Govt's digitisation plan set to deliver a slew of opportunities for startups
Govt's digitisation plan set to deliver a slew of opportunities for startups

The Indian startup sector - accustomed to being in the spotlight during Union Budgets in the recent past - had to settle for a more muted offering from finance minister Arun Jaitley this year as he unveiled a few tax sops, withheld a few more while also throwing open new avenues for entrepreneurial growth in the digital economy of the future.

For sure, there was no announcement to match the scale of the Rs 10,000 crore fund-of-funds for startups made in the 2015 budget not the "Startup India, Standup India" initiative announced before last year's Budget.

But, measures aimed at expanding the country's digital footprint and boosting online payments are expected to deliver big benefits to technology entrepreneurs.

Online retailers, smarting from the drop in sales owing to demonetisation, believe they stand to gain from the aggressive spending outlined for the rural economy as well as from tax-cuts for middle-class consumers.

The allocation of Rs 10,000 crore for the BharatNet project in fiscal 2018 is expected to spur rural connectivity, as it will deliver high-speed broadband to over 1.5 lakh gram panchayats with hotspots and access to digital services at low tariffs. Digital entrepreneurs believe this is the highway that will help them penetrate rural markets.

Sanjay Sethi, Chief Executive Officer, ShopClues, said, "BharatNet will be a disruptor in ecommerce as well as education sectors. 40 percent of the people who get on internet today are likely to buy something in the next two years."

Greater access to the internet is also expected to spur the launch of a new wave of ventures in entertainment and media consumption, telemedicine and online education - as the digital economy moves beyond online retail. A 'Digi Gaon' initiative, to be launched by the government, aims to provide healthcare, education and vocational skills to a whole new set of digital users. Vikalp Jain, President of edtech startup AcadGild, said, "The fibre-optic connection will definitely help our penetration in tier-II and III cities."

The Budget also had a slew of tax measures for startups, besides tax breaks for micro, small and medium enterprises (MSMEs). Jaitley said over 16,000 new enterprises have come up through government schemes to promote Dalit, tribal and women entrepreneurs.

Sethi added, "The tax exemptions and reductions for MSMEs curb the desire to go off the formal economy, helping them scale and compete better."

Investors, who had sought clarity on what they term "a regressive" measure where startups have been asked to cough up tax on the drop in valuation of their companies, were disappointed.

Also, on the wishlist was a reduction in the holding period for long-term capital gains tax on startup investments to be one year as in the case of listed companies.

Padmaja Ruparel, President of the Indian Angel Network, said, "Investors are taking more risks than listed companies."

 
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