Why startups need handholding from government. Image courtesy OKCredit
As we approach the Union Budget 2024, our unique vantage point is shaped by the collective journey of over 200 entrepreneurs and brands in the Direct-to-Consumer (D2C) sector. The Indian startup ecosystem, a significant contributor to the national GDP, stands at a critical juncture. The upcoming budget is anticipated to be more than just a fiscal plan; it’s expected to be a foundational blueprint for the future of startups in India.
Compliance and regulatory challenges
A primary concern within the D2C community is the complexity of compliance, particularly in areas like GST, TDS, PF-ESI, and fundraising. These necessary but often cumbersome regulations pose significant challenges, especially for emerging businesses. The budget is expected to address these issues, simplifying processes to make compliance more manageable and startup friendly. Streamlining GST norms, for instance, would greatly benefit new entrants and foster a more supportive business environment.
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Taxation and financial incentives
The community is advocating for improved tax reliefs and cashback for startups, moving beyond the limited scope of tax credits. Direct financial benefits could provide crucial cash flow relief for young companies, encouraging entrepreneurship and innovation. This support is essential for nurturing a healthy startup ecosystem, capable of sustained growth and job creation.
Enhanced access to capital
Access to capital is a fundamental need for startups. The budget is likely to enhance this aspect, possibly through increased government funding initiatives or by facilitating easier access to loans and investments. Such measures are vital for startups at different stages of growth, allowing them to scale and innovate without financial limitations.
Focus on employee benefits
The taxation regime for startup employees is another area of focus. Many employees in startups receive a significant portion of their compensation as bonuses and ESOPs. The community hopes the budget will introduce tax reliefs and benefits tailored to these compensation structures, making startups more attractive to potential employees and aiding in talent acquisition.
Building a digital and sustainable future
In addition to these areas, there is a growing expectation for the budget to support the digital transformation and sustainability initiatives of startups. Investment in digital infrastructure, such as enhanced internet connectivity and e-governance tools, can provide a significant boost to D2C businesses, which rely heavily on digital platforms. Similarly, incentives for adopting sustainable practices could encourage startups to integrate eco-friendly measures into their business models, aligning with global environmental goals.
Empowering women entrepreneurs
Recognising the role of women in the startup ecosystem, the budget might also include specific schemes or incentives to support female entrepreneurs. This could involve funding initiatives, mentorship programs, and policy reforms aimed at creating a more inclusive and diverse entrepreneurial environment.
The Union Budget 2024 is poised to be a pivotal moment for D2C startups in India. With expectations ranging from simplified compliance and direct financial benefits to enhanced access to capital, employee-centric tax reforms, digital transformation support, and empowerment of women entrepreneurs, the budget could significantly shape the operational landscape for startups. These measures, if realized, would pave the way for a more robust, dynamic, and inclusive entrepreneurial ecosystem, driving economic growth and innovation across the nation.
Moreover, this budget presents an opportunity for the government to reinforce its commitment to the startup sector, acknowledging its role as a key driver of economic diversification and technological advancement. The implementation of these policies could mark a new era of growth and opportunity, not just for startups but for the entire Indian economy. As the D2C sector eagerly awaits the budget announcements, there is a palpable sense of optimism mixed with cautious anticipation. The decisions made in this budget could very well chart the course for the next phase of India’s entrepreneurial journey, potentially ushering in a golden era for startups in the country.
The author is co-founder at Dusaan. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.
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