The Indian government, in its union budget for 2022-2023, has laid a roadmap to bring stability and technological development to the Indian industry. So that domestic companies may have a competitive advantage to compete globally. The budget has provided incentives to startups so that they grow, flourish and create sustainable business development that benefits the country and its citizens.
According to the Economic Survey 2021-2022, thartups in India have grown considerably in the last six years. As of January, 2022, the Government of India has recognized 61,400 startups. Even as the country was struggling to balance its economy during the Covid crisis in the year 2021, India overtook the UK to be the third highest country in the number of unicorns. These startups have been successful in raising $42 billion through global and domestic markets. With such high numbers and the economic situation being in favour of startups. The government is reaching out to encourage the startups in order to move to a self-reliant India, i.e., AtmaNirbhar Bharat.
The union minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman presented the Union Budget for the financial year 2022-2023 on February 1, 2022, with emphasis on all-inclusive welfare, use of technology and special focus on investments. The finance minister has reinforced a very important message that startups are the driving force for the growth of India. The union budget has laid special emphasis on boosting the startups in India. And has made provisions and budgetary allocations to support and assist startups.
Some of the key updates to boost startups in the Union Budget 2022-2023 are:
- Startups whose annual turnover does not exceed Rs.25 crores in any financial year and established between April 1, 2016 to March 31, 2023 are eligible for a tax rebate of 100% for the first three years out of the ten consecutive years from the date of their incorporation. This incentive is very useful for startups to meet their working capital needs, especially in the initial years of its operation.
- To help domestic manufacturing start-ups compete easily in the global business environment, a concessional tax rate of 15% for newly incorporated domestic companies whose date of commencement of manufacturing activities is not later than March 31, 2024.
- A fund blended with capital under the co-investment model has been set up to promote the idea of inclusive development and encourage startups in agriculture and entrepreneurs in rural areas. This fund would be facilitated through NABARD to finance agriculture, rural enterprises, farm produce supply and value chain. The activities included for these startups are:
- Support for Follow-on Public Offerings (FPO)
- Machinery on rent for farmers
- Technological and IT based support for farmers
- In the same way to promote the application and the use of Artificial Intelligence (AI), startups are encouraged to use “Drone Shakti”. Alternative courses would be introduced in ITI’s and all states to develop the skills to help people use Drone-As-A-Service (DrAAS). Technology is very important to bind the urban and the rural population of the country. And the government is taking every step to bridge the gaps, if any.
- Accordingly in a move to take a step closer to achieve self-reliance, the defence related research and development segment is now open to industry, academia and startups. The private sector is called to design and develop military platforms with DRDO and other organizations. A budget of 25% has been set aside for research & development in defence.
- A special call-out has been made to the youth and budding entrepreneurs of the country. So, that they may attain employment and develop sustainable ideas to modernize the country and make the Indian industry more efficient and competitive. Also some of the new avenues for sustainable development namely:
- Artificial Intelligence
- Geospatial Systems and Drones
- Semiconductor and its ecosystem
- Space Economy
- Genomics and Pharmaceuticals
- Green Energy
- Clean Mobility Systems
Blended funds are being promoted for these sunrise sectors. And new gates are being opened by the government to pump funds into the economy. So, that funds are readily available for startups to fulfill their capital requirements and operate with ease in these new areas of development.
- In order to scale up the venture capital and private equity investments in startups. To examine and suggest the additional measures an expert committee would be set up. This committee would examine all regulations and issues in the investment process. It would provide better measures which would make the investment process smooth.
Our Take:
On the whole the budget has laid special emphasis on boosting and encouraging startups. And to make this a reality for startups, they would require support and assistance, especially in their finance related areas. So, for startups and providing them with financial consultancy, tax and other advisory assistance, Diligen is always at their service.
At Diligen, the financial experts follow the budget closely and are updated with all the latest notifications that can help startups not only sustain their business but also earn revenues and profits. Diligen’s team of tax experts and consultants help the startup clients by understanding their business and providing them with best solutions, especially in their initial years when they struggle through financial issues. Diligen provides a wide range of services to startups that include:
- Bookkeeping and accounting services
- Tax planning and strategy
- VCFO services
- GST compliances
- Compliance management, etc.
Diligen provides 24 x 7 assistance to its clients so that they do not need to wait and take quick business decisions. Diligen’s VCFO services provide startups with financial advice and strategic fund management at the most affordable cost. Such cost effective VCFO services can be easily customized based on the client’s business needs. They can add more services as their business starts expanding, thus enjoying the benefits at every stage of business growth. The team of professional experts at Diligen understand every startup is a dream and they strive hard to help clients live this dream and achieve the heights of growth and success.
