Budget reactions: Startups and manufacturing sector

1 Feb 2022 , 07:32 PM

Below is the budget reaction quote on announcements made for startup and manufacturing sector

Rajesh Khosla, President and CEO, AGI glaspac

“The Indian government this year has presented a growth-oriented budget with a special focus on boosting manufacturing sector to create massive employment opportunities and to maintain India’s status as world’s fastest-growing economy. The concessional corporate tax for newly incorporated manufacturing companies is a positive move towards promoting the Make in India initiative as this will encourage new manufacturing industries as well as increase private investment in this industry.

The PLI Scheme(Production Linked Incentive scheme) in 14 sectors with the aim of creating 6 million jobs can be predicted to improve the performance of the manufacturing industries in the country by 4X in the next four quarters. We congratulate FM, Nirmala Sitharaman for presenting a budget that has laid a roadmap for the economic revival of India – despite the pandemic crisis.

MSR, CEO, T-Hub

“This year’s Budget by Finance Minister is pragmatic, positive, and committed to the startup sector which needed a deliberate boost to further innovate and help in sustaining the economy. The extension for startups on both, the eligibility for claiming tax holiday and the capital gains exemption for investment by another year (March 2023) is a progressive continuity of last year’s budget policies powering economic growth. It is encouraging to see the government’s support for startups across different sectors like healthcare, gaming, drones, Electric mobility and the defence sector. The budget provides a major boost to the research and development segment and defence startups by announcing the launch of defence R&D for industry, startups and academia.

The sector-specific announcements like fund to be facilitated through NABARD to finance for agriculture and rural startups, and promotion of Drone as a service and giving new manufacturing companies with a concessional corporate tax rate of 15 percent will further strengthen the startup ecosystem. The focus on ‘Ease of doing business is a great step, as it will further promote entrepreneurship in the economy. I also appreciate the government’s decision regarding The ECLGS credit scheme guarantee cover which will provide collateral-free loans to stressed-out SMEs and MSMEs.

In order to promote long term investments in equity of startup, the rate of surcharge has been capped at 15%, irrespective of the amount of long term capital gains. This is beneficial for the individual investors who are holding shares for more than 12 months and selling them thereafter, thus treating gains on the sale of such shares as long term capital gains. We are also eagerly waiting for FM to announce measures to scale Venture capital and private equity as it has facilitated India in becoming the fastest growing startup ecosystem with an investment of more than Rs 5.5 lakh crore last year. Overall the Budget 2022 reaffirms the Government’s push to make startups job creators and multipliers in one of the largest and most exciting economies in the world.”

Deepthi Ravula, CEO of WE HUB

“The Finance Minister announced extension of the tax holiday up to March 2023 and an expansion of its guarantee fund by Rs 50,000 crore to Rs 5 lakh crore. Millions of MSMEs impacted by the pandemic may receive additional support from ECLGS, aiding them in softening but not minimizing the impacts. The dedicated fund for Agritech is a great move in the right direction as it will regulate and infuse capital in to a much needed sector of the economy. We are pleased that the capital gains tax exemption on startups investments is extended, as this will encourage more investment in startups. In addition, the National Skill Qualification Framework will focus on enhancing skill-building and upskilling – as well as support for the job market.

However, with the emphasis on NariShakti, it looks like a missed opportunity on supporting inclusion and diversity. With the pandemic enabling more women to be part of the work force and entrepreneurship, the budget lacked support in terms of working capital, technology upgradation, incentives to companies, MSMEs and startups for addition of female workforce. Although the startups have contributed a great deal of energy and capital, the path to preferential procurement has not been clearly defined yet, as well.

Further, we are also looking forward to the interconnectivity of MSMEs platforms – Udyam, e-Shram, NCS and Aseem portals – and believe this will improve entrepreneurial opportunities and facilitate operability for MSMEs. In light of the amazing value that Startups have been able to bring over the past year, creating 80+ unicorns, we hoped the Budget 2022 could have included additional perks for Startups at the acceleration phase, including incentives and additional support when working in a Tier 2 or Tier 3 region.

However, we have great confidence in Indian entrepreneurs and SMEs. It is evident from our past experience, including the pandemic, that they are extremely resilient and would demonstrate their grit, determination, and might on a global stage.”

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com