Budget 2022: Here’s what India Inc is wishing for

January 25, 2021 | By YourStory

Ahead of February 1, all eyes are on Finance Minister Nirmala Sitharaman as she readies to present Union Budget 2022. Business leaders, entrepreneurs, investors, and other stakeholders from the Indian startup ecosystem are hopeful that the crucial budget will announce measures to fire up India’s pandemic-hit economy.

The Budget Session of Parliament will commence from January 31 with President Ram Nath Kovind’s address. COVID-19 protocols are in place as several ministers have tested positive for the virus in recent times. An optimistic outlook towards sustained growth prevails in every sector in the Indian startup ecosystem, the third largest startup ecosystem of the world, despite concerns over the likely impact of the third wave of COVID-19 pandemic.

According to the advance estimates of the National Statistical Office (NSO), the economy is expected to record a growth of 9.2 percent during the current fiscal following last fiscal’s 7.3 percent contraction, still a tad lower than the 9.5 percent projected by the Reserve Bank.

Deloitte has predicted that the Union Budget is likely to “put the economy on an accelerated growth path after the impact caused by the pandemic”.

“Amendments in the tax law to bring about sustainable growth, infrastructure investment, focus on R&D spending, nurturing incentives to the core sectors including manufacturing and services, tapping the huge experience of running captive centres are some of the priority items on the agenda,” Deloitte said.

Here’s a look at what Indian business leaders, entrepreneurs, investors, and other stakeholders across the Indian startup ecosystem expect from Union Budget 2022.

Harshil Mathur, Co-founder & CEO, Razorpay

“Small Businesses & entrepreneurs who had been at the frontline of the Covid-19 crisis have been recovering from the impact and are gradually picking up. Digitization and the financial services sector has continued to be the backbone of SMBs struggling to adapt to the new normal in 2021, helping them harness the power of the internet and reach new customers across the country. Now with an aim to aid further development of small businesses, the Union Budget 2022-23 could introduce additional startup-friendly policies and tax relaxations that enable spending on innovation, ease-of-doing-business and reduce compliance costs.”

“We’ve seen a substantial spike in the adoption of digital payments in the last year. I’m hoping that in the upcoming budget, the Government will think of alternatives to the Zero MDR policy, as that will help promote e-payments and drive significant digital adoption amongst businesses. Initiatives like these will also lead to new innovations in the payments infrastructure.”

“Secondly, the crisis is likely to leave long-lasting scars on our society and economies, including the SME sector where issues of high indebtedness are particularly salient. It would be desirable for the Government to increase contribution to the FFS funds for startups. Hassle-free loan disbursements, automation of tax and compliance, paper-less approvals, and incentives to adopt digital banking practices will also be welcome changes that can support the growth of MSMEs.”

“Lastly, we’ve seen numerous startups incentivise employees this past year with buying back ESOPs. Deferring tax payments when exercising the option, plus waiving off tax for some ESOP receipts will also be a laudable change in the new budget.”

Sudhesh Chandrasekar, CFO, slice

“The NBFC sector has witnessed liquidity crunch in the last few years. Therefore, boosting the liquidity flow to fintechs and smaller NBFCs focused on consumer credit would be key to reviving economic growth and putting the economy back on a double-digit growth rate trajectory. In a bid to ease lending, the government also could promote banks to specifically fund fintechs and smaller NBFCs which are furthering financial inclusion in the retail segment. Another welcome move could be the Extension of tax sops on MLDs, which has the potential to increase the flow of capital to the fintech space. The government’s policies can also be helpful in promoting the flow of overseas capital by easing the requirements and thresholds for Indian debt instruments. Similar to credit guarantee schemes for Micro and Small Enterprises (MSEs), I’m hoping the Government would look at credit guarantee schemes to retail borrowers to boost retail demand.”

Deepak Jain & Sushil Pasricha, Partner, Bain & Company

Expectations for the manufacturing sector are multi-layered, such as:

  • Rationalization and simplification of taxation: The reduction of GST in certain sectors and reducing the number of slabs in GST would not only increase the tax compliance but also provide the necessary relief that would boost consumer sentiments and keep the demand higher.
  • Low-cost, long-term loan to reduce debt burden: In the MSME sector (which employs 40% of the country’s workforce and contributes to 30% of GDP), the government should provide low-cost, long-term loans to infuse working capital and ease out the effects of the pandemic.
  • Higher investment in the skilling workforce: There needs to be a higher investment in the skilling workforce as automation is replacing old jobs and creating new ones. The workforce should be upskilled for the next phase of industrialization i.e. Industry 4.0.
  • Make factories energy efficient: The manufacturing sector is considered one of the significant contributors to environmental pollution; the government should take a two-pronged approach to reduce the carbon footprints of factories, one by incentivizing the use of renewable energy like solar, and second by setting stricter norms of energy efficiency for factories.
  • Long term vision of EV: EV is the next big thing in the automotive sector, which is going to be critical for meeting sustainability goals. The adoption of EVs depends on two critical factors; affordability and infrastructure. Therefore, the government should apply a flat GST rate of 5% for all EV components, rolling out more incentives and policies to reduce manufacturing costs ultimately leading to a reduction of the overall price of vehicles.
  • Upward revision of Remission of Duties and Taxes on Export Products (RoDTEP) rates: The government should consider raising the RoDTEP rates that were implemented in January 2021 as a successor to the Merchandise Exports from India Scheme (MEIS). The rates notified at 1% or lower, are inadequate to cover the incidence of unrefunded taxes and duties borne on export products. This is deterring the competitiveness of the Indian auto component industry.

