The countdown has come down to just a few hours for the announcement of the Budget 2020 by Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman. This year’s budget is drawing global attention as plans that would fulfill India’s aspiration of becoming a $5 trillion economy will be brought to fore.
Voice&Data collated some opinions from a few select startup entrepreneurs who shared their view-points on what the Government must consider to achieve its $5 trillion-economy plan.
Addressing skill gap and generating employment opportunities – the foremost demand
Employment generation, coupled with improving employability has been the priority of the Government, says the Economic Survey 2019-20.
The government has always proposed tall plans but what matters most are actionable results. There are still several unfulfilled promises from the last year’s budget. The startup community anticipates that this year the budget would hopefully fulfill their demands.
A few opinions that matter:
Praveen Agrawal, Managing Director, OakNorth India
Despite its strong fundamentals, the slowing economic growth, rising inflation, subdued consumption, and job creation are just some of the key challenges currently plaguing the Indian economy. One way to overcome these economic headwinds is to empower startups, particularly Fintechs, that help create a culture of entrepreneurship and innovation, facilitating sustainable economic growth and generating large-scale employment opportunities. The fintech landscape in India has been expanding with businesses popping up in the fields of payment applications to alternative lending. This rapid growth of the industry needs to be supported by its main stakeholders – which are governments and regulators, financial institutions, incubators and accelerators, and finally the users.
Startups not only fuel employment, but they also help in creating a skilled workforce. While the government pushes for higher employment figures through policies, and large corporations struggle to create jobs in an adverse economic environment, it is the startup ecosystem that has emerged as a ray of hope to fulfill the employment aspirations of the country. In today’s technology age, it is evident that most of the innovation will be seen from startups rather than larger established companies. All policies that facilitate this innovation will drive India’s future growth.
To foster a spirit of entrepreneurship, we hope that the government in its 2020 budget brings game-changing reforms that offer relief and tax sops to the startup ecosystem. We expect the budget to ease regulatory norms as startups currently must go through numerous compliances that are put in place by various regulatory bodies. We hope budget 2020 will continue with the momentum started with ‘Start-up India’ that enabled self-certification, income tax exemptions, rebate in filing patents for new companies. We expect that this year’s budget will see the government introduce policies that will help startups collaborate with corporates and the academia to nurture further innovation, drive skills development and create employment opportunities for the country’s youth. This could include strengthening science and technology initiatives, streamlining disbursements for startups, facilitating advanced R&D infrastructure, and providing tax incentives to fuel innovation. Additionally, an increase in personal income tax exemption limits should spur demand and consumption, providing a much-needed stimulus to the Indian economy.
Vikram Pawar, Cofounder and CEO of Techchefs
The Indian Startup Ecosystem is bustling with innovative concepts – a combination of tech and non-tech start-ups. The most visible challenges for these startups are go-to-market strategies and scaling-up. With the Modi government promoting Make in India, its time they mandate all Govt establishments to use the innovative technologies the start-ups have created. Another way the government can give a fillip to the start-up ecosystem is to invite young, budding entrepreneurs for a public-private partnership to address some of the pressing issues affecting the common man. The setting up of an Rs. 10,000 Crore Fund of Funds and establishing an India start-up fund of Rs. 1,000 crore for technology start-ups will go a long way in fuelling the image of Make in India in true spirits and promote the start-up ecosystem with the faith that Government is a partner in innovation. Relaxation in regulation for foreign VC firms to invest in Indian start-ups will further boost tech start-ups.
Kavita Mehta, Founder, Caymus Technology Ventures
The National Skill Development Mission aims to train a workforce of over 700 million over the next 5 to 7 years. However, the country doesn’t have the learning infrastructure to handle this type of volume. As such, adaptable and inclusive learning platforms become critical to delivering against this promise. The government could offer a tax break to private organizations that are creating products and services that help millions become more skilled and therefore contribute to the country’s growth.
