India's Union Budget 2020: Expectations of Industry Leaders and Entrepreneurs - Startup Terminal

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Wednesday, January 29, 2020

India's Union Budget 2020: Expectations of Industry Leaders and Entrepreneurs



On February 1st 2020, India’s Hon’ble Minister of Finance, Smt. Nirmala Sitharaman, will present the union budget 2020. Union budget plays an important role in determining the country’s future economic activities and growth. The effects of a government's budget on society and the political economy are of considerable concern to economists as well as to consumers and taxpayers.

Various Industry leaders and entrepreneurs have their own opinion and expectations from this year’s union budget.

Startup Terminal presents budget expectations from various industry leaders and entrepreneurs (Part I).

Kausshal Dugarr, Founder and CEO, Teabox

Commenting on the expectations from Budget 2020 Mr. Kausshal Dugarr - Founder and CEO of Teabox opines  "This year’s budget is being eagerly awaited by all stakeholders as the need of the hour is to revive consumer demand which in turn will spur economic growth. To tackle this, a reduction in personal income tax rates through concessions in tax slabs and an increase in welfare spends will boost spending. With the dip in foreign investment currently impacting businesses, steps towards a healthy economy will improve foreign investor confidence and attract more international investments. To reduce the burden on business owners, the government should initiate the simplification of various tax-related compliances and faster processing of tax refunds."  

Malini Agarwal - Founder and Creative Director MissMalini Entertainment

This year I suspect the overarching sentiment from all quarters will be for the government to take steps to immediately stimulate the economy and reverse the current morass that hangs over the industry.

We often think of large, independent unicorn stories when we think of startups, but the reality is many small and medium-sized enterprises operate downstream as suppliers to larger corporates. Therefore, I’d like to see policies that reinvigorate widespread consumer demand and spending, which in turn trickles down to the startup economy.

The most anticipated proposal would be the introduction of new progressive income tax rates that puts money back into the wallets of everyday consumers, following the recently implemented corporate tax cuts that have yet to bear fruit. Without confidence in sustained, robust demand, corporations are unlikely to reinvest their tax savings and therefore the two must go hand-in-hand for the benefits to be felt.

Aside from the demand for their services, startups need capital to build their enterprises. While VC activity has certainly grown in India, broader access to funds continues tightening as banks and NBFCs become more risk-averse. Many promising startups are unable to get off the ground due to simple working capital constraints. The government should introduce more financial sector safety nets to mitigate the crippling fear of bad loans, which would help loosen the purse strings.

Lastly, the tax and regulatory environment need further reforms targeted specifically at startups. We have certainly seen some progress, perhaps most visibly on the angel tax issue. And yet too much of an entrepreneur’s time and focus is still spent ensuring they do not run afoul of regulatory compliances, which can be obscure and subject to frequent change. Entrepreneurs have enough to worry about building and scaling a business, and doubly-so in a softer economic climate.  Therefore, any steps that would streamline compliances would free up a significant amount of entrepreneurial drive, talent, and energy which is exactly what we need right now.

Shubham Maheshwari, CEO and MD, Being Chef

Feb 1, 2020, is an important date for the startup industry in India. The last quarter has been really bad for startups because of the slump in the economy. The setback to the consumption pattern of Indians coupled with a sentiment wave of the slowdown is the biggest challenge for the startups. We expect our Finance minister Mrs. Sitharaman to bring some schemes to boost up the spending capacity of Indian consumers. Also, as the govt decided to go away with Angel Tax for DPIIT recognized startups like us, we also expect them to bring some policies for the fast deployment of the Startup India fund to the recognized startups. Time is the biggest factor in Startup Industry and fast deployment of the fund with a single-window clearance like what happens in China will help founders to focus more on the product and future plans instead of struggling for raising investment to sustain. 

