Budget 2021 must pave way for startups to flourish

Last year presented business, economy and the government with unprecedented challenges. We saw a majority of startups face these challenges head on. But no doubt, the ecosystem has been under enormous pressure.

There is an urgent need for the government to lend some more support so that startups who weathered the storm continue to grow.

The upcoming budget has everyone expecting overall simplification in doing business. Startups more than anyone else. It is no secret that startups work on lesser resources and manpower to achieve the impossible. While the grit and determination of the entrepreneurs has always made things possible for them, the support from the government plays a crucial role.

Our government has played that part quite well so far and we expect this to continue. We would expect the FM to simplify and accelerate ease of doing business when it comes to the startups.

This is possible if we don’t look at meeting regulatory compliances in case of startups with the same lens as for the large corporates. More often than not, founders don’t even know they are not in compliance and are caught unawares when they get notices from the government.

GST concerns for startups

Another request would be simplify the GST regime for startups. GST as a one tax idea is a simple way of paying correct taxes and avoiding double taxation. However, within GST, the filings are complex, time sensitive and time consuming.

More so, the pressure on cash flows is immense and the delay in getting refunds is affecting startups. Again, this has to be made easier understanding the DNA of startups.

Closure of business is another complicated space

Failure is an inherent part of startup culture and the maturity in our ecosystem and has finally made failure acceptable where founders fail fast and move on. However, closure of the business takes them longer than starting a new venture. This has been a long standing demand of the industry and we believe this budget will be the right platform to address it.

Funding ecosystem to evolve

When it comes to funding, angels and VC act as the primary source for emerging companies. As compared to other global ecosystem like the UK and Germany, India still doesn’t give much incentive to angels and early stage investors which act as a deterrent for new investors to come into the fold.

Tax breaks and other such incentives can encourage more angels to either invest directly or through funds like ours and contribute more actively in building the startup ecosystem in the country.

Currently only companies in Indian bourses can opt for foreign exchange listing. But as we know listing norms in India have prevented startups from listing on domestic exchanges. Thus, we would request the government to relax foreign listing norms so that unlisted Indian startups can go for foreign direct listing.

This will help them raise funds from foreign markets and also provide liquidity to early investors. This has been approved in the Cabinet and the expectations have been built up for this to be passed in the budget.

Not passing it in the budget would provide a huge dampener to the industry.

Aatmanirbhar startups

Keeping in line with PM Modi’s vision to become Aatmanirbhar Bharat and “Vocal for Local,” the main buy-in has to come from the government itself. This budget should provide direction where a certain percentage of all government contracts are kept for startups.

If the government provides that initial support, startups across manufacturing to technology can turn into mega players in the global arena.

Startup Fund of Funds

Besides this, while one doesn’t doubt this government’s intentions to foster the startup community, there are implementation challenges while it comes to disbursing the already created Startup Fund of Funds. The challenges and the bureaucracy around these and other adjunct areas needs to be overall smoothened for providing the necessary impetus for the growth of the startup community and unleashing further the entrepreneurial spirit within the country.

(The writer is founder and Managing Partner, Unicorn India Ventures. Views expressed are personal)