, who also pushed for automatic approval by SEBI for Alternative Investment Funds (AIFs) in outbound investments up to a minimum threshold. 

“In essence, the upcoming budget holds the key to addressing these critical issues, creating an environment conducive to innovation, growth, and investment in the start-up ecosystem,” said Sanjharka. 

Ankit Kedia, Founder & Lead Investor, Capital A, reiterating the same, added, “To further boost start-up growth, the government can offer tax incentives to venture capitalists investing in fintech, climate tech, and deep tech start-ups. Moreover, higher budgetary allocations for start-up incubators and accelerators will also play a crucial role in transforming the start-up ecosystem and fostering faster economic growth for the country.”

Anand Sri Ganesh, CEO of NSRCEL at IIM-Bengaluru, emphasised on a combination of capability building, incentive mechanisms for corporates and science and technology institutes to work with incubators systemically, and fiscal and monetary support to enable incubators to sustain and innovate.

He highlighted that there are over 1,000 incubators in India but very few are able to work with ventures to unlock innovation and create sustainable, scalable businesses. 

“Of the over 100,000 start-ups incorporated in the country since 2016, less than 5 per cent work with incubators to gain entrepreneurial expertise. Despite this, start-ups are estimated to contribute to 5-6 per cent of our GDP growth. This implies we have a huge upside opportunity by upgrading Incubation capability to enable start-ups to truly innovate and scale. On the other hand, the incubation ecosystem runs the risk of becoming irrelevant to the start-up ecosystem beyond being incidental contributors. Both scenarios have played out in other entrepreneurship ecosystems across the world,” said Ganesh, adding that this requires concerted policy intervention.

Rohit Arora, CEO and co-founder, Biz2Credit and Biz2X, said, “We anticipate a budget that prioritizes financial inclusion and ease of doing business, fostering a conducive environment for growth. Measures such as simplified regulatory procedures and reduced compliance burdens can empower start-ups and MSMEs, promoting a more agile and competitive landscape.”

Arora emphasised that the Budget 2024 should consider incentivising lending rates, credit guarantee schemes and increased funding channels to enhance financial resilience. He further called for investments in digital infrastructure, cybersecurity, and skill development.

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