Budget 2022 Expectations: Prime Minister Narendra Modi had earlier this month dedicated a special day for startups, to celebrate them and their success in taking India to new global heights. The startup culture has taken over India in the past few years, with the central government announcing various policies for the sectors. However, the Covid-19 pandemic has adversely affected majority of the small companies, with their funds going all over the place amid a pandemic-induced economic slowdown. Many small businesses have been forced to shut down, while the others are barely thriving due to this. In this scenario, will the government come forward to announce relief for startups and MSMEs during Budget 2022?
The answer related to this will only get revealed on February 1. On the day, Nirmala Sitharaman will present the Union Budget 2022 before the Parliament as the budget session kicks in next week. Several leaders from the startup and MSME sector are looking forward to the Budget Day, anticipating major reforms in the industry.
“In an effort to continue the economic growth of the country, we hope the Government will lower the interest rates and make higher capital availability to MSMEs as they are the backbone of the Indian business market and ultimately help generate employment," said Shreegopal Kabra, managing director and group president of manufacturing company RR Global.
“As we can see, the raw materials’ prices are very high and it’s not uniform and controlled. In this case, the government should at least rationalize the GST on manufacturing for MSME. Experts suggested in this field that GST for manufacturing should be brought down to at least 12 percent from 18 percent," said Wooden Street Founder and CEO Lokendra Ranawat.
Every sector in the MSME area, including technology, fashion, edutech and e-commerce solution providers want a reduction in GST during the Union Budget 2022. “The fashion startups are expecting the government to improve the disposable income of the consumers as well as the reduction in GST rates of readymade clothings. Current GST rates of readymade clothes that cost above INR 1000 fall under the category of 12 percent and the government should bring it down to 5 percent," said Kapil Bhatia, founder and CEO of UNIREC.
“In addition to tax rate reduction, easier compliance and simplification of taxes are two of the major expectations of the functional fashion startups in the market. Moreover, the prime motive of the government should be to empower both skilled and unskilled employees,” he said.
“With the country witnessing the third wave of Covid, online classes have become mainstream now but they currently come under 18% GST slab. Relaxation on GST for online classes and STEM toys will encourage more enrollments of interested students," opined Sharad Bansal, co- founder of edutech platform Tinkerly.
The startup sector also wants financial support and incentives during the Budget 2022, particularly for small and medium-sized businesses, to help accelerate the digital India vision. The industry experts want the startup sector to stay funded to thrive, as they make up a large part of the country’s businesses.
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