Our finance minister, Nirmala Sitharaman, will present the Union Budget 2022-23 on 1st February 2022, announced by the Finance Ministry yesterday on 28th January.
The ministry offered sweets to the core staff, given the prevailing coronavirus pandemic situation, instead of the traditional halwa ceremony to mark the last stage of the Union Budget-making process.
Last year, the ministry delivered the Union Budget 2021-22 in paperless form for the first time. The ministry had also launched a “Union Budget Mobile App” for hassle-free access to budget documents by the general public and Parliament Members.
According to reports, the Union Budget 2022 will also be available on the app once the budget presentation process is completed on 1st February 2022 in the Parliament (1).
According to the finance ministry, the smartphone app will allow complete access to 14 Union Budget documents, including annual financial statement, DG, demand for grants, the budget speech, finance bill, and more, as per the Constitution prescription.
It is worth highlighting that the mobile app is available in both Hindi and English and available on both Android and iOS platforms. If you wish to download the app, you can also do it through the Union Budget Web Portal or directly access the documents and download them via the same portal.
Here are Expectations from Founders and The Indian Startup Ecosystem for Union Budget 2022:
Startup India Seed Scheme
“We anticipate the Indian government to focus on the Startup India Seed Fund Scheme to promote startups that registered a notable success despite the unfavorable effect of the pandemic,” said Mr. Appalla Saikiran, Founder and CEO of SCOPE, a holistic platform that aims to bring aspiring entrepreneurs, VCs and investors, and experts on a single platform (2).
“The budget should also offer a way forward to build an easy regulatory system and policies for startups so they can run the business smoothly without any administrative obstacles. In addition, I believe the government would think about developing policies to push the investment climate within the country further,” he added.
Expectations For the Education Sector
Masai School’s Co-Founder and CEO, Prateek Shukla (3), has some high expectations from the Union Budget 2022 for the education system in India.
He believes that since we are going through a pandemic, there was a drop in the annual allocated spending on education in last year’s budget by 6%.
While we know that 54,873 crore INR was allocated for school and literacy and 38,350 crore INR for higher education, we don’t know the quality of education offered at schools and other educational institutes. Also, it didn’t make any provisions for skilling the unemployed young workforce to help them become more competitive in the private sector.
Shukla believes that the ministry should allocate at least 8 to 9% of the GDP for the education necessary for our education sector. In addition, the government also needs to focus on schemes for skilling our youth, especially those outside of our education system, to make them eligible for emerging employment opportunities.
There is also a growing need to make “Digital Accessible.” According to Shukla, online learning is impossible if students don’t have high-speed internet connections. Moreover, even teaching methods have not evolved to suit the digital medium.
“I don’t believe that writing on a blackboard in front of the camera is the best way to learn online. We need to enable our young minds with high-speed internet connectivity and also develop resources that allow teachers to take online classes with more efficiency.”
In our previous story, Lessons from Estonia: A Look into Future’s E-Societies, we talked about how Astonia leveraged the internet to enable digital learning. There are a lot of ideas there for our aspiring young entrepreneurs and the government to take a similar approach.
Mr. Shukla further discussed how our education system focuses more on examinations and marks over skill development. We see more governments worldwide moving towards outcome-based learning as the future of education. And it is time we also move towards promoting skill-based learning in India.
As we had also pointed out in our previous article for Sarvani, A Chandigarh-based NGO Run By Women for The Society Continues to Thrive; there has been a considerable rise in school dropouts over the past two years. More Indian students are not completing their education till even class 12th.
“We should see some interventions by the government in the budget to keep students in school to complete their education and move towards a holistic development. There should be more focus on developing students’ communication and interpersonal skills, cognitive abilities, and logical thinking,” suggested Mr. Shukla.
There is also a need for more control on the edutech industry, a sector that witnessed tremendous growth amid the pandemic and resultant nationwide lockdown. However, we believe it should be a policy and not in the budget. Yet, we can’t deny India’s need to spend more on its healthcare and education sectors. For more details on our take on the edtech policy, consider reading our previous article, The Indian Edtech Policy: A Need of the Hour.
In an agreement, Mr. Shukla stated that more people are spending big bucks for certificates which may not even have enough value in the overall market. We see courses turning into trends, with people purchasing online courses out of FOMO; the government needs to flag and address it.
Union Budget 2022 Expectations For MSMEs
“In response to COVID-19 led worldwide economic hardship, the Indian government had announced several liquidity measures to support the MSMEs. While schemes looked attractive in headlines, the fine print made it challenging for the new fintech NBFCs to take advantage. Many constraints prevented fintechs and small NBFCs from offering the benefits of those support schemes to the bottom of the pyramid MSMEs. We expect the Union Budget 2022 to implement existing schemes better. We can also expect the government to announce new measures to incentivize and support fintech companies and smaller NBFCs to ensure credit to SMEs at lower capital cost,” said Mr. Alok Mittal, Co-founder and CEO of Indifi Technologies (4), which offers access to debt financing for MSMEs, by making innovative use of technology and data in the full loan lifecycle.
