Amidst the current Omicron wave across the world, leading world economies, including India, are on the path of recovery from the damage COVID-19 pandemic has done. With the predicted growth of real GDP estimated at 8.3 per cent, as forecasted by the World Bank, the Indian economy is at the center of the limelight. However, many industries and sectors are going through tough times and need Government initiatives to help them grow exponentially.
Nishant Arora, co-founder & director, Setup Services India (SSI), a unit of Sixth Element Finserv, says, “There is an urgent need for relaxed tax structures and capital gains framework so that foreign institutional investors and investment funds directly introduce capital & provide funding to Indian registered entities and not divert funds to the holding concerns registered in other countries.”
“We recommend that the Government should strengthen their startup promotion and facilitation schemes in Tier 2 & 3 cities; it will help in the development of various zones like the Silicon Valley in India. We also recommend establishing Startup Parks and Zones” where the cost of basic infrastructure is subsidized, and the Center & State government organize startup fairs where MNCs could be invited from all over the world to have a look at the Indian grown startups,” he adds.
India is rich in the availability of human resources but still faces issues relating to workforce availability with due skill sets required in the Startup ecosystem such as Digital marketing, website development, blockchain development, ML optimisation, UI/UX Design and development, and AI development. “If the Government facilitates the growth of such skill universities, then we will solve the unemployment problem and also see more startups setting up entities in India,” adds Arora.
The hospitality sector is amongst the sectors most affected by the COVID-19 pandemic. “We expect reduction in tax rates on both corporate and normal assesses, funds for extending liquidity to the sector in form of collateral-free top-up of working capital limits, increased or priority access to MSME reforms for the stressed entities, and introduction of schemes for promotion of travel and tourism,” says Arora.
Then we have MSME that contribute 45% of India’s total industrial employment, 50% of India’s exports, and 95% of all industrial units. “The Budget should announce reforms surrounding import substitutes to promote self-reliance and boost domestic manufacturing. Businesses are also hoping for a more straightforward GST rate structure and the overall simplification of GST compliances. There should be financial support in the form of reduced interest rates to compete with the international manufacturers. Also, there should be the development of the Central body to promote vocational and skill-based institutes and foster the intra-state employability opportunities.”
The Textile sector is stressed due to the rapid increase in the cost of inputs such as Cotton prices and fuel. “The textile industry is looking for relief in the form of export duties so that more quantity can be made available for domestic and captive consumption and prices can be kept at valuation. The industry is also expecting the Government to remove or reduce the import duty of 5% levied on the import of raw cotton. The industry wants the Government to either reduce the fuel prices or increase the Duty Drawback incentives available for exporters,” says Arora.
To promote rapid growth of the Services sector, the Bombay Chamber of Commerce and Industry has recommended that the concessional rate of tax at 15% available to manufacturers also be extended to the service sector. Arora says, “The industry expects the Government to direct more of MSME schemes & incentives that are focused on service providers. The Government of India should develop KPO & BPO parks in India to promote the export of services that will help generate forex transactions and help the Union budget in a strong Balance of Payments. There should be an inclusion of services sector-related definitions in the #StartupIndia Initiative so that more services providers can register themselves as Startup and enjoy the benefits being extended by the Government in the same. SaaS, IaaS & PaaS all have been instrumental in creating Unicorn enterprises in the Indian Startup Ecosystem, and hence the Government should promote such entities.”