Union Budget 2014 Fuels the Entrepreneurial Spirit in India
For years, Indian SMEs and start-ups have been complaining about not getting enough government support. But the Nda-led government has created a history by announcing the splendid finance bill for the betterment of entrepreneurs in India.
Many discussions had been taken place in the past few decades about the significance of entrepreneurship in India’s economy. But the question is – whether entrepreneurs in India are getting required attention from the government. Start-ups in India are still going through lots of hurdles like the lack of SME friendly policies by the government. Finally, the Union Budget 2014 has brought smile to the Indian SME sector with Finance Minister Arun Jaitley proposing a slew of funds and measures to promote entrepreneurship and SME sector in India.
Key Budget Highlights for Start-ups and SMEs:
Finance Minister Arun Jaitley proposed Rs 10,000-crore fund to support the emerging entrepreneurs in India. As per Jaitley, this fund will be a windfall to provide equity, risk capital and small loans to start-up companies. In the Union Budget 2014, Jaitley also highlights the challenges faced by start-ups in raising the seed capital from venture capital (VC) firms. So this fund is meant for those Indian start-ups that are deprived of the VC funds.
Saurabh Srivastava, Co Founder and Director, Indian Angel Network, says, “We applaud the government’s strong focus on the entrepreneurial and investment landscape in the country. The Union Budget’s key announcements for Rs 10,000 crore fund for the MSME sector was recommended by the IAN-led report and is a very good news for the creation of conducive entrepreneurial ecosystem in the country. Other welcome announcements are the special focus on technology product start-ups and Rs 100-crore investment in ‘Startup Village Entrepreneurship’ scheme. These steps will help a great deal in boosting and nurturing the entrepreneurial ecosystem in the nation.”
“We are disappointed, though, that the so called ‘Angel Tax’ has not been dealt with, which prevents business angels (successful entrepreneurs/business leaders who invest their own money in start-ups) from providing the first crore or two to innovative start-ups before VCs get interested. We now have a piquant situation where start-ups in India can raise money from foreigners (who are exempt from Sec 56) but have to relocate overseas to raise money from Indians,” he says further.
Empowerment of Technology Start-ups
Technology start-ups triumphs on the recent allocated funds of Rs 200 crore announced in the Union Budget to establish technology centre network to promote innovation and entrepreneurship. In addition to push youth in rural areas to venture into entrepreneurship, an initial fund of Rs 100 crore has been recommended to set up ‘Start-up Village Entrepreneurship Programme’, which come as a ray of hope for technology start-ups to grasp the maximum pie in terms of market that now the MNCs are enjoying.
Ravi Swaminathan, MD, AMD India & VP (Sales & Marketing) AMD South Asia, says, “We welcome the announcement for the IT sector. The budget looks very pragmatic and realistic. The government has pledged to support the growth of domestic information technology capabilities in both hardware and software, focused on enabling the timely delivery of citizen services and creating new job opportunities, especially in the rural areas.”
Swaminathan further emphasises that these announcements of the Finance Minister clearly speak about the government’s intention to go aggressive in developing the nation with the help of technology. Exemption on all inputs/components used in the manufacturing of personal computers from 4 per cent special additional duty (SAD) will help revive the subdued demand and promote domestic manufacturing in the country.”
Empowering product start-ups is also considered as one of the core strategies of NDA led-government to generate employment opportunities. Tech players seem to cheer up on an overwhelming fund of Rs 7,060 crore to invest on a slew of green field infrastructure projects which encompasses creating 100 smart cities, establishing new IITs and developing a conducive environment for entrepreneurship.
“We are particularly thrilled with the government’s all-encompassing initiative themed ‘Digital India’ that clearly enunciates a strong action plan for last mile Internet connectivity, better access to services, as well as IT skills development of local talent,” says Sanjay Rohatgi, President (Sales, India), Symantec.
Measures to Revive Economy
The new government in its maiden budget has stressed on the needs to stabilise the economy, boost investments and encourage savings. With a vision to revitalise all sectors of the economy – agriculture, power and infrastructure, manufacturing and services, Finance Minister as a part of its fiscal consolidation strategy announced to bring fiscal deficit to 3 per cent by 2016-17.
“The maiden budget presented by the new government contains a comprehensive package for economic revival and creation of jobs. The Finance Minister has laid adequate emphasis on the need for fiscal consolidation and maintained the fiscal deficit target of 4.1 per cent of GDP for 2014-15 despite the challenges of an economic slowdown,” says
Ajay Shriram, Chairman, DCM Shriram Ltd.
One of the major hindrances that create blockage in the growth trail of SMEs is the unfavourable tax policies. Hence, the recent Union Budget has proposed a personal tax relief of Rs 50,000 for tax payers, allowing them to save huge taxes. Under Chapter VI-A, the Income Tax Act offers tax reliefs by investing in certain tax saving investments. The section 80C has various list of investments Individuals can opt to reduce their tax burden.
Pradeep Karambelkar, Convener, CII MP Panel for Economic Affairs and Taxation, says, “The Union Budget 2014-15 has effectively captured the mind of people by addressing their hopes and aspirations. It has defined a roadmap for ‘New Vibrant India.’ Exhibiting an appetite for change, the Union Budget provides an enabling support to realise the true potential of Indian economy. In a clear move to accomplish fiscal consolidation and economic recovery, the Union Budget has made many real announcements.”
Dinesh Agarwal, Founder & CEO, IndiaMART, finds the Budget a positve step for the growth of SMEs as he says, “The Union Budget 2014 has brought some cheer for the SMEs across the country, as it reflects optimism for them in the coming year. With conducive financial schemes and budget allotments planned in their favour, SMEs are bound to make a substantial contribution to the country’s GDP. The efforts undertaken to promote entrepreneurship is truly a positive sign for the economy.”
On the same note, Chandrajit Banerjee, Director General, CII, says, “We are happy to note the encouragement to manufacturing through various measures such as opening defense, insurance, and e-commerce sectors to FDI, correcting inverted duty structures, setting up of industrial clusters and promoting entrepreneurship. Many CII suggestions, such as reducing investment allowance, changing definition of MSME, setting up a start-up fund, and overhaul of the subsidy regime, have found mention in the Budget. We believe that the Budget will set the tone for quick recovery of GDP growth and generation of new jobs and hope that it will be followed up by close monitoring and implementation of announcements.”
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