Ahead of February 1, all eyes are on Finance Minister Nirmala Sitharaman as she readies to present Union Budget 2022. Business leaders, entrepreneurs, investors, and other stakeholders from the Indian startup ecosystem are hopeful that the crucial budget will announce measures to fire up India’s pandemic-hit economy.
The Budget Session of Parliament will commence from January 31 with President Ram Nath Kovind’s address. COVID-19 protocols are in place as several ministers have tested positive for the virus in recent times.
An optimistic outlook towards sustained growth prevails in every sector in the Indian startup ecosystem, the third largest startup ecosystem of the world, despite concerns over the likely impact of the third wave of COVID-19 pandemic.
According to the advance estimates of the National Statistical Office (NSO), the economy is expected to record a growth of 9.2 percent during the current fiscal following last fiscal’s 7.3 percent contraction, still a tad lower than the 9.5 percent projected by the Reserve Bank.
Deloitte has predicted that the Union Budget is likely to “put the economy on an accelerated growth path after the impact caused by the pandemic”.
“Amendments in the tax law to bring about sustainable growth, infrastructure investment, focus on R&D spending, nurturing incentives to the core sectors including manufacturing and services, tapping the huge experience of running captive centres are some of the priority items on the agenda,” Deloitte said.
Here’s a look at what Indian business leaders, entrepreneurs, investors, and other stakeholders across the Indian startup ecosystem expect from Union Budget 2022.
Harshvardhan Lunia, CEO & Co-founder, Lendingkart
“As the economy gradually recovers from the pandemic, India continues its march towards becoming a 5 trillion-dollar economy by 2025. To achieve this ambitious vision, the MSME sector will play a critical role. This sector is expected to increase its share of the GDP above the 50% mark, making rapid strides from its current share of ~30 percent of a $2.7 trillion GDP.”
“We urge the government to further incentivise the banking sector to partner with fintech lenders on various risk-sharing co-lending models to extend capital support to MSMEs as well as simplify and standardise financing norms. We also appeal to the government to allocate budgetary support to encourage development of new technologies giving impetus to paperless digital lending and stronger collaboration within the lending ecosystem.”
“It is evident now that small businesses can benefit by expanding to online channels. This is because of two factors: i) business operations in a purely offline manner can be severely restricted and ii) customers are showing increasing preference for online shopping. Expansion of online businesses may not be easy for small business owners. Hence, they need to be encouraged to adopt the ways of the digital ecosystem. The Indian government has shown its inclination towards digitisation in various fields. Similar efforts and policy changes are needed to ensure that digitisation of small businesses happens in Tier 2/3 towns, tehsils, talukas, and villages. MSMEs from such places need support to embrace digital workflows, cost optimisation techniques, inventory planning, and new ways of providing customer service. There is a lot of potential that is waiting to be unlocked via innovative business models. Aligned to such models will be building of capacities and improving skills levels of small entrepreneurs. All of this will help insulate MSMEs from losses such as the ones they faced during lockdowns in 2020 and 2021. Further, this can also lead to higher employment opportunities for all kinds of skilled/unskilled labour.”
Vaibhav Singh, Co-founder, Leap Scholar
“The 2022 budget is expected to have a higher focus on the edtech sector as a whole, with significant investments to enhance greater access to robust and improved digital infrastructure. The GST for educational services is expected to be brought down to 5% from the existing 18%, to increase accessibility and feasibility for students from lower and middle-class families. With greater internet penetration, the upcoming budget is expected to announce various initiatives to accelerate digital innovation in the edtech sector.”
Amit Bansal, CEO, Solv
“We believe tech-led transformations in the Indian B2B ecommerce space need to be inclusive of India’s traditional distribution channel players who have supported the country’s large manufacturers for decades. With the success of GEM in the public sector, the next significant leap in digitising and growing the vital MSME sector, could come from establishing similar models through PPPs with pure-play B2B ecommerce marketplaces which create robust platform ecosystems. This will help the smallest of the players get a level-playing field to compete and establish credibility, as well as access a larger pool of customers, on-demand credit and essential business services – all without disrupting their businesses, livelihoods, and potential for growth.”
“Warehousing, a critical growth enabler of commerce, is currently a highly unorganised sector in India, with more than 90 percent of warehouses in the sub 10,000 sqft segment. Integrating & reviving India’s warehousing network through investment in a ‘national warehousing grid’ can help significantly increase capacity, leverage economies of scale, minimise wastage in perishables, as well as provide value-added services such as consolidating and breaking up of cargo, packaging, labelling, bar coding and reverse logistics. Developing the national warehousing grid as a plug-and-play ecosystem with easy access to MSMEs, will help eliminate several traditional growth blockers and rev-up the economy through a major uptick in both commerce, and generation of mass employment.”
