The alternative investment fund (AIF) industry and the startup ecosystem had much to cheer about the Budget 2022 presented by Finance Minister Nirmala Sitharaman in Lok Sabha on Tuesday. The Budget has proposed to set up thematic funds emulating the Fund of Funds, extend tax benefits to registered startups for another year besides announcing steps to boost the digital economy. The Budget has also proposed to set up an expert committee to suggest measures to review the regulatory framework for the venture capital (VC) and private equity (PE) industry, underlining the maturity of the ecosystem Here's what the PE/VC and angel fund managers and startup founders have to say about the Budget:
Renuka Ramnath, Chairperson, IVCA & Founder, Managing Director and CEO, Multiples
The Budget 2022 includes two important announcements for the industry: Our request to set up an expert committee as the apex body to evaluate the different regulations impacting the industry has been granted. Addressing the concerns of the industry will enhance the ability of the industry to bring more capital into the growing number of Indian startups and enterprises. The decision of the government to form thematic funds in climate action, deep-tech, digital economy, pharma and agritech is a revolutionary move to support innovation is a revolutionary step that channelising capital to sectors of innovation.
Mark Kahn, Managing Partner, Omnivore
Keeping up with the times, the Union Budget 2022 has made concrete provisions for technology adoption in agriculture. Promoting drone use for spraying and monitoring in agriculture will help scale up precision farming massively. Startups will play an important role in facilitating 'drone shakti' and NABARD's new agritech focused fund with blended capital is poised to help agri-entrepreneurs and millions of farmers via FPOs. Finally, we hope that the 'one station, one product' initiative can successfully decentralize the food processing industry by establishing units closer to the farm gate.
Anup Jain, Managing Partner, Orios Venture Partners
The Union budget has been very positive in recognising the role being played by tech startups in India's present and future. The biggest step towards removing an anomaly between taxation on capital gains from unlisted and listed shares has been taken with LTCG (long term capital gains) surcharge being capped at 15%. An expert committee being set up to examine ways to attract investments is the right step as India cannot grow to $5 trillion economy without more capital.
Bhaskar Majumdar, Managing Partner, Unicorn India Ventures
This Budget shows that technology enablement for transparency and roll-out at scale remains at the heart of the government. Every aspect of the Budget speech has this aspect in mind. At the macro level, this tech enablement as an integral part of governance will be a boost for all new age tech companies and would further enhance the environment of new age digital and tech companies Recognition of digital assets and bringing them under the tax structure is an excellent initiative as this would bring these in the mainstream. The tax on crypto/ NFTs will now make it legalised and users won’t be able to circumvent tax and other financial regularities.
Padmaja Ruparel, Co-founder, Indian Angel Network & Founding Partner, IAN Fund
IAN is glad that our demand for an expert committee to look at regulatory frameworks for the VC industry is addressed in the Union Budget 2022. This budget opens up huge opportunity for start-ups across defence, agriculture, drone, fintech and mobility sectors. The focus on digitization across sectors will lead the way towards innovation for start-ups. Introduction of digital rupee using blockchain and other technology will further boost opportunities for start-ups in India. We appreciate the FM’s empathy, in light of covid, by extending the period by a year for startups to avail tax incentives.
Gaurav VK Singhvi, Co-Founder, We Founder Circle
Indian startup industry has earned itself acknowledgement globally with funding on an all-time high, and unicorns shining on the stage. Now that the Budget has announced the establishment of an Expert committee for VC/PE funding, it is clear that the government has adopted a progressive inclination towards further boosting the growth of the startup industry. The expert panel will analyse the industry and guide the government to accordingly scale up the funding, form favourable policies, and nurture the segment at national level. We can expect a healthier credit line for budding entrepreneurs, and a better penetration in tier 2 and tier 3 cities reaching innovative businesses.
Nandini Mansinghka, Co-Founder and CEO, Mumbai Angels
The budget read more like an overview of the economy and its direction, with very few details. Most submissions for changes in the venture capital and private equity industries have not been addressed, with the promise of an executive committee to be set up for reviewing the rules. The one big announcement of course is the acceptance of digital assets as a reality with a 30% taxation.
Vijay Shekhar Sharma, Chairman, Managing Director and CEO, Paytm
The Union Budget today made way for digital rupee, which is a monumental step in driving the next phase of growth in the digitization of financial services and payments in India and will bring efficiency of transactions. Clearly, the success of digital payments is prompting the next milestone of this journey. Through the massive adoption of Paytm, QR code, and digital banking, we have seen that customers are ready for mainstream digital money. I'm excited that India will be at the forefront of new financial services that can act as a big gamechanger in lowering the cost of banking, which in turn will drive financial inclusion.
Byju Raveendran, Founder and CEO, Byju's
There is a significant jump of 12% in the budgetary allocation to the Ministry of Education. The government continues to approach education reforms with a digital-first mindset. Programs such as 'One class One TV channel' for supplementary education in school, DESH-stack for upskilling India's youth and virtual labs for developing critical thinking skills will go a long way in fulfilling the liberating vision of NEP 2020. I have always maintained that the digital learning gap is easier to bridge than the physical learning gap. The plan to connect all villages and their residents with optical fibre by 2025 is a welcome step in this regard. The proposed digital university with a personalised learning experience will make higher education more accessible and equitable.
