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Reactions on Budget 2024 pour in over major annoucements

Several initiatives like the abolishment of Angel tax, the schemes for youth and women have been welcomed by the industry leaders.

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As much as the highly anticipated announcements for the key states of Bihar and Andhra Pradesh in the formation of the current government found their place in the Union Budget 2024 that was tabled today, there have been various announcements in the speech by Finance Minister Nirmala Sitharaman that interested various industries.

On the boost to MSMEs 

Sharing how access to credit continues to be a significant hurdle for MSMEs in India, Yashraj Vakil, CEO of CaptainBiz says, "The budget has placed a strong emphasis on the upliftment of MSMEs and announces several financing-related programmes to bridge the credit gap in the sector. The introduction of the new collateral-free credit guarantee scheme, providing term loans up to Rs 100 crore, is a welcome announcement. This initiative will help manufacturing SMEs invest in equipment, technology upgrades, and capex planning."

Adding to it, he also says that the government's directive for public sector banks to build their in-house capability to assess MSMEs for credit is a positive step. "These assessment models, based on the scoring of digital footprints and covering MSMEs without a formal accounting system, will help thousands of potential MSMEs without strong financial records gain access to finance. It is expected to create room for innovation and collaboration between fintech companies and PSUs, enabling them to underwrite MSMEs more effectively," Mr. Vakil says. 

As a homegrown checkout network working with lakhs of sellers across the country, Simpl's founder and the CEO, Nitya Sharma says, "The proposed development of e-commerce export and industrial hubs will enable our sellers to cater to a global market while support to MSMEs and promoting entrepreneurship through policy interventions will further propel opportunities for sellers including Direct-to-Consumer brands. This along with the availability of higher disposable incomes in the hands of citizens through rationalisation of personal income taxes will propel consumer spending across the board."

L Srinath Reddy, Managing Director, Raminfo Limited, an MSME says, "The introduction of a credit guarantee scheme and enhanced Mudra loan limits will significantly bolster the MSME sector, providing much-needed financial support and stability. As an MSME, we too are eyeing global expansion with young talent and innovation at the heart of our plans. This budget aligns with our vision too." 

Eyeing growth for the MSME sector in India, Karthik Kondepudi, Partner of Herbochem says, "The MSMEs in the manufacturing sector will benefit to grow without any burden of collaterals, with the Credit Guarantee Scheme for MSMEs which will guarantee a cover up to ₹100 crore." He also says that the new way of assessing MSME credit using digital footprints for credit appraisal will be far better than conventional methods and increase credit availability for many businesses. "Credit support during any stress period will ensure that operations of the MSMEs are kept continuous since this is an important factor influencing the survival and growth of businesses. Increasing the Mudra loans limit up to ₹20 lakh, strengthening the TReDS platform space and covering more clusters with SIDBI will fulfill the needed funds and working capital needs of the sector," he further says. 

Adding to it, Mr. Kondepud highlights, "The measures for establishing food irradiation units and quality testing labs will strengthen the base of the food sector in terms of both quality and safety. In summary, this budget provides a solid ground for MSMEs to grow, compete internationally, and act as a major driver of the Indian economy."

Shivashish Tarkas, the founder of The InterMentalist, says, "Increasing the loan limit in the MUDRA loans for MSMEs is a welcome step. This will help companies process and function smoothly. These steps will guarantee sustained growth and the creation of jobs, in addition to boosting creativity and innovation. The government's pledge to assist MSMEs through a range of financial incentives and capacity-building initiatives motivates us. The government's commitment to supporting startups continues in this budget, and we anticipate that it will have a favorable effect on our growth curve."

Capital Gain Tax, abolition of Angel tax, and skilling

Sunil Deshmukh, Chair of the Global Board of Directors from the Institute of Management Accountants commends the budget for providing tax relief. He says, "The introduction of a 12.5% tax on long-term gains and increased exemption limits will encourage longer-term investments and market stability. Raising the exemption limit for capital gains on financial assets to ₹1.25 lakh per year will boost individual investor participation." He also talks about the abolition of the Angel tax as he says, "The abolition of the ANGEL tax for all investors will stimulate startup investments." He further says, "Reducing the corporate tax rate for foreign companies from 40% to 35% will attract more foreign investment." 

Mr. Deshmukh talks about other announcements and says, "With ₹1.48 lakh crores allocated to education, employment, and skill development, this initiative addresses job creation and skill enhancement. First-time workforce entrants will receive a direct transfer of up to ₹15,000, enhancing employability and stimulating economic growth. Overall, these measures demonstrate a strong commitment to economic reform and growth, creating a favorable tax environment that supports innovation, investment, and long-term development." 

