The funding winter in the Indian start-ups is an open secret. Despite significant global acknowledgment, how Indian start-ups differ from their western counterparts is in their ability to access tax credits and subsidies, when competing globally. With the Union Budget 2023 ready to be presented, the start-up community is hopeful that the government will take a fresh look at the challenges facing this community in the coming times and leave no stone unturned to render support.
"The IT/ITeS sector in India is continuing to experience strong growth and innovation. There are high expectations from the government to take steps to further support and invest in the growth of this important industry by implementing measures such as providing tax breaks or subsidies, rationalising the surcharges on long-term capital gains (LTCG) and short-term capital gains (STCG) taxes and increase investment in infrastructure and R&D," said Uthaman Bakthikrishnan, executive vice president, ClearTouch.
Today, international companies enjoy a competitive advantage over domestic startups due to their scale and a steady source of credit, making it more difficult for the domestic players to compete against larger, established firms. To level the playing field, it is important that the government provide similar incentives and support to domestic startups.
With regard to this, Bakthikrishnan said, “besides tax breaks and subsidies, to accelerate its support for domestic startups, the government can build a more favourable business environment and encourage entrepreneurship and innovation within the country through implementing regulations that favour small businesses."
“Another important focus area is increasing access to digital infrastructure resources such as broadband and high-speed internet as these resources are essential for companies in the sector to operate effectively and efficiently, as they allow for faster communication, data transfer, and access to information and resources. Continued investment in research and development of innovative technologies like AI and automation will be crucial for India to maintain its competitiveness in the global market. These technologies have the potential to transform various industries and sectors, and investing in their development can help to ensure that India remains at the forefront of technological advancement." He further added.