Startups looking towards budget
Prime Minister Narendra Modi had announced that January 16 will be celebrated as “National Start-up Day” to encourage startups and take the startup culture to the far flung areas of the country. The Union Budget is round the corner and the startups, micro and small enterprise sectors are hoping that Finance Minister Nirmala Sitharaman will deliver a fair budget which supports startups amid the uncertainty caused due to Covid pandemic.
There are some recommendations for the government for the upcoming Union Budget 2022-23 from the startup industry.
The government should consider extending and expanding the Emergency Credit Line Guarantee Scheme (ECLGS) program for the better part of the new financial year, India Today reported.
According to the report, Sanjay Sharma, MD of Aye finance has said that,” It is important that rates of interest in ECLGS schemes should not be capped so that lenders are encouraged to make these funds flow to micro-scale businesses where their operating costs are high”.
“Capping the rate of interest diverts most of these funds to the bigger enterprises and thus starves the most needy micro businesses,” he said.
Budget must focus on existing schemes
According to Anil Pinapala, CEO and Co-Founder of Vivifi India Finance, in the upcoming budget, the central government should assist start-ups attempting to bring in credit for all transcending language, literacy, location, livelihood like FlexPay.
According to a Business Line report, several Fintech NBFC’s and other startups have said that the upcoming budget must push the needle towards implementing schemes already announced to provide liquidity support to the MSME sector post the Covid-19 pandemic. According to them, even though the headline schemes to support MSMEs were attractive, the fine prints of those schemes still made it difficult for many new-age Fintech NBFCs to take advantage of the schemes
“This budget must be in pursuit of better implementation of the schemes already in place. Further, the fiscal budget should announce measures to incentivize and strengthen support from SIDBI-like institutions and Public sector banks towards lending to smaller NBFCs to ensure credit to SMEs at a lower cost of capital”, a person in this industry said.
Extend loan moratorium
Akash Gehani, COO & Co-founder, Instamojo shares a different feeling, “While MSMEs continue to battle access to credit, it will be beneficial to the sector if the government introduces initiatives to manage existing credit by extending the loan moratorium and making access to affordable credit options easier,” he said.
“Additionally, with digitization defining the business landscape today, digital literacy for small businesses and entrepreneurs should be made a priority. This way, these MSMEs can upskill to be at par with industry requirements, have free access to online resources and infrastructure, and in the long run help in the further establishment and wider customer reach of these businesses digitally,” he was quoted as saying.
Relax tax burden
M & A for startups operating in retail and service have a lot of tax burden. The Ministry of Finance will hopefully explore allowing startups to carry forward losses, setting off previous losses against income and unabsorbed depreciation under Section 72A of the Income Tax Act, in the past few years following a merger or acquisition. We are hopeful as retail and service, are now a large sector of the economy, and growing daily, in India and around the world,” said Sargam Dhawan Bhayana, Director, Tressmart Marketing Pvt. Ltd. And Paul Penders Botanicals.
The startup industry also expects the government to possibly extend the ambit of the Start-up India Seed Fund Scheme to promote startups that have achieved a remarkable feat over the pandemic-hit period.
They feel that growth-oriented startups with proven capabilities should be provided financial assistance for R&D, prototype development, product trials, market entry and proof of concept,”
Sanya Goel, Co-founder of Humsafar Diesel Door Delivery startup, said that there is a need to put a curb on taxes collected as prices go up.