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Commenting on the abolition of the Angel tax, Nitya Sharma, the founder of Simpl says, "The proposed development of Digital Public Infrastructure applications at scale across areas of credit and e-commerce among other areas will also drive the adoption of digital services, thereby benefiting the entire ecosystem. This, on the back of the abolition of the Angel tax, will greatly benefit the startup ecosystem in the country and will accelerate India’s journey toward becoming a $1 trillion digital economy well before 2027-28."

Edul Patel, the CEO and co-founder of Mudrex highlights the pros and cons of maintaining the current tax rates on virtual digital assets (VDAs). He says, "On one hand, not updating the tax laws might deter new investors and slow the sector's growth, as the current tax regime could be a barrier to broader adoption and investment. On the other hand, keeping the tax rates stable provides predictability for existing crypto investors, which can help support steady market growth. In addition, there have been positive developments such as initiatives to boost employment and skill development, as well as tax relaxations on the new regime and for angel investors that could drive innovation in the web3 and tech sector."

Anirudh A Damani, the Managing Partner at Artha Venture Fund, says, "Previously, the requirement for income tax officers to understand and assess valuations led to unnecessary conflicts and delays, involving CAs, valuers, and tax officials. Valuation assessments were never meant to fall within the purview of income tax officers, and this change eliminates those complications. This simplification allows us to focus on our primary job—investing in and supporting innovative startups—without the burden of navigating through cumbersome tax regulations," adding that the removal of angel tax will make it significantly easier for us to complete transactions faster and streamline the investment process. 

However, Mr. Damani also says that an increase in the LTCG tax rate for financial assets to 12.50% and STCG to 20% may pose challenges for listed investments. "The reduction in LTCG tax from 20% to 12.50% for these investments will result in substantial savings and increased IRR, fostering growth and innovation," he adds.

Kunal Bahl, Chairman of CII National Start-up Council and co-founder of Titan Capital and Snapdeal says that the abolition of the angel tax removes friction and ambiguity in the fundraising process by start-ups. He further says, "The reduction in TDS to 0.1% for e-commerce operators will free up working capital." 

Kartik Chhaya, the Chief Operating Officer of Rupeeseed says, "The emphasis on developing DPI applications and improving IBC outcomes will streamline processes and foster a more efficient financial ecosystem." He also says that the focus on the reduction in corporate tax rates for foreign companies and the simplification of FDI rules is a forward-thinking approach. "These measures will enhance India's attractiveness as a global tech hub," he adds. 

While Ankur Mittal, the co-founder of Inflection Point Ventures believes that only time can tell the impact of the abolishment of angel tax. he also says, "On the face of it, this action has the ability to bring lot of regulatory clarity which generally is appreciated by the investor communities across the world. This should help founders looking to raise capital both in domestic and international markets."

Gunjan Agarwal, the co-founder of XYST says, “Abolishing Angel Tax will have a long-term impact on startup founders. This will not only motivate angel investors but also help to encourage entrepreneurial spirit in the Indian business domain. The budget is full of opportunities for Indian startups pushing to become the next Unicorn, and governmental assistance is bolstering it to ensure success and growth."

Mahankali Srinivas Rao, the CEO of T-Hub sees the abolition of the Angel Tax for all classes of investors, as a pivotal move that will create a more supportive environment for angel investments, ultimately benefiting startups and paving the way for India to become a global innovation hub. He says, "The establishment of a ₹1,000 crore venture capital fund dedicated to boosting the space sector is another forward-thinking initiative. This substantial investment will propel growth in the space economy by supporting innovative startups and groundbreaking research, positioning India at the forefront of space technology and exploration."

Anil Joshi the Managing Partner at Unicorn India Ventures says, "The Finance Minister has heard industry voices and has finally abolished the Angel tax. This will certainly help in the expansion of angel investment in India and will take away a lot of burden from everyone's minds on tax notice for tax-paid investment. This will also free up a lot of domestic capital and improve the funding sentiment in a strong way." He also adds that the 1000 Cr fund of funds for space tech is a testimonial to India’s capability to come up with breakthrough solutions at low cost.

On the other hand, Ratna Mehta, the Managing Partner at Fundalogical Ventures calls the changes in the capital gains tax structure unexpected. "It came during a time when the fiscal position of the economy seems to be in check," he says. Talking about the Angel tax abolition, he says, "It is relevant at a time when the funding crunch is impacting startup liquidity."

Emphasis on research

The introduction of the Anusandhan National Research Fund and a financing pool of Rs. 1 lakh crore to spur private sector-driven research and innovation is a "game-changer" as per Rao. He says, "This fund will power basic research and prototype development, driving commercial-scale innovation and enabling startups to bring cutting-edge solutions to the market. At T-Hub, we are excited about these developments and the positive impact they will have on our vibrant startup ecosystem. These initiatives will provide startups with the necessary resources and support to thrive, innovate, and contribute significantly to India's economic growth and technological advancement."