Swanubhuti Jain, COO, JIIF
The startup sector, on the other hand, is looking for measures to boost the startup ecosystem including improving access to funding, boosting digital infrastructure and providing tax relief to incubators. The move to exempt startups of angel tax must be followed by further measures to improve ease of doing business and remove unfriendly tax burdens. Regulation of the digital economy and privacy laws must also be on the agenda. allocation of funds in building infrastructure and development should be in alignment with geographies where maximum tax is collected.
Lalit Gupta, Managing Director, Spectra Televentures Pvt Ltd
The Telecom Industry contributes over 6% to the India GDP collection, and thus the survival of it is imperative to the rise of the Indian Economy and creating new job opportunities in the country. The sector is not only paying between 30-33% of their revenue in the form of taxes but is also under the pressure to pay off the loans within a small timeline. If the telecom industry has to survive from this critical scenario, then the government should extend the return timeline for the spectrum purchase, and increase the moratorium period to 4-6 years and payment period to 18-22 years. Also, since the Fiberization is another big need for the augmentation of the Indian telecom infrastructure, the Government should waive off all the taxes on Right of Way.
Vivek Kumar, MD, Springboard India
An upskilling fund is the need of the hour today to battle the skills gap created in India by emerging technologies such as AI/machine learning. Every employer should be mandated to provide a learning budget to help their employees continuously upskill and this expenditure should be reimbursed to the employer through the upskilling fund disbursed in the form of a tax rebate. A corporate obligation towards upskilling incentivized by the government will ensure that human resources in the country is skilled in emerging technologies / hot skill areas while energizing the workforce and eliminating any and all fears for the future.
Manoj Agarwal, Co-founder and Chief Product Officer, Xoxoday
The Indian economy requires some fundamental economic/fiscal/monetary initiatives which can help its growth in a tremendous way. The budget needs to bring a long term sustainable stimulus to the Indian economy. Some of the key expectations are below
- A stable policy structure that brings confidence and trust from stakeholders. Reduce volatile decision making which reduces investor confidence in the economy.
- Boost for job creation through growth in key industries that have seen a downturn in the past few years like Automobiles, Telecom, Metals, BPO, etc.
- Simple and friendly taxation environment which helps in consumer and industrial spends. An increased spend ll increase tax collection, rather than increasing tax per person or per product/service; govt should look at increasing the output itself which will give more tax collections.
- Startup India has been a good initiative. However, the government can bring more execution in the policy framework and relax it to cover slightly more mature start-ups. This will help to build a lot of new companies and jobs because these companies ll emerge out of these mature start-ups. The government can bring policies for both early-stage and mature start-ups as both are important for the economy.
Ninad Vengurlekar, Co-founder, Utter
A lot of Indian VCs tend to be risk-averse as compared to a global VCs. As a result, there is a tendency to fund copycat startups, while genuinely original and innovative startups get neglected. This is the reason why India has rarely been able to churn world-class product startups and IP based platforms for the world. Therefore, rather than offering money to VCs to fund startups of their choice, the government should earmark part of the funds for funding specific areas like EVs, Rural Innovations, Urban agriculture, etc. This will compel VCs to look for such startups and help them scale globally. The government can even underwrite a certain portion of funds to offer partial risk protection to the VCs, so that they could take the risk to fund lateral ideas.
Suresh Ramanathan, Dean, Great Lakes Institute of Management, Chennai
We are seeing global headwinds buffeting the Indian economy, caused by uncertainties in the energy sector due to the USA-Iran imbroglio, and both bilateral and multilateral trade disputes between the USA, China, and members of the World Trade Organization (WTO). These pressures, together with softening in consumer spending and a manufacturing slowdown have led to the IMF projecting a much lower rate of GDP growth for next year. I would be keen to see the Honorable Finance Minister provide for the following in the upcoming budget session:
Stimulate rural spending through aggressive promotion of rural employment, improving rural productivity and investing in infrastructure. It is not enough to provide populist sops such as middle-class tax cuts without also providing for more inclusive growth in the rural sector.
