Pre budget expectation: What entrepreneurs, startups and industry leaders want

Here is a small snapshot of different expectations and suggestions from startups and industry leaders:

Rajan Navani, Vice Chairman and Managing Director, JetSynthesys, and Chairman of the Confederation of Indian Industry (CII) National Council on Future Businesses

There has been unprecedented growth of digitisation driven by simplification of technology to achieve the same, consumer and business behaviour change and lower costs both for data and devices. This forms a base for adoption of emerging technologies in Artificial Intelligence that further drives digitisation creating a virtuous cycle for sustainable growth.

The entrepreneurial aspirations in India have also gained significant momentum led by initiatives like Startup India, Digital India and followed by the growth of incubators, accelerators and co-working spaces creating an enabling ecosystem to support startups. The one key expectation of startups from the budget is complete clarity and consistency on angel tax which has caused unprecedented levels of discomfort both for startups and angel investors.

If not addressed this can cause a complete collapse of initial financial support for startups to start thereby making the entire startup India initiative redundant. Global models in countries like UK and others give tax exemptions to angel investors and even reimburse 70% of their investment if the invested startup fails creating a very powerful incentive for risk taking for new and innovative businesses. Let alone an incentive, the angel tax taxes the startup on the share premium discouraging angel investors but more so completely paralysing the startup with having to pay taxes without even starting. All other expectations and incentives have taken a back seat in light of this large issue facing the entire startup ecosystem in our country.

Arun Balasubramian, Managing Director – Qlik India

Transformations ushered in by technologies such as AI, data science, and analytics have made information ownership the new centre of power. Recent policy discussions on issues such as Data Protection and Data Localisation highlight that the government realises the ever-increasing value of data. However, in order to create a level playing field for all stakeholders, it is just as critical to ensure that data ownership is decentralised.

To begin with, the government must look to increase public awareness about the need and impact of data by launching large-scale data literacy initiatives in association with leading domain players. Furthermore, it should look to facilitate the creation of a high-performing technology infrastructure that thrives on networked distribution. Implementing these measures can improve access to data for relevant stakeholders while keeping it secure and decentralised, thus enabling India’s transformation into a data-driven economy. Empowering the masses with information will, in turn, drive greater collaboration, innovation, equality, and progress.

Mayur Saraswat, Head of Digital, IT & Telecom Vertical, Teamlease Services

As we approach the fiscal budget for 2019-2020, there are major expectations from the government to bring reforms across sectors, especially as 2019 marks the election year. We expect this budget to focus on dedicating significant funds to various industries like e-commerce, IT and telecom and bringing reforms for better policy implementation. These sectors have witnessed a major policy overhaul in 2018 but there still much to cover in terms of augmenting industry growth. Multiple changes in the eco-system have also impacted growth and employment in the sector.

General Data Protection Regulation in Europe and continual changes in the H1B/H1B1 visa policies have increased the cost burden on IT companies thereby affecting talent acquisition, skill development and retention. It is crucial that the budget introduces some economic benefits for IT companies to continue their growth momentum and further improve hiring prospects.

E-commerce industry is another promising sector with job generation at 25% year-on-year. However the industry is gripped by high attrition. This is primarily due to the minimum wage gap as well as lack of PF/ESIC benefits which delivery executives (who constitute the majority of the workforce) face. The budget hence should also focus on allocating funds to improve wage/pay dynamics, quality of life and skill development of e-commerce employees. In addition to this, government must also work towards introducing skilling/up-skilling incentives for employees and employers which will enable the industry to become more organized. As the sector is consistently venturing into new markets (Tier 2 and Tier 3 cities), with the efforts of the government, scope of job generation and talent retention will improve in 2019.

Another sector which has witnessed remarkable endeavors by the government in 2018 is Telecom. With the implementation of National Digital Communications Policy, the government plans to connect rural India with 5G technology. This requires tremendous efforts towards strengthening infrastructure and distribution network which will in turn contribute to creation of jobs. The 2018-2019 budget must enable holistic infrastructural development to aid the industry’s growth and fulfil the Government’s Digital India initiative.”

Aprameya Radhakrishna CEO and Co-founder at Vokal and Mayank Bidawataka, Co-founder at Vokal

Startups are looking forward to abolish the so called ‘angel tax’ forever. It’s been a problem for both investors and startups. I am both a startup founder as well as an investor in startups. For most angels, investing is a way of paying it forward. However, you don’t want the hassle of going through some scrutiny just for investing a small amount in a startup.

As a startup, we don’t expect the government to tax us for having raised angel investment. Startups are employment generators. Startup investments need to be incentivized.

On the one side the government is trying to protect local businesses when it doesn’t allow FDI in multi brand retail but on the other hand they are discouraging local businesses and investors by levying startup / angel tax.

I hope the government removes the startup tax in all forms from the budget. There should be no ambiguity / subjectivity when looking at funds raised by startups. The onus is on the government to find ways to separate the few questionable transactions from the thousands of genuine startups.