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

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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 IV).
K. G. Prabhu, Group Chief
Financial Officer, 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.”

Pushkar
Mukewar, Co-Founder and Co-CEO, Drip Capital

“Budget 2020 is eagerly awaited by the
industry and financiers alike. According to the December trade data India’s
merchandise exports slipped to 1.8% in December, falling for the fifth straight
month. This coupled with the slowdown in the economy has a dampened the mood in
the market. With the Budget 2020, we expect certain policy interventions to
energize the export sector, overcome anticipated flat growth, ease liquidity
problems, and resolve persistent problems faced by SMEs in the sector. With the
new Foreign Trade Policy (FTP) around the corner, expectations are that the
Budget will allocate appropriate funds and resources for its implementation and
pave a way for boosting exports from the country. We hope that the government
revisits its export promotion policies and fine tune them to support the SMEs.
Key expectations from the FTP also include more schemes especially for tech
upgradation for small manufacturers & exporters — this would help them get
integrated within the global value chains. The government could also look at
focused schemes for helping SMEs research and develop/improve the quality of
products to become more competitive globally. Additionally, we expect dedicated
investments in logistics and warehousing infrastructure for seamless movement
of goods along with assistance for easier access to credit as well as laws
pertaining to IPRs.”

Dr
Malini Saba, Founder & Chairman, Saba Group Holdings

“The
agriculture sector employs 50% of the Indian workforce and contributes 17–18%
of the country’s GDP. It means that any government is required to pay heed to
the well-being of this sector and make it sustainable – not through doles, but
through policies that make this sector healthy. I expect the FM to remove GST
from all farm and agriculture inputs (which is 12% on Machinery & 28% on
fertilizers), reintroduce crop insurance and policies that focus on farmer
welfare along with structural reforms.

Agritech
policies with proven capability of using less water and increasing productivity
from the same land usage, while also limiting the use of pesticides and harmful
chemicals should be incentivized for research and development, and adoption.
This will also help generate employment and increase productivity, efficiency,
and output across the agriculture business value chain, and thus help farmers
grow better and healthier produce.

Last
year, the government had shown trust in women entrepreneurs and this year too
the spirits are high. The government should introduce new ideas to empower
women, provide them with a violence-free and similar socioeconomic environment
to encourage their hard work which is not only going to benefit the government
but also the country’s economy at large. The Nirbhaya Fund created for the
protection of women in the budget should be properly utilized. Along with this,
the income of housewives should be kept outside the purview of tax.

In order to ensure gender justice, all
policies should be allocated adequate budget and strict implementation should
be undertaken. The union budget should have the highest focus upon girl’s
education, healthcare, anti-bullying, discrimination, and violence as well as
investment in job-oriented skills for women– all pointing towards gender
disparity, which is known to hamper economic growth.”

Deva
Jyotula, Retail Head, Kalpataru Limited

“With
the budget 2020 being around the corner, the government is expected to come up
with fresh policies and amendments to existing schemes. Post the Budget 2019
the retail sector has defiantly witnessed an upward trend.

The Indian retail industry has emerged as
one of the most dynamic industry due to the entry of several new players. Some
major expectations by the retailers from the budget 2020 would be; Income
support schemes to boost overall consumption, tax benefits to middle class to
swing consumers, reduction of corporate tax to 25 percent and GST slab to be
simplified. There is a gaping need for a special start-up growth fund to
support start-ups.”

Amit
Jain, Founder, Rising Star Tours & Travels

“Market demand growth, friendly policies,
and a rise in credit flow are the basic needs of MSMEs and they expect that the
finance minister will give her due consideration on all these three factors in
the Union Budget 2020. Moreover, many industry insiders have put forth their
demands to address their woes concerning GST filing, as the rationalization of
GST will provide an impetus to domestic trade and fuel the growth of MSMEs and
Small Businesses. Furthermore, the extension of interest subvention scheme in
Incremental credit and enactment of a broad-based approach for the loan
disbursement criteria can bridge gaps in the current MSMEs financing scenario,
result in other companies fold into the formal economy.”

