Pre-budget quote from W Health (HealthTech VC) & FloBiz (Neo-Bank)
FloBiz is India’s first neo-banking platform for small and medium businesses across India.
The quote from Rahul Raj, Co-founder, FloBiz:
“Union Budget 2022-23 will be remembered by all as a landmark “digital budget” for some pathbreaking beginnings made towards leading India into digital transformation. All necessary registrations, such as those for forming a business, opening a store, registering for the goods and services tax (GST), obtaining an MSME (micro, small, and medium businesses) certificate, etc., should be handled through a single window. That will enable MSMEs to make significant time, effort, and financial savings.
The government should promote manufacturing, consumption & export of Made In India products. Digitization will also help in widespread e-invoicing implementation and administration for SMBs, helping in efficient business processes and operations. At present, the GST, with the full input tax credit, is 18 percent for all software products produced and sold in India. This rate must be tapered down to support indigenous creators of software intellectual property (IP) in India.
Speaking of startups, they may find it easier to fulfill their daily working capital needs if the minimum alternative tax rate (MAT) for qualifying enterprises is reduced from 15% to 9%. This is especially true in the early stages.
Tax incentives for MSMEs adopting technology: Indian MSMEs are witnessing constant push from the government towards digitisation of business functions. In budget 2023-24, the government may also consider announcing a full-fledged integration of different portals, such as e-Shram, Udyam, etc. servicing MSMEs. Last year, e-invoicing was made mandatory for businesses with turnover above 10 crores. The government is expected to further reduce the turnover threshold to 2-5 crores. Further, the government may consider announcing tax incentives on expenditures associated with expanding and using new-age technology applications for operational and organisational purposes.
Targeted interventions to improve MSME credit: Announcements with respect to providing MSMEs with a flexible line of credit is one of the essential requirements. Existing mechanisms such as Factoring and TReDS have not been very successful in facilitating credit access to micro enterprises. Micro and small enterprises face severe short-term capital needs because of challenges in the supply chain and delayed payments. There is an expectation that the government in Budget 2023-24 may come up with different targeted interventions to resolve supply chain finance concerns. Further, it may consider providing an inclusive regulatory framework and ease in regulatory burden for NBFC-fintech partnerships involved in supply chain finance.
Neobanking framework in India: In Budget 2022-23, Finance Minister Nirmala Seetharaman announced the setting up of 75 digital banking units (DBU) in 75 districts by RBI-regulated banks. The step is aimed to enable access to the core banking services for rural markets and improve financial inclusion. The government may consider the NITI Aayog’s recommendation to issue a licensing framework for such digital banks focussing on creating niche solutions for specific underserved segments, such as credit products for MSMEs.
Credit guarantee schemes for MSMEs: In its effort to recover from COVID-induced slowdown, India has witnessed the significant growth in credit to MSMEs in the last two years. This was largely supported by incentives provided under the Emergency Credit Line Guarantee Scheme (ECLGS). In Budget 2022-23, the government may also think of revamping credit guarantee schemes, grants and subsidies to support loans originated by partnerships between RBI regulated entities and fintech entities.
Introduction of National Logistics Policy: The government may announce implementation of National Logistics Policy (NLP) in this budget, as introduced by PM Narendra Modi in September 2022. NLP has been framed with the objective to reduce the cost of logistics in India from current 14-15% of GDP to the global average at 8% of GDP. NLP aims to mobilise digitisation and data-driven capabilities for streamlining cooperation and support within India’s logistic sector and improve ease in movement of goods. NLP 2022 lays out an extensive multi-stakeholder scheme for the growth of the entire logistics ecosystem to solve concerns of high cost and inefficiency. In 2025, it was predicted that this industry will reach 380 billion dollars with a 10-12% CAGR.”
2. W Health:
W Health is a Boston-based health-tech focused VC that invests in and grows tech-enabled early-stage healthcare companies that are disrupting health care delivery.
The quote from Namit Chugh, Investment Lead, W Health Ventures:
“The increase in allocation of budget for National Health Mission (NHM) and launch of the ‘National tele-mental health programme’ in the last Union Budget 2022, was a step forward in the right direction. We expect this budget to increase the allocation for mental health and further build resilience of national mental health infrastructure, as well as incentivize strengthening of the talent pool of counselors and mental health professionals – to handle the massive mental health challenge we are facing. We need additional investment on skilling other healthcare personnel such as nurses and lab technicians as well.
On the digital front, now that a robust platform and infrastructure for managing digital registries of healthcare providers and patients is created, there is a dire need to boost adoption and accessibility. The government should allocate more budget for rolling out this initiative. The creation of longitudinal data for masses will unlock several use cases such as data interoperability, personalized healthcare recommendations, hyperlocal pharmacy data, etc. and will further accelerate India’s digital health agenda.”