Union Budget 2023: 'For startups in India, winter chill arrived way too early'

India's growth is being fueled by entrepreneurs and innovators. Presently, the nation has 75,000 start-ups.  The approach has quickly and effectively steered India to grow into the third-biggest start-up ecosystem in the world over the last six-seven years.

Start-ups perform a vital role in the creation of employment throughout India, while also bringing a plethora of technological change to sectors. Startups that strive to expand operations end up creating a number of new vacancies across every state in the country and within each industry. Furthermore, India is gaining recognition as one of the world's most competitive business markets, and our pioneering mindset  is one of our strongest attributes. Premature companies raising capital find it challenging to create the credence required to progress from conception to commercialisation. 

With all that being said, there have been a few responses, suggestions, feedback, or preconceptions from investors. The following are a few:

Delphin Varghese, Co-Founder & Chief Business Officer, Adcounty Media said, “This funding winter came at a time when India became a serious contender to become the world's next startup capital. Now the question stands if the Budget of 2023-24 will offer a clarification on these policies to encourage investment in startups. Promoting entrepreneurship by funding startups which are high on growth potential, via Government programmes might also transform into a reality soon. Entrepreneurial education with the aim of improving employability through transfer of skill sets that are valued by the labour market might also be on the Government agenda.”

“For the startups in India, the winter chill arrived way too early when the startup funding hit an all-time low in the third quarter (July- September) of the last financial year. According to the PwC report, the startup funding in India was recorded to be $2.7 billion across 205 deals, which is the lowest in the last two financial years. This clearly reflects the increased selectivity in deal-making and an increasing focus on the profitability and growth of investments”, he added. 

Lokendra Singh Ranawat, CEO, WoodenStreet said, “Budget 2023–24 is anticipated to be beneficial for taxpayers with a focus on potential economic benefits.

In addition to that, the service class people can expect long-term benefits like medical healthcare, pension allowance, post-retirement, maternity benefits, etc., in the upcoming budget. Also, considering the fact that the Indian economy has begun to recover from the fiscal consequences of the pandemic crisis, the current government will concentrate on the main goal of planning a budget that encourages overall economic growth.”
 
He adds that “Being from the tech sector, we also anticipate that companies in the manufacturing space should be rewarded for bringing up the new technologies and adopting sustainable business practices.”

According to Mr. Ashish Aggarwal, Director, Spacemantra “For some time, the government has discussed allowing nationalised banks to use accumulated GST credit as leverage. There is absolutely no better opportunity to put this into effect and bring in liquidity now than before, considering the concerns of some other pandemic hindering humanity. Not only will this benefit SMEs and startups, however it will also allow banks to deploy underused credit limits from the previous two budgets.”

“A startup founders committee should be established in order to develop organised entrepreneurialism and finance education educational practices for universities in addition to encouraging the next generation of successful entrepreneurs,” he added.

Puhskar Limaye, Co Founder and CTO of Carnot Technologies said, “Agriculture is an industry that is witnessing unprecedented growth and yet there is so much more that can be done to ensure that it produces and profits at a massive scale. The upcoming budget needs effective regulatory policies on the Agri tech sector from the government. It is a sector that is ripening and many incumbent institutions and start-ups are investing in its growth. Traditional agriculture is plagued by obsolete data, lack of technology, market price volatility, ineffective supply chain, etc. The need of the hour is to begin looking at this industry as a business and invest in technology that can help elevate this mindset. Effective public-private partnership is key to resolving many issues. In cognizance of the importance of agriculture, there need to be provisions for organic farming, the inclusion of digital services for farmers, financial support for startups, facilitation to raise funds, etc.”

Back in 2020, the Indian government introduced the Press Note 3 (PN3) to curb opportunistic takeovers of Indian startups during the pandemic, bringing some FDI under the government approval route. With the budget of 2023-24, the government may ease some PN3 rules, thereby enabling better flow of funds. This budget must be a stepping stone for India to become a $5 trillion economy by 2025.