With the Union Budget round the corner, startups and new-age Fintech NBFCs are looking up to the Finance Minister Nirmala Sitharaman to give them further policy push in fiscal incentives to take the entire startup ecosystem to the next growth level. 

The upcoming budget must also push the needle towards implementing schemes already announced to provide liquidity support to the MSME sector post the Covid-19 pandemic, said several Fintech NBFCs and other startups.  Although the headline schemes to support MSMEs were attractive, the fine prints of those schemes still made it difficult for many new-age Fintech NBFCs to take advantage of the schemes, they said. 

 Alok Mittal, Co-Founder & CEO, Indifi Technologies, said that due to such constraints, the expected benefits of these support schemes did not reach/ transmit to the bottom of the pyramid MSMEs mostly catered to by fintech/small NBFCs. “This budget must be in pursuit of better implementation of the schemes already in place. Further, the fiscal budget should announce measures to incentivize and strengthen support from SIDBI-like institutions and Public sector banks towards lending to smaller NBFCs to ensure credit to SMEs at lower cost of capital”, he said.

Akash Gehani, COO & Co-founder, Instamojo, said: “While MSMEs continue to battle access to credit, it will be beneficial to the sector if the government introduces initiatives to manage existing credit by extending the loan moratorium and making access to affordable credit options easier. Additionally, with digitization defining the business landscape today, digital literacy for small businesses and entrepreneurs should be made a priority. This way, these MSMEs can upskill to be at par with industry requirements, have free access to online resources and infrastructure, and in the long run help in the further establishment and wider customer reach of these businesses digitally”.

Ketan Patel, CEO, Mswipe said “In November 2021, the government announced the Special Credit Linked Capital Subsidy Scheme for the MSMEs in the services sector. This should be extended to SMEs whose turnover is less than ₹ 5 crore as well as it will help them procure service equipment through institutional credit for the advancement of their technology. The Government should also look at tax breaks for companies providing technical support to MSMEs. While multiple initiatives have been undertaken to promote digital payments, the Government must look at giving some form of incentive to small businesses to encourage the adoption of digital payments and further strengthen the payment infrastructure of the country, especially in smaller towns.”

Banks and Fintech

Murali Nair, President of Banking, Zeta, said that to accelerate innovation in the fintech space, the budget should also support more partnerships between banks and fintech- this will aid in pushing the economy towards financial inclusion. “We expect the new budget to include supportive initiatives to provide a modern payments framework which can ensure high-quality performance while gearing up for the next wave of transformation”, he said. 

Given the surge in digital payments, the budget should consider offering tax incentives to consumers, merchants and ecosystem enablers, he added. 

Ravi Mittal, Founder & CEO of QuackQuack “With the frequent curfews and lockdowns, startups are seeing unforeseen circumstances, it would be ideal to introduce simplification of an exit route for failed startups. On the other hand, simplification of listing norms for startups will encourage further investments. Also, certain startup products in life-saving equipment can be exempt from GST. The government could create a centralized fund for smaller startups with innovative ideas. These can go a long way in supporting and promoting startups in our country” 

Crypto startups

Roshan Aslam, Co-Founder & CEO at GoSats said “While the Indian crypto ecosystem eagerly awaits the government’s decision to regulate crypto assets through the crypto bill, in the Union Budget 2022 we can expect the government to provide their initial views on crypto. This could include information on income or capital gains, taxation, and other certain views they have on crypto assets. We expect to see a boom in Indian crypto start-ups as the industry is growing massively. We are seeing many Indian and foreign VC’s being intrigued with crypto companies and the talent they have. With this degree of growth, we hope the government takes a positive regulatory stance in regulating crypto-assets”

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