However, Bhaskar Majumdar, the Managing Partner at Unicorn India Ventures says that the government should look at the Intellectual Property regime along with the R&D Fund. He says, "The much overdue Patent Policy needs to come out soonest to enable maximisation of R&D Fund."

Education and Employment 

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As the education sector has been given one of the top priorities, this time, the move can be seen as welcoming. Pravesh Dudani, the chancellor and founder of Medhavi Skills University says, "The Centre's allocation of Rs 1.48 lakh crore for the education and skilling sector, emphasising education, employment, and skilling initiatives, marks a pivotal step towards empowering institutions. The provision of e-vouchers for student loans up to Rs. 10 lakh further democratises access to education, and fosters inclusivity. The long-awaited upgrade of 1000 ITIs, coupled with curriculum alignment with industry trends under NEP 2020, signifies a significant boost to its implementation." On the announcement of the internships, he says, "The announcement of internships for one crore youth, supported by industry-aligned skill universities like Medhavi Skills University, underscores a promising avenue for practical education. Moreover, the provision for companies to fund internships through CSR initiatives will catalyze impactful collaborations between industry and academia."

Dr. Alka Kapur, the Principal of Modern Public School Delhi says, "This substantial investment, channeled through the Employees' Provident Fund Organization (EPFO), underscores the government's recognition of the critical link between education, skills, and employment. The provision of financial support for loans up to ₹10 lakh for higher education in domestic institutions, along with the upgrade of 1,000 Industrial Training Institutes (ITIs) using the hub-and-spoke model, are strategic initiatives aimed at elevating India's education sector to the next level."

Dr. Sanjay Salunkhe, the founder and MD of Jaro Education says that the initiatives will address the challenges youth face in pursuing necessary education and skills. "A substantial outlay of Rs. 2 lakh crores is a resounding call to action. This year's provision of Rs 1.48 lakh crores for education, employment, and skilling underscores our commitment to nurturing talent and unlocking potential," he says.

Pratham Barot, the CEO and co-founder of Zell Education says, "The emphasis on vocational training and apprenticeships is particularly noteworthy, as it will enable practical, hands-on experience that aligns with industry demands. Furthermore, the allocation of resources for digital skill training will ensure that our workforce remains competitive in an increasingly digital global economy."

"The goal to skill 20 lakh youth through employment-linked initiatives addresses a critical gap between academic learning and industry requirements. We see tremendous potential in integrating these initiatives with digital learning solutions," says Rohit Gupta, the COO and Co-founder of College Vidya. 

Rohit Bansal, Chair of the FICCI Startup Committee and co-founder of Titan Capital and Snapdeal welcomes the government's move on boosting employment and skilling. He says, "Internships with top corporates, focus on increasing women’s participation in the workforce, enhanced skilling and student loans, upgrading training institutes, incentives on EPF enrolment, boosting employment in the manufacturing sector and supporting MSMSEs through enhanced credit access are key building blocks to deliver on this."

Voicing the concerns about the impact of AI on job creation, Akshay Munjal, the founder and CEO of Hero Vired says, "Amid growing concerns about the impact of AI on job creation, the substantial allocation of Rs. 1.48 lakh crore for these sectors demonstrates a significant commitment to developing India's human capital." Talking about the internship announcement, he adds, "The comprehensive scheme providing internship opportunities in 500 top companies to 1 crore youth over five years, funded partly through CSR, is a welcome initiative. This will give the youth valuable exposure to real-life business environments and diverse professions, further enhancing their employment prospects while ensuring a future-ready workforce."

Karun Tadepalli, the CEO and co-founder of byteXL, says, "By offering financial support for higher education loans up to Rs. 10 lakh with a 3% interest subvention and e-vouchers for one lakh students annually, access to learning opportunities is being democratised. Concurrently, the upgrade of 1,000 ITIs using the hub and spoke model, aligned with industry needs, underscores our dedication to equipping our workforce with relevant skills."

Amar Nagaram, the founder and CEO of Virgio opines that the emphasis on employment, skilling, and MSMEs, showcases a forward-thinking approach that is well-suited to the evolving needs of the Manufacturing and D2C industries. He says, "The key incentives aimed at boosting job creation and enhancing workforce skills."

Women in the workforce

Speaking on the highlight of the inclusion of women in the workforce, Shruti Mishra, the founder and CEO, of IImage Stereo Marcom, says, “Creating an ecosystem that supports women in the workforce and is culturally aligned is crucial for sustainable development of the nation. Women play a pivotal role in the economy, and their empowerment through higher education and skill development is essential for driving comprehensive progress. The introduction of women-specific skilling programs will enhance their employability and ensure that they have the necessary tools to succeed in various sectors. By encouraging more women to participate in the workforce, we not only promote gender equality but also unlock a significant potential for economic growth."

