The Finance Minister Arun Jaitley has presented the Union Budget 2015-16 in the Parliament today. The young entrepreneurs and startup community is giving thumbs up to FM’s announcement of INR 1000 Cr. fund for supporting the startup environment. During his speech, the minister has given special attention to recognize and support cutting edge technology startups in the country. He has also extolled IT-BPM industry of India and termed it as “World Class”. Let’s find out the key highlights of the budget and what startup community has to say about it.
Key highlights of Union Budget 2015-16
- Announcement of INR 1000 Cr. fund to support startups
- Government will encourage new startups and encourage young entrepreneurs
- Govt announces AIIMS institutions in J&K , Punjab , Himachal Pradesh and Assam. Besides, ISM Dhanbad will be upgraded to full IIT
- Proposed to set up an IT-based student financial aid system under PM Vidya Laxmi scheme
- Initial sum of INR 150 Cr to create world class IT hub to take advantage of our competitiveness
Let’s find out what startup community has to say about the Union Budget 2015-16
Prevention is better than cure and we applaud the finance minister’s efforts to focus on preventive healthcare for our citizens by targeting 6 crore toilets under the Swacch Bharat campaign. This will have a huge impact on making our nation healthier.
We’re also happy with government’s increased focus and recognition towards the Indian Startup industry. Over the last few years, the Indian Startup industry has witnessed tremendous success in providing innovative services to the nation, along with generating substantial employment opportunities . The financial allocation of Rs 1000 cr under the SETU – Self Employment & Talent Utilization program will drastically help boost the startup ecosystem in India. The additional focus towards the strengthening of the IT infrastructure, the backbone of the Indian startup industry will accelerate the industry growth.
As a young company at the intersection of health and technology we’re very pleased with the government’s focus on both these sectors and look forward to working with various stakeholders to improve healthcare access for a Digital India.
This is the first completely independent budget from Mr Jaitley and industry had high expectations from it. While overall it seems to be pro-development but a lot more could have been done specially to boost the already booming start-up environment in the country. What will be interesting to see over the next couple of years is how well are initiatives like the incubation cell and nayi manzil executed. We have seen in the past that governments have been good at announcing schemes but have hardly been able to execute them well.
This is a very bold and forward looking budget. I am glad finance minister has attempted to help country’s SME’s and bring unbanked on banking platform. Schemes like funding unfunded, special fund for startup are good initiatives. I hope this government implements these great initiatives and bring double digit growth dream back to reality.
As per the budget 2015, young entrepreneurs have become more hopeful with support of the new government. These measures will incentivize the growth of the young talent in India. With this the economy has become very optimistic along with having ‘skill development’ and ‘Make in India’ will help in creating young entrepreneurs. It is a sign of relief for the corporates to get tax exempted which will also reduce tax on businesses to 25% over four years from a current 30%, with a view to boosting spending and job creation.
A positive move by the government has come at the right time to encourage the Indian startups and entrepreneurs. Today India is globally the 4th largest in terms of creating startups. Young Indians are highly inspired and motivated to build companies of their own. The initiatives by the government, if implemented properly shall help to accelerate the success of the Indian startup ecosystem and also be one of the leveraging factors for the growth of India as an economy.
Plants need additional care before they grow into trees. The government can play a major role in nurturing the young startups before they become big.
Overall a very interesting budget from the perspective of startups. The 1000 Crore Startup fund, the stress on easing permissions for doing business and decision to allow Foreign Investments in AIF is largely reassuring to the entrepreneur community. That the unfair “startup tax” which taxes Angel Investments was not addressed is little disappointing though
Budget 2015 has been a comprehensive one across spectrum covering not just welfare of the poor, the differently abled, the senior citizens but also the corporate sector especially the emerging sectors such as IT. For ecommerce in particular, while the dream of a tax holiday or FDI hasn’t come true, the introduction of GST in 2015-16 will greatly help the e-retailers who have been struggling with the differentiated tax laws.
The Marquee of this budget has been the added benefits for entrepreneurs. The government allocation of Rs 1000 crores to create a SETU (self employment and talent utilization) scheme should greatly motivate young entrepreneurs. In addition to this, the reduction of Corporate Tax from 30% to 25% essentially increases the advantages of starting up verses working for a salaried job. Consolidating startup approvals through ebiz portal by including state approvals would certainly bring down the complexities in setting up business. Overall the budget has focussed on pushing the Make in India strategy by encouraging domestic industries and entrepreneurship and rewarding the Indian industries.
The MSME sector took centre stage as our FM, Shree Arun Jaitley announced various measures in his speech during Union Budget 2015. The government showcased their keen interest in accelerating the growth of MSME sector and stated policies to address many challenges prevalent in the sector such as taxation, procurement policies and business finance – which is the core challenge of SMEs across industries. Recognizing the lack of credit facilities as dominant challenge in the sector, allocation of Rs. 20,000 crore for Mudra Bank For SMEs will play a vital role by enabling the SMEs to gain access to basic things such as raw materials and other necessary resources important to run their business. Also, the allocation of Rs. 1,000 crore for technology startups showcases government’s trust in young technology businesses.
