The Indian government is expected to use the upcoming budget to revive the Indian economy amid concerns of a global slowdown and elevated inflation. The $3.2 trillion economy grew 6.3% from a year ago in the July to September period, more than half from the 13.5% expansion in the previous quarter. Taking into account that the Indian economy has begun to recover from the fiscal repercussions of the Covid-19 pandemic outbreak, the startups from the software services sector are hopeful that the current government will concentrate on designing a fiscal budget that encourages economic growth and aligns with the expectations of taxpayers.
“The Union Budget 2022–23 will be remembered by all of us as a landmark "digital budget" for some path breaking beginnings towards leading India into digital transformation. Startups will play a crucial role in the development of jobs all across India in addition to bringing a multitude of disruptive inventions to market. It is expected that entrepreneurs in the domains of robotics, SAAS, deeptech, clean energy, fintech, and digital health will create new industries and find solutions to some of the most difficult problems faced today." said Mainak Sarkar, co-founder and CEO, Explorex.
However, there are still a few expectations from the upcoming budget which if met, may boost startups further.
“Employee stock option plans (ESOPs) have long been ignored in India, but a growing number of start-ups success stories of teams who used ESOPs to accumulate wealth before going on to found their own start-ups have slowly begun to change that. Taxing the ESOP at the point of sale, and not at the time of vesting, is a longstanding industry demand. The PHD Chamber of Commerce and Industry has also requested the government to extend the scope of employee stock ownership plan (ESOP) taxation reforms to startups," added Mainak.
The sector also hopes that the government will further encourage digitisation of companies and 100% made-in-India software products. With respect to that, increasing the angel investor pool at the seed stage for Indian start-ups, offering a double-digit tax relief incentive percent of the cost of equity shares, will go a long way in supporting startups through a year which is anticipated to be difficult with all the global forces at play.