Aditya
Kale, Founder and CEO, Airattix Storage Pvt. Ltd.

Start-ups
in most cases are bound by constraints like cash crunch, shortage of working
capital / turnaround time of debtors and lack of flexibility in repayment terms
for loans among others. Budget provisions may help the start-up community by
the allowability of higher depreciation, beyond the maximum permissible limit
of 40% for start-up’s operating in the areas which are trying to resolve the
common man issues to increase the livability index. Also, areas like energy
conservation, reduction of pollution, and use of renewable resources among
others.

Relaxation
in the terms of payment of advance tax, where start-ups are earning profits,
beyond a certain point of time with be a great provision to have this
budget.  Threshold may be prescribed for
relaxation from payment of advance tax currently which is 3 months to 6 months.

Enhancement
of years allowed to carry forward of business losses (presently at 08 years)
will be an important step in encouraging the start-up community.  Some businesses may not be able to generate
enough profits to ensure absorption of losses incurred in the initial years.
Relaxation may help them to focus on their core business activities, thereby
generating profits in the long run, rather than resorting to unethical / unfair
means and / or business practices to ensure that losses are absorbed within the
prescribed time limit.

Rashie
Jain, CEO & CO-founder, Onco.com

“India
is a country of over a billion people and has many key areas to focus on
including healthcare, education, agriculture and employment amongst others.
Currently, India spends less than $100 average per person on healthcare, which
is amongst the lowest across the world. While the government has taken positive
steps over the last few years in ensuring universal healthcare for its
citizens. Ayushman Bharat is a good step in the right direction, however,
inclusion of tertiary care is critical to making it beneficial overall. We also
expect more clarity on the policy front for healthcare to benefit the patients
and hospitals alike in order to ensure quality treatment and clinical
excellence.

Cancer
is a heavy burden on our society and thereby the economy. We anticipate the
government take cognizance and increase taxes on tobacco and related products
to curb their consumption.   

Overall,
we are optimistic about the government proposing tax cuts for both capital
gains as well as income tax. This should help revive the economy and improve
consumer spending which is good for businesses especially startups.”

Sanjay
Bhatia, Co-Founder and CEO, Freightwalla

“Globally,
growth in logistics has been via a healthy Multi-Modal mix and
interconnectedness between Rail, Road, Inland and Coastal Waterways. But, in
India, the modal mix has been biased towards roads, which we believe will
change for the better, as we look forward to increased clarity on the progress
of schemes such as the Sagarmala project in this budget. Out of the 574
projects that have been identified for implementation under this programme,
during 2015-2035, a total of 121 projects have been completed and 201 projects
are under implementation worth over 20K Cr. Yet, so far merely 1820 Cr has been
sanctioned for this project. Likewise, Jal Marg Vikas Project such as the
Sahibganj, Haldia & Varanasi Terminal will tap into the development of
inland waterways which we believe would increase the movement of cargo volume
on Ganga by nearly four times in the next four years. We look forward to Union
Budget 2020 allocating more funds to such programmes to catalyse completion of
more projects. Ultimately, these projects will lead to a fall in the logistics
costs for exports that has brought undue pressure on the competitiveness of
Indian exports and has been slowing down the growth of the Make in India
campaign.”

Rajan
Sharma, Founder & CEO, excess2sell.com

“At
the outset, we would like to commend the Government for the several initiatives
it has so far taken to encourage and develop the Start-up ecosystem. As a
three-year-old start-up, Excess2sell.com’s phenomenal growth can be attributed
to the Govt.’s efforts in consolidating GST with technology, ease of doing
business, taxation on start-ups and various policy initiatives. It has allowed
and encouraged first-generation entrepreneurs like us to take risks and be part
of a developing ecosystem for Indians who always wanted to do something on
their own. We look forward to Union Budget 2020 with more focus on reforms,
ease of doing business, system cleansing and easing up liquidity for honest
tax-payers to spend. With the kind of thrust on technology build-up, easy tax
policies and over-all opportunities, our enterprise which focuses on the B2B
segment is poised to grow at an even faster rate,”