Various other measures like GST, Public Procurement Policy, Investment in infrastructure, introduction of internationally competitive Direct Taxes, sharpslash on few indirect taxes, and simplification of tax regime and few more measure announced will certainly result in ease of doing business. With government’s focus on making the youth of India job creators and not job seekers, skill development of youth and special focus on self-employment will have very positive impact on our socio-economic scenario and if implemented in right manner this will have a long term impact.
This welcome move by the FM will provide a boost to electronic payment transactions, Online and also at POS. A similar approach helped Korea to move to almost 60% cashless transactions in retail. This will help the GDP by almost 0.5%-1% over the next few years.
With the latest budget release by Arun Jaitley, it was expected that many open ended loops will be closed for tech startups like tax relaxation, more youth programs for budding entrepreneurs, relaxation for angel investors etc. Even though a promising budget is released from a startup perspective and rate of Income-tax on royalty and fees for technical services reduced from 25% to 10% to facilitate technology inflow, few of the expected changes have been postponed for next year such as service tax relaxation on products and the simplifying the complex Company Act 2013.
Currently initial sum of Rs 150 crore is promised to create world class IT hub to take advantage of our competitiveness. Other concerns of IT industries for a more liberal system of raising global capital, incubation facilities in our Centres of Excellence, funding for seed capital and growth, and ease of doing business etc. would be addressed for creating hundreds of billion dollars in value. We are expecting these programs will add on to our advantage with other initiatives like ‘Make in India’ and ‘Digital India’. Government is also establishing the mechanism ‘self employment’ to support all aspects of a startup business. This would be beneficial to build a new or existing startups from the scratch. The budget also included hopes to improve ease of doing business in India with minimum government and maximum governance.
One of the most promising aspect was about reducing the corporate tax from 30% to 25%, but it is again a plan which will be executed in the next 4 years. Government is also establishing the mechanism ‘self employment’ to support all aspects of a startup business. SETU (Self-Employment and Talent Utilization) will be set up as techno-financial, incubation and facilitation programme to support growing startups. 1000 crore is promised to be set aside as initial amount in NITI. These initiatives will definitely encourage and grow the spirit of entrepreneurship – to turn youth into job creators.
Though there is nothing much in the bucket for the angel investors who are the main source for any startup growth, we hope that the promised programs will be executed effectively & results would be seen unlike last year.
Spread a large number of seeds even in an unfriendly environment, and you will get a few trees. A conducive environment will result in a forest. The start-up fund, a simpler regulatory environment, ease of doing business, provide the seeds and environment that can lead to a large number of successful companies. Job growth is inevitable in a fast growing economy. Small businesses make up 99.7% of U.S. employer firms, 64% of net new private-sector jobs, and 49.2 percent of private-sector Employment. A lot of this has to do with the ease of doing business.
India has perhaps one of the largest ever young population in the history of mankind. The young by their very nature are willing to dare provided the opportunities exist. Unleash their entrepreneurial potential, and India can become unstoppable.
The Government has introduced certain key measures such as the place of effective management concept which could be relevant to IT/ITeS companies having outbound operations. With introduction of GST and improvements in financial infrastructure of the postal network of India, eCommerce companies are likely to get respite. Service tax rates have been increased from 12.36% to 14% impacting Technology sector players. Reduction in withholding tax rate from 25% to 10% on royalty and fees for technical services is likely to encourage Tech startups and facilitate technology transfer to India. With a view to provide fillip to the start ups in technology industry, the Government has set aside USD 165 million to support all aspects of Start Ups, which is a welcome announcement.
The setting up of a 1000 crore startup fund created through SETU entrepreneurial innovative fund is a welcome initiative. While the initiative is commendable, the effective implementation of the same needs to be ensured to make the fund a success. Consolidating startup approvals through ebiz portal by including state approvals would certainly bring down the complexities in setting up business. With more and more states participating in this initiative, this portal would eventually act as a single place window for obtaining regulatory approvals and licenses. If implemented, this would be the single most important development to improve the ease of doing business in India.
The present legal and regulatory framework for business is not only complex but also impractical in many circumstances given the change in business environment. Amending or repealing outdated laws and regulations is the need of the hour if India hopes to climb up the ease of doing business index globally. The setting up of an expert committee to review the pre existing regulations is an extremely imperative and positive step in the right direction.
The proposal to have a plug and play model for even smaller businesses by replacing dated laws with procedures would not only move many of the India centric businesses located outside India back to India but also increase interest in setting up newer businesses. This would however become a reality in the next few years and is not an immediate proposal.
The postponement of GAAR provisions by 2 years would improve the ease of investment climate in startups and making it applicable prospectively is a serious incentive in the right direction. GAAR provisions in the present form are regarded as draconian by the investor community and deferment with a possible revisit to the provisions making them practical, would certainly boost investment climate.
Reducing the tax and withholding rates from 25% to 10% is a hugely positive step. The effective reduction is taxation is more than 22% given the fact that most of the technology agreements are “net of tax” transactions. This amendment makes cost of technology a lot more accessible and affordable to the Indian startups and businesses.
Reduction of corporate tax from 30% to 25% over a period of 4 years would bring India at par with many of the attractive business destinations of the world. Currently the average corporate tax rate is around 23%. However with gradual phasing out of exemptions, the overall change is taxation position seems marginal. The positive takeaway is the possibility of reduced litigation owing to taxation exemptions.
What’s your take on budget 2015-16?