What Does the EV and Automobile Market Expect From the Union Budget 2022?
“The Indian government needs to focus on putting EVs in the priority lending sector to build a robust ecosystem for EVs and strengthen the market for electric vehicles,” said Shubhankar Chaudhary, CEO of One Moto India (5). This British mobility company aims to shape and electrify the last mile with iconic electric bikes, motorcycles, and scooters.
At present, explained Mr. Chaudhary, only a handful of NBFCs and financial institutes offer affordable loans to fleet operators. In addition, the government also needs to encourage more research and development for affordable and indigenous battery technology, which is among the biggest pain points for EV payers.
It is also worth highlighting that India currently depends on imports for more than 90% of our lithium requirement, which Chinese players dominate. It is a strategic disadvantage for the Indian EV markers, and the government should intervene.
Similarly, the Co-founder and CEO of Automovill, Mridu Mahendra Das (6), also has high expectations from the Union Budget 2022. He believes that while the Indian startup ecosystem is booming in terms of adoption and funding, we are yet to see a considerable increase in economic activities. It has led to revenue pressure for most startups.
According to Mr. Das, the Indian government should offer some flexibility in attracting and remitting foreign funds for companies registered under startup programs like DPIIT. It can help startups gain laxity in penalties for GST delay and statutory filings. A quick resolution for any compliance-related disputes will be a welcome move since it can help founders save time focusing on their core products. In addition, it will also ease up the funding process, which is often delayed because of hurdles in statutory filings.
“There is also a need to lower the after-sales automotive segment on certain parts, especially for electronics, since the domestic manufacturing sector of such parts is witnessing a roadblock because of the chip issues,” said Mr. das.
He also believes the discontinuation of certain vehicles should be done in a phased manner. There is also room to allow these vehicles to run with additional fitness needs, increasing revenue options for players in the auto after-sale ecosystem. Traditionally, the industry connects activities between after-sales and OEMs players. However, if the government relaxed certain norms for the auto claim process, it would help after-sales players to gain a fair playing ground compared to OEMs.
Dr. Akshay Singhal, the Founder of Log 9 Materials (7) who works in the advanced EV battery-technology domain believes;
“In the upcoming Union Budget 2022, from the EV ecosystem perspective, we hope to see the extension of the FAME Subsidy corpus to EV retro fitment kits. In addition, we would welcome more R&D incentives for energy storage and EV technology-related developments in the country. We also expect to see more R&D investments in local technology developments, which can be made 100% adjustable against corporate taxes.”
Expectations From the Food and Beverage Industry
“Today, it takes multiple licenses to establish a food and beverage business in India. We hope the government will address it in the upcoming Union Budget 2022. In addition, the sector also needs some reintroduction for a tax credit. And since the industry is struggling because of the pandemic havoc, we hope the government offers a relief package and allocates special funds for a speedy recovery,” said Farman Beig, the Co-founder and CEO of Wat-a-Burger, among the most prominent domestic burger chain (8).
Mr. Kushan, the Co-founder, and CEO of SupplyNote (9), a supply chain automation platform that offers SaaS solutions to restaurants, also agrees with Mr. Beig.
“The food and beverage industry has sustained considerable losses amid the pandemic. It is essential to look to the Union Budget 2022-23 for some relief package. We expect the budget to enable interest-free loans, a reduction in tax structure, and more subsidies to accelerate the sector’s speedy recovery. In addition, we also hope to see an extended moratorium since most of the F7B businesses fall under micro and SMB categories. I think the government should also focus on allowing businesses to carry forward losses to 12 years from existing 08 years considering the present situation,” said Mr. Kushan.
Fintech Startups Expectations From the Union Budget 2022
“With the upcoming Union Budget 2022, we expect the Indian government to introduce regulations that the crypto industry has been waiting for with eagerness. The positive growth of the industry is only possible with a stringent framework. The move can also see a heavy infusion of foreign funds in India,” says Mr. Kumar Gaurav, Founder, and CEO of Cashaa, which aims to increase the adoption of blockchain-based financial products (10).
On a similar note, Dr. Navneet Gupta, the Founder, and CEO of YPay, a digital payment platform that helps teens to manage their spending (11), says,
“The Indian government may demonstrate its commitment to developing a vibrant and active startup environment by extending the tax break for entrepreneurs. More infrastructure investment is needed to boost digital payments, which have shown significant growth in the last two years. Still, there are several unexplored potentials in Tier-2 and three cities. We need to increase investment in this area to utilize the potential.”