Upma
Kapoor, Founder Teal & Terra  

“As
an upcoming business venture in the beauty and skincare segment, we are looking
forward to some big reforms in the Union Budget this year. As an entrepreneur,
I hope that the government will give greater concessions for startups in the
form of tax concessions and interest-free loans. Also, amid a global slowdown
and in the face of stiff competition from countries like China, Indonesia,
Vietnam, and others, the government must make some provisions to promote and
encourage exports to the growing markets of Central/South America and Africa.
Startups are still facing several issues with regards to taxation and funding
and the government can make an announcement to make the filing and compliance
easier. Reforms in labor laws, especially for overtime provisions, would be a
welcome move in this budget.”

Ruchi
Garg, CEO and Co-founder, Venuelook

“The
government should allocate funds explicitly for the benefit of MSMEs, including
hotels, in order to facilitate development and create job opportunities. An
important action point is to introduce uniformity in the taxes applicable to
hotel rooms. There are actually two tax slabs on hotel rooms-18% and 28%. If
this is reduced to over 10 percent, both guests and hoteliers would receive
considerable relief. There must be no delay in GST reimbursement as its
postponement blocks working capital and causes industry imbalance.”

Ashwani
Rawat and Amarsh Chaturvedi, Co-Founder & Director, Transerve Technologies
Pvt. Ltd.

“The
ongoing disruption in the technological sphere has been a prime factor
complementing India’s digital growth journey. With India undergoing a complete
digital transformation, we hope that the upcoming Union Budget 2020 should
essentially focus on designing policy frameworks to incentivize large scale
businesses to invest in the country’s tryst to technological advancement. The
Government must encourage investment in the technology hubs to promote new-age
startups and at the same time help in setting up new innovation incubators. We
also hope that the new budget will provide respite in tax in the service
sector. No industry can experience development without a skilled workforce and
more opportunities. We expect the Government to increase employment
opportunities and at the same time initiating new centers for skill
development.”

Dr.
Arvind Singhatiya, LegalKart

“We
feel that in 2020 the focus will be on the consumer market—the supply of legal
services directly to individuals and businesses will be stronger and the
concept of ‘Marketplaces’ will grow. Artificial intelligence in finding and
engaging a lawyer or legal firm will evolve to solve the difficulty of
consumers often.”

Sachin
Mittal, CEO & Founder, Loanwalle.com

“We
expect significant measures towards incentivization, sustainability, and
consolidation, which will give some impetus to spending in the economy. There
is a need to drive growth by boosting private consumption with measures like
policy rate cuts and direct tax sops. The industry is looking forward to
measures ensuring that policy rate cuts benefits are passed on through NBFCs to
its end-consumers. There must be a structured and process-driven framework for
NBFCs in order to get them access to credits from banks. There should possibly
be a comprehensive checklist or a scorecard with parameters such as customer
segment, business model, cash flows, ALM position, Ratings and so on to
automatically calculate the quantum & costs for the credit.’’

Saagar
Panchal, Founder & CEO, Hireavilla Hospitality Pvt. Ltd

“One
of the biggest challenges before the Modi government is to rescue the Indian
economy from a slump. The statistics ministry expects the economy to grow at 5%
in the current fiscal, the slowest pace of annual growth since 2012-13. I am
still optimistic about a recovery and foresee the economy quickly picking pace.
The travel and hospitality industry has a huge potential to create a number of
employment opportunities, increase services and enhance tourism. This year, I
hope that our government focuses on steps to provide capital to the industry
players. This could be in the form of incentivizing banks and other financial
institutions to lend money to industry participants especially start-ups in the
sector. Furthermore, I have high hopes on the government to lower tax rates and
remove exemptions, revisit tax regulations especially for start-ups like that
of mine. This will not only provide tax reforms but also enhance the efficiency
of tax collections.”

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

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