Budget 2024: 'Startup ecosystem in India needs to be reignited' say experts

The start-up sector's key priorities remain the same — namely, simplified regulation and compliance norms, ease of doing business at par with what listed companies enjoy, with similar tax breaks and incentives, and access to funds for R&D.

Despite all the hype, the startup sector in India has been struggling as angel investors are becoming cautious. Nishant Kumar, CEO, Earthy Tweens, revealed that the startup sector in India, is facing a "downturn in funding due to various challenges." He explained, "Recent data points to a concerning 30% decline in investments in Indian startups during the last quarter of 2023."

However, he believes that despite the 20 per cent reduction in startup investments throughout 2023 compared to the previous year, the sector still boasts "considerable growth potential."

This is why experts are looking for Budget 2024 to "reignite" the sector and create a conducive "ecosystem" that will nurture first-time entrepreneurs and the startup culture in India.

The start-up sector's key priorities remain the same — namely, simplified regulation and compliance norms, ease of doing business at par with what listed companies enjoy, and with similar tax breaks and incentives.

There is also need for funds to invest in R&D that will set Indian startups apart from their global competitors through innovative breakthroughs. Here are what the experts are saying.

Anil Agarwal, CEO and Co-Founder of InCruiter

“The upcoming Budget is not just about economic reform but is about having an ecosystem where start-ups can thrive, innovate, and contribute significantly to a thriving business environment. In particular, the 2024-25 budget should include a unique opportunity to empower tech startups and small businesses by allocating dedicated funds for innovation and providing tax incentives for research and development.  Furthermore, the regulatory processes could be simplified to establish clear guidelines to encourage innovation. Moreover, a simplified compliance framework could lower complexity and foster talent development. Also, a simplified compliance network could reduce administrative burdens to foster agility. 

To empower employees a focus on labor laws is a must, the main priority should be to maintain employee well-being which could involve provision for flexible hours, remote work, and a ‘right to disconnect.’ For this, a dedicated fund could be allocated for professional development, education, and skill training. Lastly, digital infrastructure could be fortified with the help of technologies like cloud-based solutions, cybersecurity measures, and scalable IT infrastructure. As we draft the budget, the focus should be on the seeds of innovation and support we plant for startups, ensuring a thriving business environment for years to come."

Nishant Kumar, CEO, Earthy Tweens

"Projections suggest a potential market size [of the startup sector] exceeding $100 billion (Rs 8.21 lakh crore approx) by 2025. As we eagerly await the budget, I expect it to introduce pivotal policy changes, especially related to tax policies concerning carry-forward losses and employee stock options. These changes can attract more investment, fuelling growth within the startup sector. The budget represents a critical opportunity to reignite the startup ecosystem in India, tapping into its capacity for driving innovation and economic development. The budgetary decisions will set the stage for a vibrant and thriving future for startups in the country."

Mr. Amit Mishra, Co-Founder of 91Squarefeet

“To catalyze the spirit of entrepreneurship in India, the upcoming Union Budget 2024 should pave the way for a progressive and inclusive Capital Gain regime for startups, like the ones enjoyed by listed companies. This move will stimulate increased investment in the startup ecosystem and unlock unprecedented growth opportunities. Addressing ESOP taxation for startups is vital to attracting and retaining top-tier talent, and fostering innovation and excellence.

 A holistic review of the regulatory framework is essential to create a more conducive and less stringent environment, empowering startups to thrive and contribute significantly to the nation's economic landscape.”