Pre-Budget quote (Startups/ Fintech) | KreditBee
By Mr. Madhusudan Ekambaram, Co-Founder & CEO, KreditBee.
Union Budget 2023-24 is a crucial one, in supporting India’s sustainable growth. It is essential that the budget heeds to the progress of the startup ecosystem. Policy measures towards developing startup clusters, which promote easy access to capital, incubator programs, and federally funded R&D activities, among others will surely assist startups. The growth of the startup sector also depends upon clearer regulations and streamlining the process of obtaining licenses. There are certain benefits that are extended to the Inter-Ministerial Board (IMB) certified startups and not the DPIIT-recognised start-ups. The IMB certifications are difficult to get as 99% of Indian start-ups are not recognized by IMB.
Also, we hope that the government broadens the criteria for tax relief to startup employees to reduce the burden on taxation of ESOP sales. Measures towards incentivizing ESOPs with simpler and appropriate tax structures would help provide startups with significant wealth creation opportunities while also helping them attract and retain talent. Also, providing the requisite parity for capital gains tax treatment between unlisted and listed shares as investors in unlisted companies bear higher risk, will remove the complications with respect to classes of assets, tax rates and period of holding and indexation benefits. It will render the investments attractive for investors.
Further, we have witnessed certain bills related to IT and data protection being considered for rendering the digital ecosystem reliable and safe. Union Budget 2023 can lay down a good foundation toward providing a clearer path to bring in policy-level changes with respect to these bills. It will greatly contribute in enabling sustainable and accelerated growth of the digital ecosystem.
The Indian financial inclusion efforts have skyrocketed, recently. The Union Budget can provide crucial support in continuing this momentum with measures like reducing or eliminating the loss of input credit, providing liquidity support, access to cheaper credit, and encouraging co-lending. Further, expanding the scope of priority sector lending, extending to the new to credit customers in addition to the MFI and education domains will assist the financial inclusion imperative. Also, schemes towards improving credit access with cheaper rates will aid in this regard. These measures will certainly help NBFCs and financial institutions to extend effective credit to the underserved and unserved sections in Tier 2/ 3/ 4 regions.