Hello,
Budgeting is a difficult task to balance.
Hopes are high for India’s startup ecosystem as Finance Minister Nirmala Sitharaman is set to present the seventh consecutive Union Budget and the first of the Modi 3.0 government today.
While start-ups are excited about the launch of new schemes to encourage inward investment, many also want the Budget to address other issues such as corporate tax, Section 68 of the Income Tax Act and the re-dwelling tax regime.
EV manufacturers are looking to the government for subsidies for production and sales, as well as the third round of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme to boost EV adoption. Other emerging sectors, such as the drone industry, are also looking to the government for expanded market opportunities.
Meanwhile, the education technology industry, which is dealing with fundraising challenges and the aftermath of the BYJU’S collapse, is hoping for lower taxes on online learning, while gaming startups are similarly hoping for tougher policies to encourage domestic gaming hardware and game development.
AI has become a hot topic, with many industry experts suggesting that we need to go beyond the India AI Mission to leverage the new technology.
But the Economic Survey 2023-24, tabled in Parliament on Monday, noted that the advent of AI creates “significant uncertainty” about its impact on workers at all skill levels.
It also forecasts GDP growth of 6.5-7 percent this fiscal year and warns of a shortage of private capital. The study also highlights the need to create 7.85 million annual non-farm jobs, many of which would be in the renewable energy sector, which is expected to attract investments worth Rs 30 trillion by 2030.
Watch YourStory’s live coverage of the Union Budget here.
In today’s newsletter,
VC and PE budget wish listsTech industry budget wishesUpcycling plastic waste
Quiz of the day: Which finance minister has presented the most Union Budgets in independent India?
Federal Budget
VC and PE budget wish lists
The Union Budget will determine the prospects for the startup ecosystem under the Modi 3.0 government.
Topping the wish list from India’s venture capital (VC) and private equity (PE) ecosystem this year are simplification of taxation, relaxation of norms on what constitutes a startup and freeing up domestic capital for startups.
Sector expectations:
Indian universities should also be allowed to invest as trusts in startups to tap other sources of investment beyond the incubator model like US endowments, suggests Padmaja Ruparel, co-founder of Indian Angel Network. A long-standing demand from the ecosystem is parity of long-term and short-term capital gains tax on listed securities and startups, which would help startups attract talent by eliminating double taxation on shares granted under ESOPs. Earlier this month, DPIIT, under the Ministry of Commerce, proposed removing the “angel tax” in a submission to the finance minister.
Pre-Budget Expectations from the PE and VC Industry
Funding Alerts
Startups: Stable funding
Amount: 123.56 crore rupees
Round: Series A CCPS
Startup: IncasPays
Amount: $8 million
Round: Seed
Startup: nhance.ai
Amount: $1.5 million
Round: Seed
Federal Budget
Technology Industry Budget Requests
India’s $250 billion technology industry is primarily made up of IT services companies, business process management companies and research and development focused organisations.
The industry is hopeful that the upcoming Union Budget will simplify tax rules, ensure ease of doing business, and promote advanced technologies such as AI.
Simplifying the tax system:
Indian technology industry body NASSCOM has recommended improving the tax competitiveness of transfer pricing regimes to boost Indian IT services exports and improve ease of doing business in Global Competence Centres (GCCs). The industry is hopeful that the Union Budget will bring out measures to encourage further investments in breakthrough technologies such as AI and Gen AI. It is also important to encourage and incentivise both private and public companies to invest more in cybersecurity technologies, believes Rajarshi Bhattacharyya, co-founder, ProcessIT Global.
Women Entrepreneurs
Upcycling plastic waste
Akanksha Singh started out in clean energy by producing biogas in her village and is now promoting environmental conservation through her venture, Swayambhu Innovative Solutions, and expanding her efforts in upcycling single-use plastics.
Solutions to single-use plastics:
Swayambhu has formed groups of rag pickers in Haridwar, Rishikesh and Delhi and appointed collectors to collect mostly single-use plastics such as those used in milk and vegetable packaging. The plastic is cleaned and sorted at resource centres and processed into durable plastic sheets for use in a range of products from benches to dustbins. Swayambhu has provided employment to over 100 rag pickers and employs 25 others at its factory in Haridwar.
News and Updates
QUICK FIX: Microsoft has released a free tool to help companies recover from a flawed CrowdStrike update that caused one of the biggest IT disasters of all time. The tool is designed to help IT admins recover from the “Blue Screen of Death” boot loop that left 8.5 million Windows machines inoperable. Basic Income: OpenResearch, a project backed by Sam Altman, found that after distributing $1,000 per month for three years to recipients in Illinois and Texas, recipients met their basic needs, spent more money to help others, and worked slightly fewer hours, but did not drop out of the workforce. Details: The Competition Commission of India has reportedly sent nearly 100 inquiries to Reliance Industries and Walt Disney regarding their $8.5 billion merger of Indian media assets. The inquiries also include inquiries about sports rights details, increasing scrutiny of the deal.
Which finance minister has presented the most Union Budgets in independent India?
Answer: Morarji Desai. He presented 10 budgets including the interim budget.
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