Make it easier for home-grown startups and further reform the “angel tax” process that chills the entrepreneurial spirit and leads to the flight of capital to other, more start-up friendly countries.
Provide a massive fillip to innovation, especially in areas related to Industry 4.0 such as IoT (Internet of Things), AI (Artificial Intelligence), and ML (machine learning). Substantial and sustained investments in incubators and accelerators, coupled with an emphasis on making solutions relevant for all sections of society via social entrepreneurship initiatives is the need of the hour. Reduce corporate taxes, but ensure much better compliance by using technology to better predict tax avoidance and default probability.
Subrat Mohanty, Group President, MEMG
To realise the dream of a USD 5 trillion economy, the workforce would have to be trained into several new-age skills. The government should consider a tax break for investment in skilling. This would encourage the workforce to reskill/upskill in newer job roles. In order to have a trained workforce, the student, employees and educational institutions have to start investing in skilling and the government should streamline and incentivise this investment.
Educational institutions should be encouraged to have specific job/skill related programmes in their curriculum to promote industry readiness. There should be a metric on the number of skill-related programs a student has undertaken with certification rather than being awarded just another degree
The government can promote such initiatives in colleges/universities by providing an incentive to those institutions that offer UGC/AICTE approved certified programs in new-age skills.
Gaurav Vohra, Co-Founder and CEO, Jigsaw Academy
With an army of approximately 1.2 million people looking to enter the job market every month, it becomes the government’s priority to ensure that the economy is ready to tackle this challenge of employment. Emerging technologies like Cybersecurity, IoT, AI, and Big Data is a burgeoning market and is significantly adding to the job market. Technology is constantly evolving and being obsolete is not an option in the current scenario. Allocating funds for upskilling in these domains would be a step in the right direction to help people fill these niche roles. Encouraging ventures in these sought-after domains will be a rewarding initiative.
Subramania Raju Rajasulochana, Assistant Professor, Area of Finance and Strategy, TAPMI
High and rising unemployment among rural youth requires immediate attention from the Government to stimulate the slowing Indian economy. Education and sustaining skill development is crucial to boost employment in rural areas in both agricultural and non-agricultural sectors. This is, however, a long-term outcome that requires a holistic approach in terms of investment in physical infrastructure, filling in all regular vacancies along with appropriate pay structure and improved governance.
Mansij Majumder, HR Head, Manipal Global Education Services (MaGE)
We need to focus on skilling and/or reskilling workforce. A dedicated provision in the budget for encouraging upskilling programmes within the talent ecosystem for employees who are being retrenched/laid off should be made. The Labour Code on Industrial Relations Bill 2019 requires further impetus from the government with an increase in funds to enable its seamless implementation. It is also time to look at introducing the concept of fair wages, rather than minimum wages, this will, in the long run, raise the standard of consumption and living in the country.”
Sudhanva Dhananjaya, Secretary NIE Society (The National Institute of Engineering, Mysore)
The challenge in front of the Govt is to create jobs, and to put more money in the hands of the people. Financial resources not being available at this stage, they have to borrow more or print money. Either of the options will increase inflation. The GDP growth could become as low as 4.5 % in case of some the recent updates from sources like Bloomberg etc. It is a Catch 22 situation, unless the Government comes up with novel ideas, in addition to proceeds from selling stakes in public sector assets like Indian Oil Corporation, AIR INDIA (No buyers in the first round because a high price. The government has to find some creative ways to avoid stagflation.”