Aditya Sharma, CEO, Affordplan
“The pandemic has shown us what improvements are required and where. The government commendably raised spending on healthcare by 137 percent last year, but the percentage of GDP spent on healthcare can still be increased significantly. This will be required to improve vaccine delivery as well as shore up critical healthcare infrastructure and public-private partnerships will prove key in this regard. Special attention should be paid to innovations that help households on the brink of poverty deal with their healthcare expenses, for both chronic as well as sudden or acute conditions. The recent Startup Day announcement is a positive first step for fintech and healthcare startups looking to provide ready solutions to these households”
Subhadeep Sanyal, Partner, Omnivore
“The pandemic emerged as an added challenge to the doubling of farmers’ income. I expect the government to bolster this objective via better credit availability, robust storage and logistics infrastructure and strengthening backward linkages. However, farm income is also intertwined with the deepening impact of climate change. Recognising India’s vulnerability on this front, the government can add to its efforts for finding long-term sustainable solutions. Incentivising private investments in agrifood life sciences is certainly a step in that direction.”
Anjali Bansal, Founder, Avaana Capital
“We expect continued support for the startup ecosystem in the form of higher outlay under the Start-Up India Seed Fund, for providing institutional support and boosting startup growth. Large scale deployment of public digital infrastructure, including the Ayushmann Bharat for Healthcare and the Open Network for Digital Commerce (ONDC) for ecommerce will provide the digital rails for new business models and start-ups to emerge. Start-ups innovating in priority sectors such as sustainability, climate, healthcare and life sciences typically face lower capital flows from the private market. Availability of pools of catalytic capital can enable these start-ups to produce technology-led solutions to core issues.”
“We also expect significant measures to promote the ease of doing business in India, including regulatory support for debt structures that are more suitable to the requirements of start-ups; rationalisation of GST mechanism for startups, who often end up paying GST at high rates under reverse charge mechanism; increased speed of IP and trademark approval; and reduced cost and complexity of regulations and compliance. Budget 2022 to continue supporting the mobilisation of domestic pools of institutional capital, that will increase the flow of investments in India’s thriving startup ecosystem.”
Mayank Tiwari, CEO & Founder, ReshaMandi
“The government has been lobbying for and supporting the traditional handloom and handicraft sectors over last few years; but it is necessary to look at creating a robust and healthy sector across full value chain, right from fibre, yarn, fabric, to apparels. There is a need to reinforce, encourage, and recognise natural fibre growers as an integral element of the agricultural economy. We need to achieve synergy between technology and public policy, as well as to propose relevant solutions to increase income and job prospects. There is strong optimism that the priority sector, which has not been explicitly defined, will be addressed, and standardised over the following fiscal year. In addition, the government must offer subsidies to private companies for the industry to flourish overall.”
Charu Noheria, Co-founder & COO, Practically
“The much-anticipated Union Budget comes at a time when we are introducing necessary reforms in the edtech space. Having a central body to regulate best practices in the education and edtech space will be largely beneficial for the consumers. Ideally, the budget this year should consider important factors such as stronger adoption of the blended learning model and investment in a stronger digital infrastructure beyond Tier I cities as well. Digitisation is expected to be an effective solution in bridging the literacy gap for our country. Additionally, for educational institutions and courses, the revision of the 18 percent GST slab will be largely beneficial in offering more conducive rates or fees to students. Being one of the youngest nations in the world, we are moving towards a brighter future and with some basic reforms in place, we will undoubtedly be one of the strongest countries in the world.
Kapil Makhija, CEO, Unicommerce
“Amidst the pandemic, ecommerce has become an integral part of India’s retail industry. India has the world’s fastest-growing ecommerce and SaaS markets. Both sectors have garnered attention from investors and companies across the globe. We are an ecommerce focused SaaS solution company and we expect that the upcoming budget should focus on increasing digitisation in Tier II+ cities of India. The young aspirational Indians from these regions have started adopting ecommerce extensively and if the government continues to focus on the infrastructure there is immense growth potential. Also, we expect that the government will further provide clarity on the tax obligations of e-commerce companies and brands as it will help them further streamline their operations. We also believe that logistics infrastructure will play a pivotal role and any reform in improving India’s supply chain infrastructure will help in further driving the growth of India’s ecommerce industry.”
