Union Budget 2024: Four Important Startup-Related Announcements

Union Budget 2024: Four Important Startup-Related Announcements

As she presented the Union Budget 2024 in Parliament on Thursday, Finance Minister Nirmala Sitharaman unveiled a number of initiatives aimed at providing more support to India’s rapidly growing startup scene.

It is crucial to remember that this is only an interim budget; the final one will be unveiled after this year’s general elections.

Sitharaman announced the following steps to bolster the startup environment in her sixth Union Budget.

What are the benefits for startups?

A Novel Plan For The Deeptech Industry

The minister declared that a new program aimed at bolstering the deeptech industry for defense would be introduced. The new programme, she claimed, will accelerate the ‘Atmanirbhar Bharat’ goal of the Modi government. She also mentioned the necessity for the nation to implement programmes that harness the combined strength of youth and technology. Mayuresh Raut, Co-founder & Managing Partner, Seafund, told us that “the scheme for deeptech in defence will not only help the government start addressing the Make in Bharat initiative through indigenous technologies in defence but also unlock these technologies to other civilian uses.”

Sukhmani Bedi, a partner at Orios Vice President, continued, “India’s strategic embrace of scientific self-reliance is underscored by the budget’s impetus on harnessing deep technologies across both civilian and defense sectors.”

An EV Ecosystem Drive

Sitharaman declared that the government of India would give greater attention to encouraging the use of electric vehicles (EVs). By encouraging manufacture and establishing infrastructure for charging EVs around the nation, the government will fortify and grow the EV ecosystem. The FM added that a payment security system will be implemented by the government to encourage the usage of electric buses for public transit. “Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanism,” she stated.

Anil Joshi, Managing Partner at Unicorn India Ventures, responded to this news by saying, “The focus on boosting EV charging station will drive sale of both vehicles and charging infrastructure.”

“This proposed initiative will be crucial in achieving the Government’s net-zero emissions target by 2070, paving the way for a sustainable and greener future. It will concentrate on the adoption of e-vehicles, particularly e-buses for public transport.” Additionally, this will help EV startups grow and spur more innovation. Furthering the acceptance of e-buses is the introduction of payment security systems in public transportation networks. Ankur Bansal, Co-Founder & Director of BlackSoil, continued, “This strategic initiative will propel economic growth and help us popularize sustainable transportation in the nation.”

An Uptick in Private Sector R&D in Developing Industries

A fund of INR one lakh crore will be developed, according to the Finance Minister, to promote research and development in the nation. The corpus will support private sector research and development (R&D) in the sunrise sectors by offering long-term finance at “low or nil” interest rates over a 50-year period. “A golden age for the tech-savvy youth of India. Sitharaman stated, “A corpus of INR 1 Lakh Cr will be established with 50-year interest-free loans.”

Experts further state that the announcement of the approval of 43 crore loans under the PM Mudra Yojana, amounting to Rs. 22.5 lakh crore, is a significant move. It is anticipated that this significant financial assistance will encourage an innovative and independent culture among Indian youth and feed their dreams of becoming entrepreneurs. The government’s progressive stance and consistent support are much appreciated by the entrepreneurial community, according to Credgenics co-founder and CEO Rishabh Goel.

Extension of a Fewer Tax Breaks and Benefits

The Finance Minister declared that certain tax breaks and perks for new businesses and investments made by pension funds or sovereign wealth funds will be extended for an additional year. “As for tax proposals, I propose to maintain the same tax rates for direct taxes and indirect taxes, including import duties, in accordance with the convention. I do not propose to make any changes pertaining to taxation.” Nonetheless, on March 31, 2024, some tax breaks for investments and start-ups established by sovereign wealth or pension funds, as well as a tax exemption on a portion of specific IFSC units’ income, would expire. I suggest extending the deadline to March 31, 2025, in order to maintain tax continuity,” she stated.