Nimish Trivedi, Co-Founder of Prakriti E-mobility

EV Industry
"With ample renewable energy resources, technology, and an evolving consumer mindset, the Indian Electric Vehicle (EV) industry is on the cusp of great innovation. We believe that 2020 can be the year when EVs go mainstream. Last year's budget witnessed the government pushing the segment with multiple initiatives - be it lowering the GST on EVs or providing additional tax deductions on EV loans. We hope that the momentum continues in 2020, as the focus needs to shift from just selling to overall sustainability. In the upcoming budget, we hope to see reductions in road and registration taxes for EV taxi aggregators so that they are able to develop viable public transportation alternatives. We also hope for special permissions and reduced charges for EV aggregators for operating with kiosks around major hubs such as the airport, metro and railway stations. Promoting and encouraging widespread expansion of charging infrastructure is another key agenda item that the budget needs to address. These steps, coupled with incentives for faring passengers in EVs, will level the playing field for EV industry to compete with traditional auto players. As per an industry report, India has the potential to become one of the largest EV markets in the world and these initiatives will give the much-needed push towards this goal."

Start-up and Entrepreneurship
"The start-up ecosystem in India has come a long way since the launch of Start-up India in 2015. From the upcoming budget, we hope for incentives that will help increase the success rate of start-ups in India. Incentives such as easier tax compliance to support budding and existing entrepreneurs, extension of tax incentives to incubators and tax benefits on ESOPs are certain measures that will help entrepreneurs maintain cash flow, acquire talent and eventually, help achieve better valuation and funding. We also hope to see incentives for futuristic and innovative technologies such as Electric Vehicles, Artificial Intelligence, and Green Technology as these will form the backbone of a technology strong India, helping become a $5 trillion economy by 2024."

Amit Gupta, CEO & Co-founder at Rapyder

We are optimistic about the country's economic growth as he foresees better days compared to the current slowdown. He said, "India, no doubt continues to remain the software development hub for the world. More hurdles in the path of MSME growth would be removed as I foresee a significant relaxation in the lending aspects for MSMEs to survive the current economic changes. Government could relax some of the compliances, which were mandatory earlier. It will also address the issue of delayed payments to MSMEs. The ecosystem of MSME lending is set to see significant transformation. Thanks to better access to authentic data from various credible sources that provide a better understanding of the nature of the specific business, its growth potential and profits. Government will become even more citizen friendly, by providing a boost in consumer confidence with lowering personal income tax in the coming budget. This is in turn is expected to fuel demand of goods and services, leading to consumer-spending more for buying and consumption.

Shailesh Shah, Co-founder at Strata Consulting

India needs to garner over $10 trillion to get its urban infrastructure going in the correct direction.  We need relevant, innovative and bold policy interventions to help make this happen. In the short term, we need to foster exports and domestic consumption while we start thinking beyond taxes the way we currently are to balance budgets. The Insolvency and Bankruptcy Code is a step in the right direction but is in its infancy in comparison to the depth and width the nation needs to resolve thousands of cases and trillions of rupees. As a nation, we need to commit to monetary policy that helps align inflation and interest rates to massive growth.

Dr Vaibhav Kapoor, MBBS, MS & Co-founder at Pristyn Care

As a startup trying to increase the accessibility and affordability of minimally invasive surgical technologies beyond the confines of corporate hospitals in Tier-1 cities to Tier-2 and Tier-3 cities, we could benefit a lot from partnerships with the government. Existing infrastructure of government hospitals, coupled with experienced surgeons and latest technology from the private sector can go to great lengths in ensuring that the vast majority of the population, that was previously bereft of the benefits of quality secondary care, can now be guided on the path to health. As the largest and sole provider of Laser General Surgery treatments in India through Ayushman Bharat, Pristyn Care has already taken steps in this regard to extend the benefit of Government schemes through a hassle-free patient experience, but now the Government must also include provisions for such partnerships in the upcoming Union Budget.”

K G Prabhu Group CFO, Smartlink Holdings Ltd.

As India is gradually moving forward on the path of digitization, for Union Budget 2020, government should focus on giving a strong push to the initiatives that will drive the process of digital adoption across various sectors. We are expecting that the upcoming budget will have measures to encourage domestic manufacturing by introducing polices that will allow global companies to collaborate with Indian companies and manufacture in India.

