Finance Minister Nirmala Sitharaman on Wednesday announced in her budget speech proposed the extension of the date of incorporation for income tax benefits to start-ups from 31.03.23 to 31.3.24. The FM also proposed to increase the benefit of carrying forward losses for startups to 10 years.
“Entrepreneurship is vital for a country’s economic development. We have taken a number of measures for start-ups, and they have borne results. India is now the third largest ecosystem for start-ups globally and ranks second in innovation quality among middle-income countries,” said Sitharaman.
The budget measure is being implemented as the startup industry experiences a funding winter, with investors only investing about $25 billion in Indian startups in 2022, down from $42 billion across 1,500+ deals in 2021.
The Startup India Seed Fund Scheme received a budget allocation of Rs 283.5 crore from the government for the fiscal year 2022–23, an increase over the Revised Estimates of about Rs 100 crore in the previous budget. The Fund of Funds for Startups received a budget allocation of Rs 1,000 crore.
“To unleash innovation and research by start-ups and academia, a National Data Governance Policy will be brought out. This will enable access to anonymized data,” she said on Wednesday. Further, an Agriculture Accelerator Fund will be set-up to encourage agristartups by young entrepreneurs in rural areas. The Fund will bring innovative and affordable solutions for challenges faced by farmers, she said.
To encourage startups in the country, the government has taken several actions. Fund of Funds for Startups (FFS) scheme, Startup India Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS) are implemented as part of the Startup India initiative to provide capital at various stages of a startup’s business cycle.
To nurture innovation and encourage private investment in the startup ecosystem, the government established the Startup India initiative in January 2016.