The Union Budget 2024 announcement outlined strategic investments across multiple sectors, with a focus on space technology, logistics and research and development (R&D). According to senior industry leaders, these efforts have the potential to position India as a global leader in the deep tech economy and strengthen the country’s logistics infrastructure.
Top leaders of the startup community said they view Finance Minister Nirmala Sitharaman’s decisions to set up a Rs 1,000 crore venture capital fund focused on the space economy, focus on research and development and abolish angel tax as positive steps that will strengthen India’s existing startup ecosystem.
“The government’s announcement of a Rs 1,000 crore venture capital fund and a Rs 1,000 crore research and development fund to boost the space economy is a strong testament to the realisation that the space economy will be at the forefront of the rise of India’s deep tech economy,” said Anirudh A Damani, managing partner at Alta Venture Fund.
Damani said the initiative will not only help ventures like Agnikul succeed, but also advance their ambitious plans, which include launching one rocket per week and dominating the global microsatellite delivery market.
He further added, “The abolition of angel tax will make it much easier to complete transactions and streamline the investment process. Previously, income tax officers had to understand and assess valuations, creating unnecessary conflicts and delays involving chartered accountants, valuers and tax authorities. This simplification will allow us to focus on our core job of investing in and supporting innovative startups, without the burden of navigating a cumbersome tax system.”
Similarly, Anil Joshi, Managing Partner, Unicorn India Ventures, highlighted India’s ability to develop cost-effective breakthrough solutions. He said, “The Rs 1,000 crore fund of funds for space tech is a testament to India’s ability to come up with breakthrough solutions at low cost. This will definitely help space tech companies in their quest for much-needed early stage capital to kick-start their operations. This will definitely help mobilise over Rs 4,000 crore in funding. It’s a great move.”
He also appreciated the abolition of angel tax and said, “The abolition of angel tax has been long pending and I am happy that the Finance Minister has listened to the industry and has finally abolished it. This will definitely help in growing angel investment in India and to a large extent remove the burden in everyone’s mind regarding tax notices on tax paid investments.”
Echoing this sentiment, Mayuresh Raut, Managing Partner at SeaFund, said: “It was a burden that hindered allocation of much-needed capital to deserving founders. Removal of this dreaded tax will provide a major boost to startups in the country and allow investors to focus on investing without worrying about how to deal with the repercussions.”
“For a deep-tech focused fund like ours, there are several other things that work well. Rooftop solar policy, pumped storage policy, small and modular reactor R&D, Bharat Small Reactor, small modular reactor R&D and research and development of new technologies in nuclear power form a clever trinity to change the energy map of India. Especially on the nuclear front, India is in a position to replicate the renaissance that nuclear power is experiencing in the US,” Raut said.
Turning to the logistics and supply chain sector, the budget’s focus on infrastructure, manufacturing and skill development has been well received by the industry. Ratna Mehta, Managing Partner, Fundamental Ventures said, “Logistics and supply chain are the lifeblood of India’s growth story. The budget’s identification of infrastructure, manufacturing and skill development as key areas for long-term development and subsequent allocation is a step towards positioning India as a global logistics and manufacturing powerhouse.”
According to her, the establishment of the e-commerce export hub will be particularly important for micro, small and medium enterprises (MSMEs), enabling them to export local products more efficiently.
Talking about the abolition of angel tax, she also said, “The abolition of angel tax will boost the development of India’s emerging startup ecosystem. It is especially important at a time when funding crunch is impacting startup liquidity and will facilitate capital flow without tax leakages.”
Also noteworthy is the government’s efforts to create industrial centres in historical centres like Gaya under the “Vikas bhi, Virasat bhi” scheme, which Mehta believes will boost infrastructure development, create employment opportunities and reduce the urban-rural gap.
“This will boost extensive infrastructure development and logistics in these regions, create employment opportunities, reduce urban-rural gap and enhance income distribution,” she said.
Meanwhile, Bhaskar Majumdar, managing partner at Unicorn India Ventures, said while the Rs 1,000 crore R&D allocation underlines the government’s commitment to promoting innovation, the intellectual property (IP) regime needs to be overhauled to make the most of the fund.
“This is a recognition of the growing need for a deep tech economy. But along with the R&D fund, the government should also look at the intellectual property regime. To make the most of the R&D fund, the long-overdue patent policy needs to be announced at the earliest,” Majumdar said.
Industry leaders believe that as these initiatives unfold, they will be “poised to create new opportunities, drive economic growth and enhance India’s competitiveness on the global stage.”
