Budget 2022, economic growth surge for the business ecosystem, Gautam Khaitan explains
With over 60,000 firms across all industries, India is the world’s third-largest start-up ecosystem. It has 83 unicorns worth a total of $277.77 billion. In any case, India’s entrepreneurs are at the forefront of the country’s innovation, driving important advances in fields as diverse as defence, healthcare, fintech, cars, sustainability, and many more. Despite the pandemic, Indian start-ups have continued to expand, not only in terms of number but also in terms of scope and magnitude. Gautam Khaitan, the head of the Corporate Division at O.P. Khaitan & Co law firm, explains how India will continue to be known as the start-up capital of the world with the implementation of budget 2022.
It’s no surprise that Budget 2022-23 recognises start-ups’ contributions to the Indian economy by providing numerous tax benefits. Start-ups that were formed before March 31, 2022 were eligible for a tax break for three years, up to ten years, from the year of incorporation. In light of the pandemic, the finance minister has extended the deadline for qualified firms to incorporate by one year, to 31 March 2023, in order to take advantage of the tax incentive.
Finance Minister Nirmala Sitharaman, presented a progressive and growth-oriented budget. Gautam Khaitan notes, “It will contribute to India’s goal of becoming a $5 trillion economy. The emphasis on start-ups, which have emerged as key drivers of our economy’s growth was palpable. This sector would undoubtedly benefit from the expansion of the incorporation time for qualifying start-ups.” She also mentioned in her budget speech that venture capital and private equity firms had invested more than INR 5.5 lakh crore in India’s start-up ecosystem. Notably, the government will review regulatory and other frictions through an expert group that will study and recommend suitable steps in order to properly scale this investment and its impact.
In addition, digital money has long piqued the interest of retail investors in India, and a slew of entrepreneurs will rush at the chance to lead this nascent industry, which aspires to establish a more efficient and cost-effective currency management system. The much awaited announcement about the introduction of the Central Bank Digital Currency (CBDC) has definitely opened opportunities for retail investors and several start-ups. The Reserve Bank of India will issue the Digital Rupee in 2022-23, and it would be based on blockchain and other technologies.
“To maintain the current entrepreneurial drive, the budget must continue to provide incentives to the Indian start-up ecosystem. Reducing compliance burdens and rationalising legal frameworks by reconsidering various mandated approvals and enforcing self-governance and self-certification structures would increase the ease of doing business and lead to more Unicorn Start-ups,” informs Gautam Khaitan, the head of the Corporate Division at O.P. Khaitan & Co law firm. Including the gaming and digital transformation industries in the budget to encourage investment in these new-age arenas has the potential to scale-up and revolutionise the business climate of India.
These rules, together with other sector-specific policies, give India’s entrepreneurs a much-needed boost. India’s innovation ecosystem will flourish and set newer, better standards as a result of this enabling framework.
Therefore, through the construction of a digital economy and a thriving FinTech ecosystem, the Union Budget 2022 has achieved a fine balance between macro-growth and all-inclusive welfare. It features a number of interesting projects that will aid prospective entrepreneurs, FinTechs, and the start-up ecosystem as a whole in succeeding.
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