Saahil Goel, CEO & Co-founder, Shiprocket
“We have a lot of expectations of support to the startup ecosystems which can really boost the economy. There should be a single window for all the relevant registrations like company incorporation, shop establishment, GST registration, MSME certificate etc. which will help save time, efforts, and money considerably. For startups, ESOPs are key to attract and incentivise talent, these should not be taxed on vesting as recipients do not have ready cash in the hands at that point, the taxation should be on the final sale of shares. Further, there is a deduction of TDS by the ecommerce operators on sale of goods, which leads to blockage of capital – that should be done away with.”
“India’s logistics cost are high. Steps towards subsuming petroleum products under the GST regime have been under discussion for long; these will reduce fuel cost and progress needs to be made in that direction.”
Kinner N Sachdeva, Co-founder & CEO, Knorish
“When Benjamin Franklin was thinking of a bright future for America, he decided to focus mostly on building the Public Library System. The gurukul system of ancient India was also based on the premise that the ‘Guru’ is the best source of knowledge and learning. As India stands on the verge of becoming a global powerhouse in all spheres, we are not just competing with ourselves but the world altogether. Today, the thirst for good learning content amongst students, lifelong learners and corporates is witnessing unprecedented growth. So, if we are to compete with the best in this global economy, access to learning that teaches new-age skills needed to survive and thrive in the 21st century must be made available to all. As such, I believe that GST on all online learning programs and enablers should be exempted from GST to make it more affordable for all.”
Shiv Sharma, VP International, Stocktwits
“Based on our social media surveys, most retail investors “avoid trading” during the Budget, likely because many own blue-chip, secular winners for the long-term. Meanwhile, active retail traders usually ride momentum on sectors expected to hear bullish commentary in the Budget session. This year our data shows retail investors expect renewable energy to see increased focus. Retail investors are also hoping for relaxing of Long Term Capital Gains Tax and clarity on crypto tax policy.”
Kartik Shah, CEO, Coldrush Logistics
“The logistics industry is dealing with non-predictable fuel prices, and its non-inclusion in the GST regime is already making it hard for companies in this space. This sector also has a higher CAPEX cost, making the liquidity cycle more stringent for businesses. Currently, the processed food segment is growing rapidly and needs reefer transport. But the GST on fully built reefer vehicles is 18 percent; thus, reducing it would significantly encourage businesses to invest in it and thrive in their journeys. Similarly, extending the subsidy scheme on these vehicles would also be a step in the right direction and help players operate more seamlessly without any financial burden.”
“Moreover, the central and state governments currently have huge unused land parcels at prime locations. These can be leveraged to create warehouses and cold storage. The government has also pushed for the use of solar in this sector. However, it is not viable for medium-level players like us. As a result, the government can incentivise this and explore other possibilities to make solar power duty-free for cold storage providers. This move will serve a bigger goal of reducing carbon footprints and building a sustainable ecosystem for businesses.”
Anil Nagar, Founder & CEO, Adda247
“The edtech industry has flourished at an accelerated rate as it broke new territory and entered Tier III and IV cities of the country. It will play a major role in educating our workforce for a better tomorrow. This is possible only if we make online education affordable to all. The government should support this through a lower GST, while focusing on creating a strong digital infrastructure to improve the quality & experience of online education for students in cities as well as remote areas. The government should also forge alliances with edtech companies to accelerate the learning outcomes with the help of cutting-edge technologies in the education ecosystem.”
Vivek Tiwari, CEO, Medikabazaar
“The pandemic exposed the deficiencies in our healthcare infrastructure and now it is imperative for the nation that the allocation to healthcare be increased and raised at least 2.5 percent of the GDP. This will help to ensure universal healthcare access across the country especially in Tier II, Tier III centres and beyond. There is a need for enabling policies that will boost and promote public-private partnerships in ramping up healthcare infrastructure and medical equipment manufacturing. Policies that encourage local technology-driven innovations in the field of medical devices are the need of the hour. This will also encourage increasing adoption of healthtech to access healthcare.”
“India has the potential to be a centre for R&D and manufacture of high cost medical equipment and reduce the import dependency. A long term plan to incubate and support innovations across healthcare delivery infra building, patient care, supply chains and advanced equipment manufacturing will help India bridge the structural gaps, generate employment and deliver healthcare as per the growing needs of the vast population of India.”
