India is home to the third-largest startup ecosystem in the world, with over 60,000 startups across all sectors. It has 83 unicorns, with a combined valuation of $ 277.77 Bn. At any rate, India’s startups are at the forefront of Indian innovation, spearheading crucial advancements in diverse sectors like defence, healthcare, fin-tech, automobiles, sustainability, and many others. Despite the pandemic, Indian startups have continued on a growth trajectory, not only increasing in numbers but also in scope and size. Indeed, India is now the land of startups.
It is, therefore, no surprise that Budget 2022-23 acknowledges the contributions of startups to the Indian economy by extending various tax incentives. Eligible startups established before 31 March 2022 have been provided with a tax incentive for three consecutive years up to ten years from the year of incorporation. The finance minister, considering the pandemic, has extended the period of incorporation of eligible startups by one more year, that is up to 31 March 2023, to benefit from the said tax incentive.
In the Budget Speech, Finance Minister Sitharaman also shared that venture capital and private equity invested more than INR 5.5 lakh crore facilitating India’s startup ecosystem. To carefully scale this investment and its impact, the government will examine regulatory and other frictions through an expert committee that will study and suggest appropriate measures.
Furthermore, in a much-awaited announcement, the FM shared the introduction of the Central Bank Digital Currency (CBDC). Digital currency has long excited India’s retail investors and numerous startups will jump at the opportunity to lead this emergent sector that aims to create a more efficient and cheaper currency management system. Digital Rupee, as it will be called, will use blockchain and other technologies and will be issued by the Reserve Bank of India starting 2022-23.
These measures, among other sector-specific policies, provide a much-anticipated boost to India’s startups. On the back of this supportive framework, India’s innovation ecosystem will grow and set newer, higher standards.