GOVERNMENT POLICY: STARTUP INDIA BUDGET 2021
Here is all you need to know
To support the small business start-ups in India, India’s Prime Minister Mr. Narendra Modi introduced a policy Startup India in August 2015. The primary agenda of Start-up India scheme was to provide funding support, incentives, Industry-Academia Partnership, Incubation and handholding to the small business startups in the country.
The First Digital Union Budget’21- What’s In It For Start-ups In India?
The finance minister Nirmala Sitharaman presented the first paperless budget aimed at boosting second wave pandemic effects in the Indian economy. At the beginning of the 2-hour budget speech, Sitharaman stated “The preparation of this Budget was undertaken in circumstances like never before”
Moreover, this budget focuses on the MSME ecosystems that were seeking game-changing reforms to accelerate their growth and leverage the Covid-induced tailwinds for digital upgradation. As per the Union Budget 2021 on startups, there is an allotment of around Rs. 1500 crore to promote growth of the digital payments industry and incentive businesses.
The MSME sector is allotted Rs. 15,700 crores which is more than double from the preceding budget that was 7,572 crores. Post Covid-19 outburst, millions of first-time customers & startups have adopted digital transactions, therefore this industry has the potential to grow more and may become among the best startups in India for freshers.
Overview Of The Startups & Msmes In The Budget
OPC Investment Setup: To benefit successful startups in India or one-person companies (OPCs), the finance minister announced restrictions on paid-up capital and turnover. Most importantly, The Minister also allowed their conversion into any other type of company at any time and reduced the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days. He also allows NRIs to incorporate OPCs in India.
Extended Eligibility of Claiming Tax Holidays: To uplift startup investments in India, the government has proposed to extend tax holidays by a year to March 31, 2022. Moreover, to elevate funding, the capital gain exemption for investments is also extended till 31st March’22.
Increased FDI Limit: Another remarkable move in the startup budget is that the government has decided to increase the Foreign Direct Investment limit exclusively for the Insurance industry from 49% to 74%.
Social Security to India’s Gig Workers: The government of India has shared a proposal to launch a website portal to collect relevant information about the gig workers & migrant workers population in order to formulate social security schemes for their protection.
Updated Insolvency Resolution: The National Company Law Tribunal (NCLT) framework will be strengthened in addition to alternate methods of debt resolution and special framework for MSMEs will be introduced in order to resolve the cases faster, said Sitharaman.
Digital Census 2021: The Government has set aside over 3000 crores for the Indian IT firms to gain from Digital Census’21 MCA21 3.0
Withdrawal Exemption on Imports: The government announced dispensation on imports of certain kinds of leather as they are being produced locally that too in good quality and quantity.
FinTech Hub in Gift City: As per the 2021 budget allocation for startups, to support the development of the international FinTech Hub at Gift City designed to double up as a versatile finance hub in Gujarat.
With these reforms & policies, it is anticipated that the budget impacts on startups will be positive and therefore the Indian economy can recover from the effects post covid-19 second wave.