Harsh Jain, CEO and Co-Founder, Dream11 and Dream Sports
We welcome the budget's focus on promoting start-ups and giving impetus to the digital economy. The task force for promoting the animation, visual effects, gaming and comic (AVGC) sector will provide the much-needed clarity and certainty for the fantasy sports and esports sectors by providing more upskilling and career opportunities for the youth to be a part of India's sunshine sectors. The rollout of 5G services will further accelerate the adoption of online sports engagement platforms and promote investments, innovation and wealth creation.
Falguni Nayar, Founder and CEO, Nykaa
This Union budget continues to reinforce the larger vision to enhance acceptance and usage of digital payments in India, especially with the introduction of the Digital Rupee. The allocation of Rs 1,500 crore to promote digital transactions and boost digital payments in rural and remote areas will be beneficial to the already booming online retail business. The move to focus on promoting the use of payment platforms that are economical and user friendly is especially welcome. New retail, as a trend, is being embraced by consumers and its potential is being recognised by all. The support offered through infrastructure creation will help build and sustain the momentum towards organised and technology-enabled retail.
Vivek Gupta, Co-founder, Licious
This has been one of the inclusive budgets of recent times. The FM announced a few tax structure changes, which is bound to bring relief to various sectors. The D2C sector gets a boost from the focus in fintech & digitisation. Bringing 100% of 1.5 lakh post offices under the core banking system is a step towards improved financial inclusion. I am also hopeful that the co-investment model, facilitated through NABARD to finance start-ups for agriculture and rural enterprise will unlock more opportunities there.
What the budget lacked this year is impetus to improve the fisheries sector, who have been poorly impacted by the pandemic over the last two years. Fisheries, in India, is a multi-billion dollars export industry. We are also a significant aquaculture hub. This sector needs more meaningful inventions from the government It will be great to see a boost in training, upscaling & solutioning through tech for this sector.
Sujeet Kumar, Co-Founder, Udaan
This is a very progressive, bold and growth-oriented Budget that lays the roadmap for Bharat’s next 25 years of growth led by a decisive Prime Minister. While focusing on growth the Budget also takes into consideration the interests of every section of society including the farmers. With economic growth as the central theme the Finance Minister has looked beyond exemptions to focus more on digitisation, infrastructure creation & promoting future tech – all key levers towards making India a $5 trillion economy by 2024-25. The incentives to further extend the existing tax redemption benefit for startups, surcharge on long-term capital gains (LTCG) tax capped at 15%, plans to fund agri-startups, and steps towards universalization of education, skill development and health are some of the major steps in this year’s Budget.
Ananth Narayanan, Founder, Mensa Brands
We were delighted to watch the Finance Minister acknowledging the contribution of start-ups to the growing Indian economy, followed by the roll-out of well thought through sops to encourage more entrepreneurs to set up shop, while incentivizing existing businesses with the start-up tax holiday being extended by one more year. Overall, the government seems determined to support the growth machinery - evident from the decision to form an expert panel to encourage more venture capital and private equity, following massive investments to the tune of 5.5 lakh crore in the sector in 2021.
Dilip Modi, Founder, Spice Money
The government’s proposal of setting up 75 Digital Banking units in 75 districts of the country and providing online fund transfer between post office accounts and bank accounts will help in adding further tailwinds to expand necessary banking services to the last mile and enable us to take a step further towards our goal of financial inclusion through rural empowerment.
Additionally, Finance Minister Nirmala Sitharaman’s announcement on the allotment of funds through NABARD to finance start-ups for agriculture & rural enterprises along with the plans to launch delivery of hi-tech services for farmers including the use of Kisan Drones is a great move towards the development of the agri sector as well as for supporting nanopreneurs.
Sandeep Aggarwal, CEO, Droom
There was a lot of mention of acknowledging the contribution of Startup companies. For automobile companies, the battery swapping policy for the electric vehicle once they are used for public transportation. This will indeed increase the adaption of an electric vehicle for the transportation industry.
Finally, this is consistent with the prior announcement of vehicle scrappage and now on EV and focus on developing a 25,000 km of road infrastructure in the fiscal year 2022-23 that will ultimately contribute to the higher adoption of automobiles in the country.
Kavitha Subramanian, Co-Founder, Upstox
"The Hon'ble Finance Minister has presented a digital-first Budget that focuses on quick, holistic, and inclusive economic growth. The focus on start-ups and fintech in this year's Budget is a fantastic step that will help these sectors grow further.
The introduction of 5G and the spread of optical fiber to villages would provide a boost to the Fintech industry. It encourages digital investment platforms like ours to expand their services, resulting in an increase in retail activity in Tier 2-Tier 3 cities and towns. The Central Bank Digital Money (CBDC) will help to enhance the digital economy by making currency management more efficient and less expensive. The capping of surcharge at 15% on Long-Term Capital Gains (LTCG) tax for all listed and unlisted corporations responds to a long-standing demand for new-age businesses.