Rachit Chawla, Founder & CEO, Finway

Better liquidity and sector-specific incentives to MSMEs should be the top priorities of the Finance Minister in the Union Budget 2020-21. 6.5 per cent GDP growth in the coming fiscal is not a formidable task once liquidity resurges and conditions of MSMEs get improved. There is a strong connection between the health of NBFCs and health of MSMEs. The financial goals of the latter depend a lot on the financial stability of the former, and their collective growth is an index to economic growth. IL&FS and DHFL crises bring drastic repercussions on India’s financial markets and MSMEs, the back-bone of Indian Economy are still bearing the brunt of reduced liquidity in the market.

A large number of MSMEs are struggling with financial challenges, and without special subsidies, their sustenance is difficult. It is very much shocking that out of 6.33 crore MSMEs in India, only 0.05 lakh are medium enterprises, and they usually deprive of Public Procurement Policy which mandates 25 per cent procurement from MSEs. They are also barred from availing delayed payment reliefs through facilitation councils. So, to revamp the economy, the Finance Minister should take adequate measures which may empower the NBFCs and consequently ensure better prospects for the MSMEs.

Shubh Bansal, Co-Founder, Truebil

“We have Strong expectations from the Union budget when it comes to reduction in GST charges as it will encourage foreign investors to invest more in Indian startups. One of the biggest steps from the Indian government in tax norms has been the relaxation of the angel tax for the startups registered.

A reduction in personal income tax is necessary as it will put more money in the hands of the consumer. The assumption being that this extra money would then be spent on buying goods and/or services, thereby stoking demand.”

Aurko Bhattacharya, Co-Founder, ePayLater

"Financial inclusion remains a critical concern, and digitization has the potential to effectively address the same. This can be achieved by taking steps to promote digital payments and improve the supporting infrastructure for digital payments. The Government should introduce budgetary concessions for digital transactions and thereby reduce dependency on cash.

The digital lending industry has been playing a very important role in accelerating financial inclusion, helping India transition from a cash economy to a digital economy. Thus, digital lending needs to be given a boost. Tax benefits are needed for regulated entities involved in digital lending. We expect the government to usher in a new set of reforms in the upcoming budget and hope for higher tax relief, and further clarity on Aadhaar based eKYC.

At the same time, a push on security standards for various platforms offering financial services would be necessary for people to gain confidence in dealing with digital currency. The introduction of RBI sandbox comes across as a positive development made in this sphere, and the FinTech industry expects more such policies and reforms this year."

Karishmma V Mangal Director and Trutee Thakur International School Cambridge

“The education sector featured prominently in Honourable Finance Minister, Nirmala Sitharaman's, maiden budget in 2019 which was quite encouraging. I believe that further reforms in the education policies in the 2020 budget, will be favourable for the sector. To support and strengthen Indian education; initiatives, schemes, and policy inform should be implemented that promote India as an emerging global education hub and improve the overall quality of education within the country.

I support the highlight and landmark development of the 2019 budget which was the introduction of the New National Education Policy. However, I hope in 2020, the government will strive to bring about critical changes by addressing certain pain points including research and innovation, global visibility, quality faculty, and technology.

Most education entrepreneurs like me are hoping that the scope of higher education in India will be radically reformed. I believe that the idea should be to focus on better academic outcomes.

Rather than only focussing on imparting knowledge and learning to students, it’s high time we make them industry ready which is only possible by improving facilities in educational institutions by setting up smart classrooms and modern research facilities, and making artificial intelligence, robotics, augmented reality, virtual reality, and Internet of Things (IoT) a part of student learning programs. 

Besides reforms in the overall quality of education for students, faculty training should be made mandatory too. The country has roughly 8.5 million teachers and only 19,000 teacher training institutions. Teacher counselling programs should aim at training teachers to address the current learning needs of the students.

Lastly, subsidising education loans is also the need of the hour as the funds given by banks for students looking to study abroad is too low considering the cost of education.”

(Views expressed are of different industry leaders. Email us your feedback at startupterminal@gmail.com)