Need for an increased impetus on strengthening digital infrastructure
Redickaa Subrammanian, Founder and CEO, Resulticks
The Government has been pro digital since the beginning on the back of which India has rapidly emerged as high growth digital economy. We expect the upcoming budget to further propel this growth trajectory. As a fast growing AI and ML based technology start-up that helps businesses catalyse growth through real time customer engagement and acquisition, we hope that the budget will introduce policies that would induce companies to adopt digitisation across all aspects. Administratively, we hope processes to get even smoother for entrepreneurs to do business and investors to invest in India. We are entering a new era of technological disruption and expect the government to leverage this thoroughly through investments in initiatives on artificial intelligence, machine learning, blockchain and the internet of things as well as relevant skill development.
Kazim Rizvi, Founder, The Dialogue
We hope that the government comes out with greater incentives to industry and startups to revive economic growth in India. We need the middle class to increase its consumption and therefore income tax benefits would go a long way to incentivise people to spend more, thereby increasing the circulation of money in the economy. Reducing corporate tax in 2019 was a good welcome step forward, but it’s imperative to provide a more conducive economic environment for investors to place their bets in India once again.
Neel Juriasingani, CEO & Co-founder, Datacultr
We are optimistic that with this Union Budget 2020, the government will come up with some major policy and structural reforms towards strengthening their key programs – Digital India, Startup India. The upcoming budget needs to emphasize the importance of better digital infrastructure by improving internet connectivity in rural areas and establishing centers of excellence for research & training”.
We are hopeful that the upcoming budget will have policies and recommendations that will further strengthen the ecosystem. We also expect that this time the union budget will push institutions to disburse more funds to tech start-ups that are in the space of financial inclusion and aim to have an impact with disruptive technology at the bottom of the pyramid
Pankit Desai, Co-founder and CEO, Sequretek
Right now, most of our customers are in a hunker-down mode not willing to take long term bets especially in discretionary spend areas like cybersecurity. As an entrepreneur, we would be watching keenly on confidence-building measures that the government comes out with for improving the business sentiment, which should hopefully trigger the increased spend cycle.
Lakshmi Mittra, VP – Center of Excellence (CoE) and Clover Academy, Clover Infotech
With initiatives such as Skill India, the government has taken great strides towards training the young talent. India has a significant young population of more than 800 million. New-age technologies are disrupting business models and creating numerous opportunities for the youth. However, there’s a considerable gap between what is taught in education institutions and the actual skills required by the industry. The government should introduce measures to empower institutions that are proactively working towards bridging this gap and creating highly skilled human capital for the country.”
Kushal Nahata, CEO & Co-founder, FarEye
The existing government has always been supportive of digitalization. Having said that, it will be welcoming news if the government plans to invest more in digital infrastructure to enhance connectivity in the rural parts of the country. Connectivity is extremely important to ensure logistics visibility and mitigate transportation risks. A greater focus on mandating the digitalization of certain key accounting, billing, and logistics processes are also needed to boost compliance and tackle corruption better. Another important reason as to why this budget should focus on and invest in digital technologies is ensuring greener logistics practices. Modern logistics management tools can empower businesses to drastically reduce fuel consumption and hence shrink their carbon footprint.
We are expecting that the government will initiate further investments in the National Centers for Artificial Intelligence and AI hubs that will help the startup ecosystem garner the benefits of these technologies. Besides, we also expect the government to expedite the development process of projects like the Dedicated Freight Corridor (DFC).
Sameer Nigam, CEO &Co-founder, Stratbeans
2020 promises to be a huge year for digital transformation across industries. With the Union Budget set to be announced, we expect the government to introduce measures to provide the MSMEs sector a fair and equal opportunity to participate with large organizations. A level-playing field could be created by tax incentives.
The government should also consider lowering the rate of GST on eLearning and eLearning creation software to reduce the input cost of digital transformation projects, which are a key component of industry 4.0 initiatives. This will also make E-learning and video production software more affordable to a large number of consumers and create a higher growth rate for the gig economy in this sector.
Another key step that the government can take is to allot budgets for conducting Expos and trade shows for the IT players wherein we can showcase and pitch our tech services to Indian as well as global companies.