How angel, venture capital and private equity investors reacted to Budget 2021

By Team Tc

  • 01 Feb 2021
How angel, venture capital and private equity investors reacted to Budget 2021
Credit: VCCircle

Union Budget 2021 is out. This was going to be a crucial budget following a year of economic crisis, worst hit GDP, a global pandemic and most recently the on-going farmer protests. While some sectors such as hospitality and tourism were left disappointed with no respite or significant relief in sight; healthcare, fintech, agriculture and the overall startup ecosystem had a few things to cheer on. A call for Atmanirbhar Bharat, digitisation of payments and the fintech ecosystem, extension of tax holidays for startups, and planned capital infusion into the MSME sector were some of the key highlights of the year’s budget. 

Here’s a look into what some of the country’s angel investors, venture capitalists and private equity executives had to say about the budget.


Renuka Ramnath, founder and CEO, Multiples Asset Management, and chairperson, IVCA

The Indian Private Equity & Venture Capital Association is very heartened to see a spending heavy budget which augurs well for the economy. This budget comes on the heels of a series of roundtables with key stakeholders in government,  regulatory bodies, and the entire PE, VC, Startup ecosystem. The discussions were wide-ranging and very positive.  Pleased with some of the announcements for IFSC for onshoring the offshore, startups, Infrastructure, Real-estate and the healthcare sector. We hope we can see some benefits for the AIF industry once we read the finer points.

There is consensus around doing what it takes to build a vibrant PE, VC sector. We also hope to see concrete policy changes and steps to enable this common vision. Today, India needs at least 2.5% of the GDP to come in the form of PE, VC investments for the country to reach its $5 Trillion target, i.e. (Around ₹8.75 Lakh Crore or $125 Bn). Only an internationally competitive tax and regulatory environment, as well as a level playing for domestic capital - unlisted shares, will catalyze investors to look towards India.”


Jinesh Shah, managing partner, Omnivore  

The initiatives to have a Developmental Financial Institution, the expansion of commodities under MSP, usage of agri infrastructure fund for the strengthening of APMCs, and supporting dairy, fisheries, animal husbandry are laudable. The support for gig workers, financial inclusion, skilling, and efforts for 'minimum government maximum governance' provides opportunities for boosting India's employment rates. Finally, it is commendable that the union Budget 2021 avoids any knee jerk reaction for fiscal deficit consolidation and instead focuses on growth, especially in rural India. The continuous support to farmers via DBT, strengthening of e-NAM, and supporting agri commodities via increased duty on import of raw materials are steps in the right direction for energizing the rural economy.

Pankaj Makkar, managing director, Bertelsmann India Investments 


The increase in FDI in insurance is a welcome step. Not only will it boost growth in the fintech and insurance sectors, but also as more international companies come-in, over time it will help build great products in India. The extension of the tax holiday is a welcome step. The amount saved will help startups focus on building products and services and also pass on a part of this value to the end consumer.

Hemant Daga, CEO, Edelweiss Asset Management


In a global economy which is flush with liquidity, the budget has strategically opened the doors for global capital to fund the growth needs of India. This is a master stroke. A big thrust on monetisation of operational assets like roads, airports, transmission towers etc is a clear win-win for both the government and investors. This will not only help the government to manage its fiscal deficit, but will also help unlock capital for investing in other greenfield infrastructure projects. There is considerable interest from global pension funds and insurance companies for these assets and the long-term, inflation-indexed cashflows make this space very attractive for patient institutional capital.

The creation of an infrastructure-focused Development Finance Institution with a capital base of Rs 20,000 crore ($3 bn) is a very good initiative from an economic standpoint. By providing finance for infrastructure projects, which are envisaged under the National Infrastructure Pipeline, this will provide the stepping stone for funding infra projects in India. Coupled with this the zero coupon bond issuance by IDFs to fund infra projects is another enabler for capital to flow freely.

The budget connects capital to infrastructure which has been the biggest missing link. What we now need is meticulous structuring of these initiatives and good execution.


Siddharth Pai, founding partner and CFO at 3one4 Capital, Co-Chair at Regulatory Affairs Committee, IVCA

A noteworthy measure has been to introduce a "warehousing" mechanism for offshore funds who currently invest into India - a system that allows them to move their fund to GIFT IFSC without the transfer being subject to tax. This is a huge boost to the Indian fund ecosystem as part of the "Onshore the Offshore" programme that has been in vogue for the past few years. This will help ensure that the gateway to Indian equities will be in India and the need to have a foreign launchpad in order to invest into Indian equities is mitigated. Startups will benefit from the extension of the tax holiday by another year, but reforms in the IMB process will be necessary in order for it to live up to its full potential.

