Thiruvananthapuram: Union Finance Minister (FM) Nirmala Sitharaman in her debut budget has unveiled a slew of incentives which is expected to encourage the ‘entrepreneurial spirit’ in the IT and startup ecosystems across the country. Some of the major announcements made by the FM for startups include relaxations in angel tax, easing of rules governing foreign
Thiruvananthapuram: Union Finance Minister (FM) Nirmala Sitharaman in her debut budget has unveiled a slew of incentives which is expected to encourage the ‘entrepreneurial spirit’ in the IT and startup ecosystems across the country.
Some of the major announcements made by the FM for startups include relaxations in angel tax, easing of rules governing foreign direct investments into startup segments like grocery, e-commerce and food delivery, a host of encouragements to the digital payment ecosystem that would help fintech startups, incentives for electric vehicles to help EV startups, and a TV programme exclusively for startups.
A host of incentives for startups announced in the budget speech by Nirmala Sitharaman, Union Minister for Finance, are expected to provide a major boost to ‘entrepreneurship’
Experts close to startup circles in the State believe that the budget proposal to relax angel tax will benefit the startup ecosystem in the State, especially ‘Kerala startup fund-of-funds’ using which Kerala Startup Mission (KSUM) is raising capital for investing in new companies.
The minister announced 100 per cent Foreign Direct Investment (FDI) in single-brand retail and proposed curbing of norms stipulating 30 per cent local sourcing. The move is expected to benefit startups in the FMCG sector. Besides, she has also proposed 100 per cent FDI in insurance intermediaries, a proposal which could spur startups in the insurance sector.
Sitharaman’s budget also promises to set up 80 ‘livelihood business incubators’ and 20 tech business incubators in the current financial year. According to the government, the incubators will help create 75,000 skilled entrepreneurs in various sectors.
The Union Budget has also announced several measures to streamline labour laws, education and rental housing segments. The Finance Minister said labour laws will be modernised into a set of ‘’four labour codes” in order to “standardise registration and filing of returns and reduce disputes”.
The ‘Stand Up India’ scheme, launched in 2016, to support entrepreneurship among women and marginalised segments of society, will be further extended during the entire period of 2020–25. “To further encourage women entrepreneurship, Women SHG Interest Subvention Programme will be expanded to all districts of the country,” the Minister said.
In a stimulus to the Electronic Vehicle manufacturers and dealers in the country, Sitharaman proposed a reduction in goods and services tax (GST) and income tax rates applicable to electric vehicle manufacturers.
In her budget speech, she also added that startups will not be subjected to unwarranted scrutiny in respect to share value premium. A mechanism will be implemented for e-verification of startups. The budget also proposes to exempt startups from justifying fair market value of shares issued to investors including Category-II AIF funds and funds for distressed assets, sheilding such funds from I-T scrutiny.
Following a press meet after the Union budget presentation, the Finance Minister highlighted the role played by Thiruvananthapuram-based startup, Genrobotics, in helping put an end to manual scavenging. She said the government would provide financial assistance for acquiring robots to stop manual scavenging, and Genrobotics, which is the only manufacturer of manhole-cleaning robots in the country at present, will stand to gain much.