For Noe-Banks and PPI companies like ours, the idiosyncrasies and changes in KYC requirements are a major nuisance. KYC norms have led to many problems, including registration issues for customers, explained Mr. Gupta. “Also, I believe the government needs to see the fintech industry as a partner in formalizing the economy and offer banking services to those who lack access to the formal banking system.”
Read Also: India to Define Cryptocurrencies As Commodities: Full Story Explained
The Expectation of the Alternative Energy Sector
“I expect the budget to include a five-year plan to enhance small decentralized industry and craft sector participation and use of renewable energy resources.,” says Mr. Abhishek Pathak, the Founder, and CEO of Greenwear (12).
In addition, he believes that the Indian government needs to ensure growth in procurement from startups working with renewable energy resources. It is worth emphasizing that the textile industry alone may significantly reduce carbon emissions while also creating jobs on a local level.
According to Mr. Pathak, the Indian textile and Fashion industry needs urgent reforms to reduce pollution. We at Greenwear are taking one step at a time. However, the efforts are still small against the problem.
The Expectation of Health and Wellness and the Cannabis Sector
“We have benefited from prior Indian government efforts, such as the Startup India initiative and the Make in India initiative. These incentives helped us create a space for ourselves. For the Union Budget 2022, we hope the government expands these schemes to help home-grown brands grow and thrive in the Indian market,” says Mr. Shivam Singhee, Co-founder and CEO of Awshad (13).
In addition, said Mr. Singhee, “we also hope to see more incentives to help Indian brands expand their markets on international markets and help bring FDI to the growing wellness sector. If the government offers more tax relaxation to startups in the wellness space, it can help them compete with giant multinationals aiming to control this sector.”
What Does the Digital Media Space Expect From the Union Budget 2022?
“With the Omicron variant, the Covid-19 menace still expresses concern over the Indian economy. The forthcoming Union Budget should prioritize permitting expected economic growth and providing supportive help to diverse industry sectors, such as services and media,” says Ms. Shalu Jha, the Co-founder and CEO of PRandit Solution (14).
At the same time, she added, “In the media and communications industry, I would like to see a targeted push and incentivization for digital media platforms and companies. Especially since the nation’s customers now have greater influence thanks to the rapid adoption of digital and social media networks. As a result, some stimulus packages and forward-thinking policy initiatives centered on digital infrastructure development and media technology will be welcomed and promoted.”
The Expectation of VC Sector
“India’s VC space is growing by leaps and bounds- and there is great enthusiasm among domestic investors to participate in venture funding of startups- albeit this is a small fraction of the overall funding. However, a couple of issues seem to stand in the way of rapid development in this area: the first is the adverse development related to the tax department treatment of “carry” earned by domestic venture funds with attendant heavy tax consequences from direct and indirect regimes; the second the is long-standing issue of parity of treatment of long-term capital gains on listed versus unlisted equity. We hope clear measures to solve these two vexing issues can be taken up in the upcoming budget,” said Deepak Gupta, General at WEH Ventures (15).
The Expectation of Logistics and Warehousing
According to a recent report by RedSeer (16), the road logistic market in India is to grow at a CAGR, compounded annual growth rate of 8% in the next five years, making it a 330 billion USD market by 2025. With so much buzz around the logistics industry, the upcoming Union Budget 2022 will be crucial for the logistics sector (Suggested Reading: Transformation of Indian Logistics Tech Ecosystem).
“Keeping in mind the logistics sector’s resilience in the previous year, the forthcoming budget is one to watch. Logistics is the economy’s metaphorical growth engine, and making it more cost-effective through additional reforms will be a welcome gain. We look forward to the implementation of a comprehensive National Logistics Policy, as it will help strengthen the sector even more. A strong regulatory push for commercial electric vehicles would be a positive step as well, said Mr. Pushkar Singh, Co-Founder, and CEO of LetsTransport (17), a new-age logistics tech platform and a prominent player in the last-mile logistics space.
“In addition, the Union Budget may include subsidies for the use of electric vehicles for commercial and logistics purposes, as well as incentives for the supply of basics and food goods and a reduction in diesel excise duty,”
“For the upcoming budget, we have great expectations from the government. We believe that all energy and fuels should be subject to GST, further reducing state-by-state variances in fuel costs. As a logistics company, we anticipate CGMST expanding to startups to lower the cost of working capital. In terms of integrated logistics, we anticipate a comprehensive national logistics policy, as well as the Gati shakti initiative,” said Prasad Sreeram, Founder and CEO of COGOS Technologies (18).