Jatin Desai, managing partner, Inflexor Ventures 

While the devil will be in the details and implementation, there were few direct and indirect measures that were announced in the budget that are positive for the startup and VC ecosystem. Direct measures that will have a positive impact on the ecosystem include extension of tax holiday and capital gains tax exemption for startups by one more year, OPC (one-person company) reforms and setting up of a fintech hub in GIFT city. Indirect measures like the massive increase in healthcare spending, higher capex, infrastructure building and reducing some stress in the banking and financial system will also be a net positive for startups and the VC ecosystem.

Padmaja Ruparel, founding partner, IAN Fund

Budget 2021 opens up opportunities for startups across health, hygiene, water, clean air, sanitation, etc. The vision of Atma Nirbhar Bharat with a focus on good governance and women empowerment will lead to a boost for the Indian economy. Indian startups have a great opportunity to innovate and help to sustain the economy. Non-conventional energy boosted with focus on solar and non-renewable sources. Reopening of tax cases reduced to 3 years from 6 years and increased income limit of Rs 50 crores.

Vineet Rai, founder and chairman, Aavishkaar Group

“The budget has critical infra push, significant focus on agriculture and sops for start-ups. The increase in Rural Infra fund and micro irrigation are welcome. The budget has laid significant focus for startups. The most notable has been the incentive to set up one person companies, extending the eligibility of  tax holidays for startups by one year and extension of capital gains tax exemption for investors  by one year in startups. 

The defining statement was around the National Research Foundation endowment of INR 50,000 crore over five years. The boost to digital payment and conciliation mechanism of disputes for investors are also welcome and positive steps. 

Rajiv Sabharwal, CEO and MD, Tata Capital

Rajiv Sabharwal, managing director and CEO, Tata Capital

FM Sitharaman’s 6 pillared budget is progressive and growth inducing in more ways than one. Push to infrastructure, healthcare and education and extension of tax holidays for startups and affordable housing projects are exactly the reforms that our economy needs for growth. 

Budget 2021 will benefit the real estate sector in the form of extension of interest deductions and tax holidays for affordable housing projects. The Vehicle Scrappage policy will be a big boost for the Auto sector. Allocating funds for digital adoption and providing incentives for the same will facilitate digital inclusion and greater transparency in the financial services ecosystem. This is a great motivator for companies to continue innovating.

Abhijeet Pai, partner, 9Unicorns

Budget 2021 is special since it focuses on creating avenues for both Make in India and Innovate in India initiatives. The Finance Minister's announcements and proposals are well in line with the Government's vision to make India the leading startup destination globally.  The Government's decision to invest heavily in futuristic technologies such as AI/Robotics and Automation in various sectors right, from healthcare, infrastructure, finance, and manufacturing, would undoubtedly boost the existing startups and lead to innovative startups entering the ecosystem. 

Kunal Bahl, co-founder and CEO, Snapdeal, and angel investor

Budget 2021 holds out various positives for the startup sector. The move towards providing social security benefits for gig workers will add a much-needed safety net that will help this sector grow in a sustainable way and help the many millions that are a part of it. Reducing residency requirements for founders will allow talent to flow & will boost the start-up ecosystem. Extension of tax holiday for start-ups by 1 yr, boost to digital payments, increasing threshold for small businesses to Rs 2 Cr are other gains for the startup sector.

Devang Mehta, partner, Anthill Ventures

All the steps to improve the macroeconomic situation – fiscal deficit, taxation, privatization etc. will continue to improve the investment climate in the country – something will percolate down to the entire startup and VC ecosystem. Steps taken on extending tax holidays, incentivizing the formation of one person ‘lone ranger’ corporations, and making it easier for overseas citizens to participate in these creations will significantly improve perception of the startup industry. Further, the very definition of what constitutes a startup has been favorably altered, something that will help cast the net wider and have a multiplier effect on the overall early-stage ecosystem.

Roopa Kudva, managing director, Omidyar Network India

It is great to see the emphasis in the budget on using technology as an enabler for social impact and inclusion in critical areas like education, urban governance, and provision of benefits to migrant workers. A 45% increase in the allocation to e-learning and the launch of a new scheme PM e-Vidya to provide multi-modal access to education for teachers and students can go a long way in strengthening education delivery, especially post COVID. The proposal to create a platform for unorganized migrant workers to access benefits under various welfare schemes is an important step, as migrant workers have been left out of the social safety net so far. There is also a new target to digitize 125 civic services across 25 cities through the Smart Cities Mission.

Digital infrastructure should continue to be given importance going forward. In addition to the technology, we will need good data governance and community engagement for the benefits to reach every Indian. 

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