Union Budget 2024: 4 Key Announcements for Startups It is important to note that this is an interim budget and a full budget will be presented post general elections
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In a bid to give a further boost to India's burgeoning startup ecosystem, Finance Minister Nirmala Sitharaman announced a slew of measures for startups, as she presented the Union Budget 2024 in Parliament on Thursday.
It is important to note that this is an interim budget and a full budget will be presented post general elections slated later this year.
In her sixth Union Budget, Sitharaman announced the following measures to strengthen the startup ecosystem.
What's in it for the startups
New Scheme For Deeptech Sector
The minister announced that it will be launching a new scheme for the deeptech sector, which would strengthen the sector for defence purposes. She said that the new scheme would expedite the Modi government's 'Atmanirbhar Bharat' vision while adding that the country needs programs that combine the powers of youth and technology. "The scheme for deeptech in defence will not only help the government start addressing the Make in Bharat initiative through indigenous technologies in defence but also unlock these technologies to other civilian uses," Mayuresh Raut, Co-founder & Managing Partner, Seafund told us.
"The budget's impetus on harnessing deep technologies across both civilian and defence sectors underscores India's strategic embrace of scientific self-reliance, added Sukhmani Bedi, Partner, Orios VP.
Budget 2024, experts feel, is also all about supporting our young innovators. "Setting up a Rs. 1 lakh crore fund with a 50-year interest-free loan is a positive step. It means long-term support for tech-savvy ideas. With this help for startups, our future looks brighter than ever. Embracing the 'First develop India' ethos, the government aims to forge bilateral treaties with foreign partners, prioritizing India's growth. With a development policy centered on social and geographical inclusion, we're charting a path towards a more equitable and prosperous future for all," said Sudeep Kulkarni, Founder, Game Theory.
A Push for EV Ecosystem
Sitharaman announced that the government will place an increased focus on promoting electric vehicle (EV) adoption in India. The government will expand and strengthen the EV ecosystem by supporting manufacturing and setting up charging infrastructure across the country. The FM also said that the government will promote the adoption of electric buses for public transportation by introducing a payment security mechanism. "Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanism," she said.
Reacting to this announcement, Anil Joshi, Managing Partner, Unicorn India Ventures said, "The focus on boosting EV charging station will drive sale of both vehicles and charging infrastructure."
"With a focus on e-vehicle adoption, particularly e-buses for public transport, this proposed initiative will be crucial in achieving the Government's net-zero emissions target by 2070, paving the way for a sustainable and greener future. This will also give a boost to the EV startups, encouraging further innovation. Additionally, introducing payment security mechanisms in public transport networks will encourage greater adoption of e-buses. This strategic initiative will drive economic growth and help us popularise sustainable transportation in the country," added Ankur Bansal, Co-Founder & Director, BlackSoil.
A Boost To Private Sector R&D in Sunrise Sectors
The Finance Minister announced that a corpus of INR 1 Lakh Cr will be established to spur research and development in the country. The corpus will have a 50-year tenure and will provide long-term financing with 'low or nil' interest rates to fuel private sector research and development (R&D) in the sunrise sectors. "Golden era for India's tech-savvy youth. A corpus of INR 1 Lakh Cr will be established with 50-year interest-free loans," said Sitharaman.
Further, the announcement of the sanctioning of 43 crore loans under the PM Mudra Yojana, totaling Rs. 22.5 lakh crore, is a noteworthy step, say experts. "This substantial financial support is expected to fuel the entrepreneurial aspirations of the Indian youth, fostering a culture of innovation and self-reliance. The entrepreneurial community is delighted by the progressive approach and sustained support from the government," said Rishabh Goel, Co-Founder & CEO, Credgenics.
"The government's Startup India initiatives, facilitating seamless access to capital, stand as the bedrock for startups—providing the crucial initial funding necessary for product development," added Jay Ranjeet Bhatt, Founder & CEO, Airrchip.
Extension of Certain Tax Benefits and Exemptions
The Finance Minister announced the extension of certain tax benefits and exemptions for startups and investments made by sovereign wealth or pension funds by a year. "As for tax proposals, in keeping with the convention, I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes including import duties. However, certain tax benefits to start-ups and investments made by sovereign wealth or pension funds as also tax exemption on certain income of some IFSC units are expiring on 31.03.2024. To provide continuity in taxation, I propose to extend the date to 31.03.2025," she said.