Agriculture in focus

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Prem Kumar Vislawath, the CEO and founder of Marut Drones says, "The allocation of ₹1.52 lakh crore for agriculture and allied sectors underscores a pivotal commitment to bolstering India's agricultural resilience. The emphasis on developing climate-resistant varieties and introducing 109 new high-yielding varieties is a forward-looking stride towards sustainable agriculture." He further says, "The promotion of farmer producer organisations, cooperatives, and startups heralds a new era of inclusive growth and innovation in the agricultural sector."

Talking about the announcement of bioresource support for farmers transitioning to natural farming in the coming years, Gayatri Nair Lobo, the CEO of A.T.E. Chandra Foundation, says, "The initiative to involve 1 crore farmers in this movement in an organized manner, by offering support and removing critical bottlenecks related to branding, certification, and availability of inputs via 10,000 bioresource centers, will be extremely beneficial to the state of agriculture in India."

She further says, "Handholding farmers as they transition to Natural Farming will meaningfully reduce input costs, and for consumers, it means a significant reduction in chemicals in the food that reaches our table. This results in a positive impact on profitability for the farmer, individual health, and the environment. It also reduces the governments massive subsidy bill as farmers move away from chemicals fertilizers, that are depleting soil quality, and pesticides. We see the move to set up Bio resources centres as a crucial part of this transition, as it will ensure ready supply of safe bio inputs, while also  creating rural entrepreneurship opportunities."

Energy Security

Talking about the necessity for a diversified energy strategy to achieve energy security and meet national contribution targets, the Chief Financial officer of Maxvolt Energy, Bhuvneshwar Pal Singh says, "With India's energy demands expected to grow by 2-2.5 times by 2047, the budget recognises the critical need to address the challenges within the renewable energy sector. The introduction of the Pump Storage Policy will significantly enhance the deployment of pump storage systems, which are vital for balancing electricity supply and demand by storing energy during periods of low demand and releasing it during peak times. Overall, the increased support for energy storage solutions is essential for ensuring a stable and sustainable energy future, driving progress and innovation in this crucial industry."

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Vineet Mittal, the Chairman of Avaada Group says, "It is a compelling vision for India's clean energy future. We are particularly encouraged by the roadmap for hard-to-abate sectors and the establishment of a clear climate finance taxonomy. We are confident that the policies outlined in the budget will unlock immense potential for innovation and investment in green fuels and renewable energy solutions, propelling India towards a leadership position in the global clean energy landscape."

"The rooftop solar policy, the pumped storage policy and research and development for small and modular nuclear reactors, Bharat small reactors, R&D for small modular reactors, R&D for new technology in the nuclear form a neat troika to alter the energy map of India," says Mayuresh Raut, the Managing Partner at Seafund. He adds, "On the nuclear side, it positions India to replicate the renaissance that nuclear is experiencing in the US."

Urban Housing 

Satyendra Prasad Narala, the Managing Director of Regency Ceramics says, “The announcement of a ₹10 lakh crore investment in urban housing through PMAY Urban 2.0 is a significant boost for India's real estate sector and related industries such as Ceramics and Tiles Manufacturing. This substantial infusion, including ₹2.2 lakh crore to rejuvenate the affordable housing segment and is expected to drive demand for construction materials and stimulate growth in sectors like ceramics, fostering innovation in construction technologies for affordable housing." Talking about the focus on middle-class families, he says, "The enhanced focus on middle-class families is likely to encourage diverse housing types and urban design solutions."

According to Satyam Kumar the co-founder and CEO of LoanTap, "There has been a huge push in the rural sector with sufficient allocation towards linked infrastructure, mainly road infrastructure and urban housing. Even the rental housing schemes under the PPP model for urban, poor and migrant labours working in industrial sectors is a very thoughtful step in improving their standard of life."

On tourism and infrastructure

Sandeep Arora, the director of Brightsun Travel, India says, "The focus on boosting spiritual tourism not only honours the country’s rich cultural heritage but also opens up new avenues for travel and tourism. The special focus on Bihar and Odisha will see extensive development and promotion of religious and historical sites such as Bodh Gaya, Rajgir and Nalanda. Odisha also has a great potential as a destination for religious and beach tourism. The new initiatives to improve infrastructure and connectivity in these offbeat destinations will attract both domestic and international tourists, offering a much-needed boost to the local economy."

Divyam Shah, the Director of Euro Panel Products Limited, feels the government’s continued push on developing and revitalising infrastructure projects will assist the overall construction sector to ensure growth. He says, “The construction of several key road connectivity projects, including highways and others, along with a new airport in Bihar and across India aligns with Eurobond’s long-term objectives. Furthermore, the incentivisation of job creation in the manufacturing sector will help the sector to generate more jobs for skilled professionals, helping to streamline and increase the efficiency of the manufacturing process, leading to future growth.”

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