Murali Nair, President of Banking, Zeta

“The year 2021 was a phenomenal year for the Indian fintech and startup industry. With 40+ startups attaining unicorn status in the year, the startup industry witnessed tremendous growth. With regards to the fintech industry, India saw a continued explosion in digital payments and increased adoption of digital modes of payment. Around 44 billion digital payments were recorded across India in 2021. The Union budget 2022-23 must take into account this growth in the industry and continue to provide incentives for this industry to thrive in the coming months.”

“Given the surge in digital payments, the budget should consider offering tax incentives to consumers, merchants and ecosystem enablers. The digital payments ecosystem can be a force multiplier for economic growth. Spurring this industry is therefore is a great way for accelerating overall economic growth and bringing about greater transparency in economic activity. In order to accelerate innovation in the fintech space, the budget should also support more partnerships between banks and fintechs- 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.”

Kapil Banwari, Founder & CEO, Fyp

“The Indian fintech ecosystem has revolutionized the banking industry to a great extent in the past two years. In the year 2021, we saw increased collaboration for growth between banks and fintechs. Neobanks also paved the way for financial inclusion and have proved to become the next big thing in the banking industry.


“We expect the Union Budget 2022-23 to undertake measures to support and boost the growth of neobanks and fintechs in India. With full-stack digital banks proposed by the government think tank, NITI Aayog, we hope it opens up doors for growth and opportunities in terms of foraying into full-stack banking. Moreover, we expect the budget to consider reforms and policies that provide increased space for homegrown innovation. A structured regulatory framework for the functioning of neobanks in India would also be a welcome move.”

Himanshu Gupta, Co-founder & COO, WeRize

“According to figures unveiled by RBI, the fintech industry received a boost in 2021 with $4.6 billion in investments. All eyes were on the industry, as fintechs played a crucial role in accelerating the digital wave with an array of financial solutions, that reached the length and breadth of the country in the midst of the pandemic. The government is already on to a good start, with the launch of the new Fintech department to drive innovation. I would welcome a consolidated approach to take this to the next level, with the budget focusing on building a stronger fintech ecosystem. This could be done through liberalization of the tax regime, which would bring considerable relief to the industry. It would also be a step in the right direction to see the introduction of new start-up friendly policies, additional support mechanisms and tighter regulation for our industry.”

Soham Chokshi, Co-founder & CEO, Shipsy

“There is a growing need to make logistics sustainable. The government needs to build policies that ensure subsidies for using electric vehicles to execute delivery operations, especially in the last mile. We are also witnessing a significant need for Indian businesses to leverage AI, Machine Learning, predictive analytics and more. Robust plans and investments must be made to empower the country’s youth to understand, manage and use these disruptive technologies. According to research, AI in the logistics and supply chain market is predicted to clock a CAGR of 42.9% by 2023, and it will reach USD 6.5 billion by then. The scope is massive.”

“Another critical area that seeks greater attention is the export-import (EXIM) side of India’s supply chain operations. Currently, EXIM operations are riddled with silos creating challenges on freight procurement, shipment visibility, and customs operations. The government must build policies that will drive disparate EXIM stakeholders, like manufacturers, retailers, freight forwarders, shipping lines and more, to embrace a unified platform to execute, track and manage cross-border supply chain activities.”

Kumar Abhishek, Founder & CEO, ToneTag

“The government has consistently driven programs like Digital India, which has catalyzed digital penetration and financial inclusion. With the groundwork prepared, information and education about digital payments, both online and offline, must be encouraged proactively across all geographies of the country.”


“We are hopeful that the upcoming budget will focus on bolstering the digital infrastructure of cooperative banks across the country and initiate reforms that drive digital financial inclusion.”

“It is also crucial to capitalize on the success of homegrown technologies such as the UPI and encourage tech startups to invest in R&D and explore avenues to leverage existing tech and create new products. We are hopeful that the upcoming budget will consider offering tax benefits and incentives; thus encouraging innovation.”

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