Madhusudan Ekambaram, Co-founder & CEO, KreditBee, and Co-founder, FACE (Fintech Association for Consumer Empowerment)
“The Union Budget 2022-23 is a crucial one, considering the economy’s efforts to fully recover and set on a growth path. In this imperative, focus on financial inclusion is very significant. The government’s recognition of the enhanced operations and effectiveness of fintechs to reach out to the unserved and underserved population, as evident from multiple initiatives in recent times, is encouraging. We expect this emphasis to become more prominent in the upcoming budget. It is essential that the government announce measures to ease the liquidity flow to NBFCs and fintechs. Further, while ensuring the right degree of regulation, relaxation of norms and tax liberalisation to some extent will allow the fintech sector to boost their reach and operate effectively to offer innovative credit solutions to the borrowers. Focus should also be on enhancing the country’s digitisation bid, to empower the consumers to avail various credit products.”
Varun Goenka, Co-founder & CEO, Chargeup
“Sustainable transportation needs have seen a lot of developments in the EV sector in India. However, the pace of growth is not adequate and it is expected that the government will declare the EV industry to be a priority sector in the Union Budget. So far, various companies have launched electric 2-wheelers with a focus on last-mile connectivity. However, with the growth of business and commercial activities, there has to be a greater emphasis on last-mile delivery. This year, we anticipate significant growth in the B2C as well as B2B segments. Food delivery companies such as Zomato are moving towards a 100 percent EV fleet for their operations, and some of the cities such as Gurgaon have declared EV-only zones. We expect the government to take policy measures to build more EV zones that will drive the adoption of such vehicles. Further, strengthening of initiatives such as infrastructure and financial support to EV manufacturing, charging and battery swapping service providers to augment operations are also anticipated in the upcoming budget.”
Sahil Chopra, Founder & CEO, iCubesWire
“Ever since the pandemic started, we have transformed our way to work and handling our business. From rapidly shrinking budgets to events’ going virtual to the new hybrid workforce, we have surely come a long way. Considering a lot more similar factors, this year we are expecting a major push in the digital marketing and advertising sector. From higher rates for digital media buying to challenges in bringing the right talent on board to engaging increasingly digitally savvy buyers, we have seen higher customer expectations and so considering it as a base we expect the government to bring new schemes that will eventually enhance the marketers skill sets to improve their team’s effectiveness without creating burnout.”
“Raising marketing budgets to pre-COVID levels (if not higher) will be crucial. A lot of entrepreneurs are hoping for relief measures in the form of credit lending. Subsidies at ground level will make entrepreneurs feel protected & safe. We also expect to see decisions to fuel the growth of startups in several domains. If the right incentives on both the marketers’ and consumers’ sides are announced in this budget session, it would push the quick and wide adoption of digital advertising and marketing.”
Akash Gupta, Co-founder & CEO, Zypp Electric
“India is undergoing a massive EV revolution – which will get a further boost in 2022 following the rapid growth of charging infrastructure and advanced EV models. We are optimistic that the government will announce new initiatives to encourage local EV manufacturing, facilitate easy finance, and create an innovative EV ecosystem.”
“With that said, we urge the government to reduce GST on EV purchases and rentals from 5 percent to 2 percent. A reduced GST would allow consumers to smoothly shift to EV. The Finance Ministry can also reduce taxes levied on loans taken to purchase an EV. GST reduction and tax benefits would play a crucial role in making EVs accessible to everyone. Additionally, the government can also subsidise electricity pricing for EV charging to further improvise the existing EV charging infrastructure.”
Arun Vinayak, Co-founder & CEO, Exponent Energy
“The government’s done a splendid job of supporting the EV ecosystem in India till date. However, there are a few areas they can address to further spur growth. Due to the inverted tax structure that currently exists (where EVs are taxed at 5 percent and battery packs alone at 18 percent). Several constraints are placed on new OEMs as well as the development of new models like Battery As A Service.”
“While the nodal and state level delegation of charging station deployment and policies around that make the process faster, infrastructure spending support for DISCOMS to support EV charging will accelerate deployment of charging stations across the country. The government has rightly introduced the PLI scheme to foster domestic production of Li-ion cells but the time taken to set up a cell manufacturing ecosystem will take at least three to five years. In the interim, reducing the import duties on Li-ion cells would greatly benefit EV startups to make EVs affordable and spur consumer demand.”
Edited by Suman Singh, Anju Narayanan and Teja Lele Desai
