Budget 2022: A Boost for the Tech and Start-up Ecosystem

The Union Budget for 2022 was built on the foundation of promoting technology and digitalization across all industries. The announcements, dubbed the ‘Budget for Digital India’ by many, are a positive step for India’s digital and start-up sector.

The (Indian) government has repeatedly recognized and accepted that start-ups are important drivers of economic growth in today’s world. As a result, a boost(er) has been given to start-ups in the form of an extension of tax benefits for another year, till 2023. (being an expected move because of the COVID-19 pandemic).

With the country’s agriculture industry in need of growth, the finance minister has advocated boosting agriculture and rural enterprise start-ups that are related to the farm produce value chain. A blended capital fund (raised under the co-investment model) is planned to be enabled through the National Bank for Agriculture and Rural Development for such start-ups (which has invested in AIFs that contribute to the capital of the enterprises working for the benefit of agriculture and rural development). Help for farmer producer organizations, rental machinery for farmers at the farm level, and technology-based support are among the actions planned for such start-ups. It is also suggested to support start-ups that would facilitate ‘Drone Shakti’ through a variety of applications and Drone-as-a-Service. This serves the twin objective of strengthening the start-up ecosystem while also assisting the agri-expansion. sector’s Mr Anurag Thakur, Minister of State for Finance, declared in a speech in 2019 that “India needs to produce agripreneurs for which skilling and tech-enabled services are critical.” Agri-based eCommerce platforms, farm monitoring, and fintech integration will assist young people in becoming agripreneurs…” The Union Government’s goal is aligned with the Budget 2022.

It has also been proposed that R&D for the defence sector be opened up to businesses, start-ups, and academics, with 25% of the defence R&D budget set aside for this purpose. With the support of start-ups and other technology companies, the defence infrastructure will be modernised.

Furthermore, the government recognises that venture capital and private equity investments are critical to the growth of the start-up ecosystem, with around Rs. 5.5 lakh crores invested last year. It has been proposed that an expert committee be established in order to assess the regulatory issues that the investor community is facing and to advise appropriate actions to overcome these challenges in order to scale up the investments. Keeping investor attitudes in mind, this is a fantastic move by the (Indian) government. Finally, the FM recommended capping the surcharge on long-term capital gains arising on the transfer of any form of an asset at 15% in order to help the start-up community — a move that the start-up and investor communities applauded.

Recognition of the animation, visual effects, gaming, and comics (AVGC) industry is another news in the Union Budget that could help start-up enterprises. It has been suggested that a task force be formed to maximise the sector’s potential in order to serve the global market. With the government’s emphasis on developing high-quality e-content to empower and equip teachers with digital teaching tools and allow higher learning outcomes, the ed-tech sector is set to expand. The goal is to create high-quality e-content (in all spoken languages) for digital teachers to deliver. FM has also recommended the creation of a digital university to provide students from all over the country with world-class universal education and a tailored learning experience right at their doorstep. Following the pandemic, there has been a huge increase in digital payments, which was even promoted by the government in the last budget. An expert group has been proposed to analyse the regulatory concerns that the investor community is encountering and to recommend appropriate solutions to overcome these obstacles in order to scale up investments.

These announcements inspire Indian entrepreneurs to pursue their ideas and ventures, as well as reaffirm investors’ faith in the country. It is my fervent hope that the (Indian) Government will efficiently implement these announcements in order to provide the necessary momentum for the development of the country’s tech and start-up ecosystem.