Union Finance Minister Nirmala Sitharaman unveiled the Interim Budget for 2024 today, marking her sixth budget presentation. This interim budget, strategically presented ahead of the upcoming general elections, places a strong emphasis on youth and women empowerment, all while adhering to fiscal consolidation and sustaining capital expenditure. One noteworthy aspect of the budget is the lowered fiscal deficit target for FY25, set at 5.1% of the GDP. Importantly, there were no alterations to the existing direct and indirect tax rates.
“Entrepreneurship is vital for a country’s economic development. We have taken a number of measures for start-ups and they have borne results. India is now the third largest ecosystem for start-ups globally, and ranks second in innovation quality among middle-income countries,” said Sitharaman.
Impact on Startups:
Recognizing the pivotal role startups play in fostering innovation and economic development, the government has introduced several measures to support the startup ecosystem in India. As of now, there are more than ONE lakh recognized startups in the country.
The Finance Ministry, in its latest monthly economic review, said the Indian economy will become the third largest in the world in the next three years, with a GDP of $5 trillion from the current $3.7 trillion.
It also said India can aspire to become a $7 trillion economy in the next six to seven years (by 2030).
The Finance Minister, in her budget speech, highlighted the achievements of the startup ecosystem, noting that India is now the third-largest global ecosystem for startups and ranks second in innovation quality among middle-income countries.
The Finance Minister has recommended extending the time limit for specific tax benefits applicable to start-ups and investments made by sovereign wealth funds/pension funds. Additionally, the tax exemption for specific IFSC (International Financial Services Centre) units, originally set to expire on March 31, 2024, has now been extended until March 31, 2025.
Nurturing the entrepreneurial aspirations of the youth, the PM Mudra Yojana has sanctioned an impressive 43 crore loans. The MUDRA Yojana has disbursed an impressive 30 crore loans to women entrepreneurs, fostering financial independence and inclusive growth. Over the past decade, there has been a significant surge in women’s empowerment through entrepreneurship, resulting in improved quality of life and increased dignity preservation.
In the pre-election budget, Finance Minister Nirmala Sitharaman also highlighted this government’s achievement. Introduced in 2015, the initiative aims to provide loans of up to Rs 10 lakh to small and micro-enterprises, fostering entrepreneurship and economic independence, particularly among women, and contributing to the nation’s overall development.
The Government of India will also be focusing on expanding Electric Vehicle manufacturing as well as strengthening the supporting charging infrastructure as the country is moving towards the net zero emission target by 2070.
“As India moves towards its net zero emission target by 2070, the Government will work towards expanding and strengthening the EV ecosystem as well as develop the charging infrastructure,” said Finance Minister Nirmala Sitharaman.
The government is set to transition a significant portion of public transport, including buses, to electric vehicles (EVs) as part of its commitment to expanding the adoption of e-vehicles. Emphasized the push for electric public transportation, incorporating formal payment mechanisms.
Aligned with India’s net-zero target, Prime Minister Narendra Modi has previously outlined ambitious goals for electrifying the country’s public transport, aiming for a 30% share of EV sales in private cars, 70% in commercial vehicles, 40% in buses, and 80% in two-wheelers and three-wheelers by 2030.
Here is how the industry reacts:-
“Digitization is the backbone of this budget. Solar power in the remotest of villages will aid internet connectivity. Capex outlay of 11 plus trillion is a shot in the arm for the economy.
I am waiting for the day when we have a non deficit budget, and respite to the middle class with greater tax relief.”
– Shashank M., Angel Investor, Marketing Director, Fashion Entrepreneur Fund
“This Budget confirms the huge momentum & focus given by the Modi Government to the Startup Industry. The proposal to extend tax incentives for startups and investments facilitated by sovereign wealth or pension funds for an additional year, effective until March 2025, is much welcome.
For long-term financing or re-financing with low or nil interest rates, the corpus of Rs 1 lakh crore to be established with 50-year interest-free loan is also a robust move forward” says Tushar Kansal of Kansaltancy Ventures
“The interim budget looks promising for the startup ecosystem and new-age lenders focused on bridging the vast credit deficit for SMEs and MSMEs . The government’s bold step in establishing a 1 lakh crore corpus for emerging sectors is a beacon of optimism for the growth trajectory of early-stage startups. This year, we anticipate a significant boost for Cleantech and Agritech startups, propelled by an augmented allocation that surpasses the benchmarks set in the previous year.
