Top Hits and Misses of Budget 2023 for Indian Start-Ups

The Top Hits and Misses of Budget 2023 for Indian Start-Ups

Introduction

India is the world’s third-largest start-up hub, and Budget 2023 holds a significant impact on the growth and development of start-ups in the country. The government’s pro-entrepreneurial initiatives and the growing investor interest have led to the emergence of a vibrant start-up ecosystem in India. Let’s dive deeper into the budget and analyze its implications for Indian start-ups.

Top Hits of Budget 2023 for Indian Start-ups:

Reduction in Corporate Tax:

One of the most significant hits for start-ups in Budget 2023 is the reduction in corporate tax from 30% to 25%. This move will help start-ups save money and reinvest it in their businesses, promoting growth and expansion. This step is a welcome relief for start-ups, which usually struggle to maintain profitability in the initial years of their operations. With lower corporate tax rates, they will now have more funds at their disposal to invest in research and development, marketing, and talent acquisition, which can drive innovation and business growth.

Increase in Digital Payments:

The second hit for start-ups in Budget 2023 is the government’s focus on promoting digital payments. The government has announced a slew of measures to promote digital payments, including reducing the MDR (Merchant Discount Rate) for digital transactions. This move will encourage more start-ups to adopt digital payments, leading to greater financial inclusion and a more robust digital economy. Digital payments can help start-ups save costs, enhance customer experiences, and boost sales by offering greater convenience and accessibility. With more start-ups adopting digital payments, it can also promote transparency and accountability in the system, which is crucial for building trust and credibility.

Setting Up of Investment Clearance Cell:

Budget 2023 also proposes the setting up of an investment clearance cell to provide end-to-end facilitation and support for investors. This move will help streamline the investment process and make it easier for start-ups to access funding. The investment clearance cell will act as a single-window clearance mechanism for start-ups, which will help them navigate the bureaucratic hurdles of obtaining investment clearances. This move can help attract more foreign investments to the Indian start-up ecosystem and boost the availability of funds for start-ups. With a more straightforward investment process, start-ups can have quicker access to funding, which can help them accelerate their growth plans.

Increased Funding for Start-ups:

The fourth hit for start-ups in Budget 2023 is the government’s announcement of an increase in funding for start-ups through various schemes, including the Fund of Funds for Startups (FFS) and the Atal Innovation Mission (AIM). This move will help start-ups access the capital they need to grow and expand their businesses. FFS is a fund-of-funds that provides early-stage funding to start-ups by investing in SEBI-registered alternative investment funds (AIFs). AIM, on the other hand, is a flagship initiative to promote innovation and entrepreneurship in India. It provides a platform for start-ups to showcase their ideas and access funding, mentoring, and other support services. With increased funding, start-ups can scale their businesses, hire more talent, and invest in research and development, leading to the creation of more jobs and economic growth.

Top Misses of Budget 2023 for Indian Start-ups:

1. No Relief in Angel Tax:

The budget did not propose any relief in the angel tax, which has been a major concern for start-ups. The angel tax has been a major deterrent for angel investors, which has hampered the growth of the start-up ecosystem.

2. No Increase in the Fund of Funds for Start-ups:

The budget did not propose an increase in the fund of funds for start-ups, which has been a significant source of funding for start-ups. The fund of funds has been instrumental in providing seed capital to start-ups, and an increase in the fund of funds could have provided a significant boost to the start-up ecosystem.

3. No Focus on Easing Regulatory Framework:

The budget did not propose any measures to ease the regulatory framework for start-ups. The regulatory framework has been a significant challenge for start-ups, and a more relaxed regulatory framework could have provided a significant boost to the start-up ecosystem.

4. No Increase in Digital Infrastructure Spending:

While the budget focuses on digital India, it did not propose any significant increase in digital infrastructure spending. This could have been a significant boost for start-ups working in the digital space.