Budget 2019: Key takeaways for startups

Budget 2019- First budget of a new government which secured a landslide victory in the Lok Sabha elections this year. With India being third biggest startup hub in the world according to a NASSCOM-Zinnov report expectations of the Indian startup community with this budget was really high.

With her maiden budget new Finance minister Nirmala Sitharaman somewhat delivered. There’s no doubt that this budget has put limelight on the startups.

Here are the biggest takeaways concerning startups from this budget:-

A new TV program for startups

Government will launch a startup exclusive TV program on Doordarshan. It is envisioned to serve a matching platform for venture capitalists and startups.

What’s interesting is that this program will be fully run by startups that includes the complete execution and designing of the program.

New incubators

Finance minister announced 80 new “livelihood business incubators” and 20 technology incubators. These incubators are likely to produce about 75000 skilled entrepreneurs in Agro-rural industries. This will be done under government’s flagship rural entrepreneurship focused ASPIRE scheme (A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship)

Standup India extended till 2025

With the aim to finance SC/ST’s and women entrepreneurs government launched standup India scheme back in 2016. This scheme provide manufacturing, service or trading businesses with a loan between ₹10 Lakhs to ₹1 crore, given that At least 51% of the business is owned by a women or an SC/ST individual.

This empowering scheme is extended till 2025.

Streamlining of labour laws

Soon companies don’t have to do multiple registration under several labour laws. Under the new provision only one Registration is required. Also one license for executing multiple projects with contract workers for a five year time period. Any establishment hiring more than 10 workers will be covered under the labour law.

Relaxation of Angel tax

“Funds raised by startups will not require any kind of scrutiny from the. Income tax department.” FM Said. 

Those startups and investors who will file necessary declarations will not come under scrutiny with respect to valuation of the share premium. Existing cases will also be closed. 

Also startups funded by category-II Alternative Investment Fund (AIF) are exempted from angel tax. This provision will provide enhanced immunity and loss bearing capacity to many startups.

Easing FDI rules

Government eased FDI norms in various sectors. This will have a direct impact on startups under these sectors and help them secure funding more easily.

Government has changed FDI norms in media, aviation, single brand retail etc. but the biggest boost was given to the insurance intermediaries where FDI limit is raised from 49% to 100%.

With all these provisions, startups was clearly an area of focus under union budget 2019. There are several welcoming steps taken to give startup ecosystem a boost but a lot needs to be done. More funds and efforts are needed to be drawn towards the startups and help is required for these startups to collaborate with corporates, develop skills and increase innovation.

Now let’s see how this startup friendly budget plays out at the ground level.