Anindita Nayak
Bhubaneswar, 8 June:
The Indian startup ecosystem is hopeful of receiving clarity on many taxation issues along with more incentives in the form of PLI schemes spreading across several sectors as the BJP-led NDA under Narendra Modi is all set to form the government for the third time.
At a time when the Indian startup ecosystem has been going through a severe funding winter leading to laying off thousands of employees, the government’s role will be critical in reviving the sector, said analysts.
According to sources in the know, most startups are expecting the repeal of the Angel tax, which has been a contentious issue for quite some time now. The Union Budget 2023 tightened regulations on foreign funding for startups, extending the angel tax regime. Experts opine that as the startup ecosystem is facing a funding crunch since last year, the government should abolish the law relating to angel tax.
Moreover, taxation measures with regard to domicile change should be simplified, many startup founders feel. As India emerges as a key growth market for startups, many of these new-age companies are changing their domicile from foreign countries to India. Several Indian startups with foreign domiciles across the US and Singapore are in various stages of flipping back to India. Reportedly, fintechs like Pine Labs and Razorpay, quick-commerce company Zepto, edtech Eruditus, ecommerce firms Meesho and Udaan are also planning to move their holding companies back to India. In this context, startup founders are expecting simplified tax regulations in order to accelerate this process.
Amid the fund crunch, India’s startup ecosystem is also hopeful of significant government intervention to strengthen regulations and attract fresh capital, with initiatives like Fund-of-Funds. Similarly, the industry participants expect initiatives like Startup India, and Digital India to be strengthened further.
Startups operating in the electric vehicle space, are eagerly awaiting the new government’s initiatives after the announcement of FAME II & III along with PLI scheme. Many believe that India, which is home to the world’s third-largest startup ecosystem, will come up with concrete measures to promote entrepreneurship in small towns
Data privacy and security is another area in which policy measures are likely to be taken by the new government.
