Budget News 2019
24 July 2019
The start-up community has welcomed the slew of measures for the sector, including easing Angel Tax norms, announced in the Union Budget, presented by Finance Minister Nirmala Sitharaman on Friday.
“I can see a lot of focus of this Budget on start-ups. Deep tech focus, especially reskilling programmes, will greatly help boost the talent pool and is much needed,” said Akshay Mehrotra, co-founder and CEO of EarlySalary, India’s largest consumer-lending application.
Mehrotra pointed out that MSMEs’ 59-minute loan — by which MSMEs can get a loan of Rs 1 crore within 59 minutes through a dedicated online portal— will be a big boost to SME players. “Start-ups/investors, who file requisite declarations will not be subjected to any kind of scrutiny in respect of valuation of share premium. This will further boost domestic angel investment, which is much needed to retain capital growth showcased by start-ups. Also, reduction in corporate tax to 25 per cent for turnover less than Rs 400 crore has been a much awaited addition… I really liked the idea of taking start-ups to TV and mass media to reach out to the entire nation,” added Mehrotra.
Jasveer Singh, co-founder, Sense it Out, said: “A new National Education Policy aimed at boosting higher education with focus on AI, IoT, VR and Robotics, among others, will help improve the skills of engineering students. Start-ups run on tight budgets and can afford only freshers, but they severely lack the skills the industry demands. The government’s move will give a major advantage to start-ups by providing skilled employees. But this will take a few years to show results,” Singh said.
Singh is upbeat about the Finance minister’s mention of zero-budget farming that “gives a sense of how the government is thinking about the agri sector. This will encourage a lot of new agritech start-ups to come up”.
Siddharth Khinvasara, co- Founder, EarthFood, an online grocery store, sees promise in the Budget’s provisions for the agriculture sector. “The government’s stance of setting up 10,000 farm producer organisation by 2022, which will ensure economies of scale for farmers regarding access to inputs and markets, will enhance the agriculture sector. Additionally, 80 livelihood business incubators and 20 technology business incubators will be set up to produce 75,000 skilled entrepreneurs in agro-rural industries. This will be a boost for a lot of budding entrepreneurs in the agri space. The government’s focus on promoting entrepreneurship is quite evident,” he said.
The Budget has also given push to Electric Vehicles (EVs). The Finance minister said the government had moved the GST council to reduce the GST rate on EVs to 5 per cent from 12 per cent. She added that an additional income tax deduction of Rs 1.5 lakh would be provided on the interest paid on a loan taken to buy an EV. This would result in a benefit of around Rs 2.5 lakh over the loan period to the taxpayer who takes a loan to purchase an EV. “The announcement of reduction of GST on EVs and deduction of interest on a loan of an EV are very encouraging moves towards making them more affordable for the masses. We are very bullish about the future of electric vehicles in India,” said Amit Jain, CEO and co-founder of CarDekho.com.
The Union Budget aims at making India a $5 trillion economy by 2025, and to achieve it, Aditi Walunj, co-founder and chief strategy officer, Repos Energy, Pune, said start-ups will have to play a big role. “As a young woman entrepreneur in India trying to build a company that creates value for the nation, the 2019 Budget was satisfactory to me. The first impression was that the Narendra Modi-led government is ready to walk the talk. Encouraging start-ups with a slew of tax benefits is a welcome move. For better labour participation, the development in the programme of women self help groups (SHG) interest subvention is especially appreciable.” Sitharaman in the Budget speech said, “For every verified woman SHG member, having a Jan Dhan Bank account, an overdraft of Rs 5,000 will be allowed. One woman in every SHG will also be made eligible for a loan up to Rs 1 lakh under the MUDRA scheme.”
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Walunj said that the Indian economy “with its heavy reliance on the service sector, is prone to external shocks. The idea of promoting ‘Make in India’ programme to make India a manufacturing hub is an essential step today and it is good to see that the 2019 Budget has laid out provisions for the same.”
Kiran Deshpande, president, TiE (The Indus Entrepreneurs) Pune, an organisation that fosters entrepreneurs, praised the “good measures”, including extension of Start-up India to 2025, training in new age technologies, livelihood incubators and support for agri entrepreneurs and no scrutiny for angel investment in tax returns, proposed in the Budget on Friday. He said: “The government could have introduced tax breaks for angel investors as it exists in other countries… Most importantly, government processes and functionaries, especially at the leaf node, continue to operate in archaic and obstructive ways, creating difficulties for start-ups. If you need the licence from FDA, power provisioning etc, it is painful dealing with local agencies,” he said