Budget 2024-25: PHDCCI proposes comprehensive measures for boosting India's startup ecosystem

Union Budget 2024-25: India, already considered the startup hub of the world with over 100 unicorns, is gearing up for a renewed focus on its burgeoning startup ecosystem in the upcoming Union Budget 2024-25. The PHD Chamber of Commerce and Industry has laid out a series of recommendations to address challenges and enhance the vibrancy of the startup ecosystem in the country.

The structural reforms announced in the 2021-22 budget, such as changes in the definition of MSMEs, a new PSU policy, the development of industrial land/ land bank and Industrial Information System, and the revamp of the Viability Gap Funding scheme for social infrastructure, have set the foundation for the startup ecosystem's growth. The 2022-23 budget provided a significant push to public investment in modern infrastructure, guided by initiatives like PM GatiShakti, Productivity Enhancement and Investment, and Sunrise Opportunities.

Recognising the challenges faced by startups in acquiring initial investment and navigating complex financial landscapes, the PHD Chamber emphasises the need for a more inclusive and streamlined approach. While traditional banks and financial institutions often view startups as high-risk ventures, the Chamber proposes initiatives to simplify the funding process and reduce the burden of interest rates.

Addressing the limited scope of startup funding managed by a few venture capitalists and angel investors, the Chamber proposes measures to broaden the avenues for startups. It highlights the importance of enhancing access to the Government e-Marketplace (GeM), leveraging technology and AI-based development, and strengthening the incubation framework for startups.

The PHD Chamber underscores the significance of regionalisation, advocating for dedicated personnel in rural areas and internal parts of the country. The proposal includes expanding the Production Linked Incentive (PLI) beyond the existing 14 sectors to encompass areas like medicinal plants and handicrafts. Marketing platforms and dedicated Special Economic Zones (SEZs) for startups, especially MSMEs, are suggested as critical components for fostering growth.

Government legislation facilitating exits and capital infusions, coupled with provisions allowing startups to form Joint Ventures and subsidiaries without losing tax exemptions, are proposed to encourage innovation across businesses. The PHD Chamber's recommendations aim to create an enabling environment for startups, ensuring a robust and dynamic ecosystem that fuels innovation and economic growth.