Union Budget 2019: For the first time, the Union Budget encourages India's startup entrepreneurs in heartening detail
10 years ago, it would have been impossible to imagine that startups would even get a mention in the Union Budget.
Back then, the thought of quitting a professional job in favour of starting a company was seen as reckless, antithetical to all the carefully established norms of playing it safe. Today, as Finance Minister Nirmala Sitharaman became the first woman in nearly half a century to present the Union Budget, it was heartening to see a substantive portion of her speech devoted to the government’s plan to nurture startups.
It is clear that the nation now sees entrepreneurship as not just a viable career path for today’s youth — but an important driving force behind the country, transforming into a US$ 5 trillion economy.
The act of creating something out of nothing is a delicate balance between art, science, grit and fortune.
The environment in which startups are born needs to be rich in three key ingredients — capital, ideas and a steady supply of mould-breaking entrepreneurs. This Budget takes steps to bolster these three key areas and nurture startups through the gauntlet of their early years till they can achieve escape velocity.
To start with, striking down the draconian angel tax is a welcome move. Further, the FM provided clarity on pending angel tax cases, and mentioned that startup valuations will not be subject to the taxman's scrutiny. Standardized documentation and declarations will ensure that these exemptions are not misused by shell companies. Additionally, exempting funds in the category of AIF (II) from security premium scrutiny under angel tax should provide access to new pools of capital.
The Budget’s proposal for a TV Channel on the DD Network exclusively showcasing content about startups can have a deep impact on India's youth, particularly in smaller towns and rural areas.
This idea was first floated in 2016 by DPIIT, with the view that such a channel would share new ideas, spread success stories, and inspire the youth of India to think differently — and take risks. Being a channel by and for startups, it will be a good way to disseminate breakthrough technologies and ideas across the length and breadth of India.
The extension of the 'Stand Up India' scheme until 2025 will also empower women and traditionally marginalised members of our society to pursue entrepreneurship. The proposal for the RBI and banks to absorb the typical charges and merchant discount rates for startups espousing digital modes of payment will not only reduce the burden on startups, but also encourage customers to transact digitally.
The open-mindedness around allowing 100% FDI in insurance intermediaries and single-brand retail will also make these traditionally tough sectors very attractive to entrepreneurs.
Overall, I welcome the changes introduced in this Budget.
The proposed initiatives are steps in the right direction to encourage entrepreneurship and make this difficult journey just a little easier for founders.
There is always more to do, of course, and more radical wide-sweeping policies will undoubtedly be proposed in Budgets that follow. But looking at where we’ve come from, I am heartened to imagine the future that startups will have in our country.