2020 was an unprecedented year which saw the COVID-19 pandemic wreak havoc across sectors, and the startup ecosystem was no exception. According to Nasscom, 40% of Indian tech startups were forced to halt operations. Despite this, the year saw the emergence of 10 unicorns including Unacademy, Nykaa, Cars24, Dailyhunt among others. With Finance Minister (FM) Nirmala Sitharaman set to present the Union Budget on February 1, here’s what startups across the board are expecting.
The upcoming budget is expected to stimulate growth across sectors and establish a self-reliant economy by boosting domestic manufacturing, says Saurabh Kumar, Founder, Grofers, adding “We, at Grofers, are in line with the government’s vision of making India AtmaNirbhar by promoting Make in India initiatives and to do so, we are constantly working with small sellers and manufacturers. We have created a viable ecosystem to uplift their business, by bringing their goods in direct reach of our huge consumer base.”
Rohit Kapoor, CEO, Oyo - India & South Asia expects this year’s Union Budget to be truly reformative given the unpredictable circumstances around us. “With turbulent economic recovery trends, we expect further streamlining of regulations in the travel, tourism and hospitality industries to spur greater demand amongst domestic and international travellers for accommodations. We are hopeful of some stimulus package, uniform taxation, an extension of the moratorium period so that our small hotel partners can benefit from the required working capital to sustain these challenging times and thereby meet their operational costs, retain jobs and boost domestic tourism - an integral contributor towards India’s robust revival story.”
The year 2020 was tough for everyone but the worst affected segment has been SMBs (small & medium businesses) across the country as they were forced into lockdowns multiple times while their businesses were primarily offline, says Vaibhav Tolia, COO, Dukaan App. “Our expectations from the 2021 budget are to empower these businesses with financial support as well as weather-proof them from black swan events. Digital first SMBs can weather such events and thrive in the consumer economy which is quickly moving online. Regulatory framework and compliances need to be thought from a SMB perspective, making it easier for them to do their business digitally and not be dependent on large e-commerce providers.
Government should also focus on incentivising businesses that are willing to transition to the digital era. India has millions of entrepreneurs fuelling one of the fastest growing GDPs globally, digital first should become the precursor to Digital India,” he says.
Small businesses don't have resources to meet the tedious compliance requirements like GST, says Bhaskar Majumdar, Managing Partner, Unicorn India Ventures. “The government should ease rules and also offer support /exemptions to small and medium businesses from certain mandatory compliances. Overall, the budget needs to facilitate easy access to capital to businesses that are reeling from the after-effects of the pandemic,” he adds.
The focal point for startups is the availability of working capital, says Shivjeet Ghatge, CEO & Co-founder, StepSetGo, adding, “While according to Nasscom, the investment ecosystem is set to return to its pre-pandemic levels, if not exceed it, a mobilised framework for funding would be a great start that would increase the ease of inflow and outflow for foreign investors. Considering the size of the Indian software exports, we are hopeful that this year's budget increases the prioritisation of growth opportunities and incentives for indigenous, homegrown brands.”
Startups are an important component of the economy and would play a crucial role in driving it forward. “The cost to capital in India is apparently highest compared to other markets and a lot of paperwork and approvals are required that make the entire process very cumbersome. The government should make the process of raising funds and related procedures easier and less laborious so that startups, especially early-stage startups, could be at ease and feel supported,” says Harshit Jain, Founder & CEO, Doceree.
Harshil Mathur, CEO and Co-Founder, Razorpay says that while some industries have seen a bit of turnaround in the past few months, it is essential to have inclusive policies that will enable ease-of-doing-business in this new order, while allowing small businesses to prosper. “It would be desirable to have increased loan limits for unsecured loans, thereby helping small businesses have better access to credit and working capital. Hassle-free loan disbursements, automation of tax and compliance, paper-less approvals, and incentives to adopt digital banking practices will be critical changes to look for."
Amit Gupta, CEO and Co-founder at Rapyder Cloud Solutions feels that the government should extend credit facilities and provide means for new-age technology adoption to MSMEs (micro, small & medium enterprises) knowing that MSMEs are the biggest growth drivers to the economy and the second largest sector after agriculture.
“Rigid regulatory compliance and tax burdens should be revised, which can provide impetus for growth and expansion. This will increase hiring and businesses can largely contribute to the GDP. Revised tax policies, less complex GST structure and relevant policies that provide thrust for digital innovation can incentivise home-grown startups and brands. Such a solution can help MSMEs to operate in a more level-playing field which has MNCs and other established players,” he says.
“Specific to our category, coffee (and other daily use beverages such as milk & tea) impact the entire ecosystem of consumers. We are not a luxury product, rather a necessity almost. With the entire country being severely dispensed with challenges all through 2020, we expect the government to put more money in the hands of consumers - either through increased tax benefits as well as by creating many more entrepreneurial opportunities with bank support. Levista is keen to expand its presence through micro-entrepreneurship models where individuals can sell our coffee packs as well as ready-to-serve beverages,” says S Shriram, Vice President, Levista Coffee.
Anand Ayyadurai, Co-founder and CEO, VOGO believes that the mobility sector's outlook will be majorly driven by electric vehicles as the world is moving towards greener and cleaner transit solutions. “In order to drive this movement, we are hoping to see a reduction in GST on EV batteries from 18% to 5% along with subsidies on all electric vehicles including low-speed electric two-wheelers. This will not only support the manufacturers and service providers but will also reduce the overall cost of the vehicle for consumers.”
"For manufacturers, one of the key challenges on investments in the sector is the concerns regarding GST inverted duty structure. In order to minimise working capital blockage, the government should look at extending end use based benefits to the EV industry like lowering GST rates on raw materials, allowing inverted duty refunds for research and development and capital expenditure. Especially for startups like ours in their growth phase, offsetting inputs on such major expenses without being GST profitable is a big challenge," said Tarun Mehta, Co-Founder & CEO, Ather Energy.
The government has started realising the importance of new technologies like Artificial Intelligence and Machine Learning and has even called data as the new oil in the previous Budget 2020, says Gaurav Shinh, Founder and CEO at DAAS Labs. “The pandemic has been a huge boost to Edtech, AgriTech, FinTech, HRtech and HealthTech startups. So, we expect to see decisions to fuel the growth of cloud data storage, big data and AI technologies in several domains,” he adds.
Pankit Desai, Co-founder & CEO, Sequretek feels the time is ripe for the government to address the need for implementing cyber security mechanisms and if the FM can announce Indian cyber security mission, this will help tech startups to adopt a cyber security policy with a defined framework.
“As 2020 pushed businesses to adopt digital transformation, it was also a year of the highest number of cyber-attacks on Indian companies and even some government agencies. Indian startups are specially on the radar of some notorious threat actors. With respect to business growth, Budget 2021 should make efforts for startups of Indian origin to get a preference in procurement,” he adds.