As finance minister Aun Jaitley prepares to present his third Union Budget, wish lists have been pouring in from all quarters. Here’ a look at the few things that the finance minister could announce in Budget 2017 that would see loud cheers from startups:
Startups need funds. They grow on money that angel investors and venture capitalists give to bear losses and grow the business in anticipation that one day they will be profitable. The government has, in the past, talked about fund-of-funds. Startups also need credit guarantee, which is missing. The National Credit Guarantee Trust Company or the SIDBI, can help. The government has also failed to address “building the startup culture” in smaller cities and towns. The Narendra Modi-government’s “Startup India” has failed to address these issues in the previous budgets.
Incubation of startups
India doesn’t have multi-billion dollar companies like they have in the Silicon Valley. India doesn’t have a Mark Zuckerberg or a Travis Kalanick. These startup founders have played an important role in incubating the next big promising startup. That makes the government’s role to incubate startups more important. The government does aim to start 35 incubators, but that is yet to take off. Jaitley, might want to put timelines of rolling out these incubators, and allocate funds.
Even though Modi envisions “Startup India”, the government has not been able to dole out tax benefits for investors – angel and venture – at least for the time the business doesn’t break even, or for the limited period, in the beginning. With a large number of companies registering in Singapore, the budget should address the issue of capital gain tax for those companies. Also, for startups, last budget, Jaitley gave three-years tax breaks for startups, but it faced a lot of criticism. He might want to review that.
The government has failed to connect social schemes, such as Aadhar, with startups. The Digital India campaign has failed to address larger issues that startups face, neither has it given a fillip to the startup ecosystem. While the government’s campaign aims at bringing in a large number of Indians under the internet literacy, but the government has failed to work with startups to do that. Budget 2017 could look at ways of connecting the Digital India project with startups.