The increased focus on funding Solar Grids and the National Green Hydrogen Mission underscores the government’s unwavering commitment to also advancing climate tech companies. This not only signifies robust financial support but is also an acknowledgment of the pivotal role startups in these sectors will play in steering us towards a more sustainable future. The anticipation of a surge in climatetech and cleantech startups in the upcoming years creates a ripe landscape for cash flow-based financing models, presenting a greenfield opportunity for alternate-financing companies including fintechs and NBFCs.
Moreover, the spotlight on reforms for MSMEs is a commendable stride toward fostering inclusive and sustainable development. These initiatives not only strengthen the roots of our homegrown businesses but also fortify their global competitiveness, aligning with the vision of making India a Viksit Bharat by
2047.
In essence, the interim budget heralds a discernible upswing in the startup ecosystem. We are optimistic that startups, armed with these transformative reforms and policies, will leverage them strategically to scale new heights on their growth journey.”
– Bhavik Vasa, Founder, GetVantage
“Today’s Honorable FM Budget speech left me wanting more for the forthcoming year. While there was a comprehensive recap of past achievements, there was a noticeable absence of concrete measures for startups, founders, and investors. The emphasis on macro measures such as EV adoption in public transport, increased focus on tourism, rooftop solarization, and infrastructure development is appreciated, as it indirectly benefits startups in these sectors. However, there was a missed opportunity to outline specific initiatives and incentives to foster innovation and entrepreneurship. Looking ahead, we hope for a more targeted and supportive approach to fuel the growth of the startup ecosystem in the coming year.”
– Mr Yagnesh Sanjharka, Founder and CFO 100X.VC
“The 1 lakh crore for innovation aligns the government with entrepreneurial priorities, reshaping the tech startup landscape and addressing a historical funding gap for deep research. This marks a pivotal change, as limited funds earlier restrained the focus on deep tech. Over the next few years, an emphasis on deep tech and research will complement the allocated corpus, driving significant advancements in the future.” – Saloni Jain, Founding Partner, Sunicon Ventures
“The establishment of a 1 lakh crore corpus with 50-year interest-free loans for sunrise domains is a visionary move by the Government of India. This initiative reflects a strategic focus on new-age technology and research, showcasing a commitment to fostering innovation. I believe this substantial investment, especially directed towards startups in sunrise sectors, will play a pivotal role in propelling the country forward and fostering technological advancements.” – Dr Dinesh Singh, Co-Founder and Director, FAAD Network
“With an interim budget, the government was able to ensure continuity and stability with the extension for tax breaks on sovereign wealth funds, and exemption for businesses housed in the International Financial Services Centre at GIFT City as well as extension of tax rebates provided to early stage startups.
With a dedicated corpus of 1 Lakh Crore at low to nil interest rate loans for the ventures building in the space that require intensive research & innovation. This will create an impact of high end innovation being introduced in India in the years to come.” – Nischaiy Pradhan, Partner at Favcy VB
“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. Deeptech focused funds like ours will definitely benefit from enabling initiatives like this.
The solar rooftop schemes will be a big boost to not only meet our goals for clean energy, but will also set up India to start addressing the EV charging infrastructure that is currently holding back wider adoption of EVs. It will also create enormous jobs for installation, manufacturing and maintenance of solar infrastructure and a secondary effect will be opportunities available for startups to build on this.
Extension of tax benefits for sovereign wealth funds expiring on 31st March 23 to 31st March 25 is a good signal from the government to indicate that there will be continuation of beneficial policies and friendly institutional investor policies”
– Mayuresh Raut, Co-founder & Managing Partner, Seafund
“As a startup accelerator founder, I view the Interim Budget as a nod to the entrepreneurial spirit that fuels our nation’s growth. While it maintains stability with no major tax changes, I’m hopeful that the government’s acknowledgment of the startup ecosystem signals a commitment to fostering innovation.
The focus on digital infrastructure and R&D is promising, aligning with the core values of our tech-driven ventures. The allocation of a dedicated fund for women entrepreneurs in this interim budget is a laudable step towards fostering gender inclusivity in the entrepreneurial landscape. This financial commitment not only acknowledges the untapped potential of women-led ventures but also empowers them to overcome traditional barriers. With increased access to capital, mentorship, and resources, women founders can catalyze innovation and contribute significantly to economic growth. As we await detailed policies, I’m optimistic that the government’s trust in startups will translate into tangible support, catalyzing our journey.
This budget reflects the symbiotic relationship between the state and startups, emphasizing the crucial role we play in shaping India’s economic future. Let’s leverage this foundation to propel our ventures into a future marked by innovation, resilience, and collaborative success.”
– Manas Pal, Co-Founder, PedalStart
