28 May 2020

RSS Feed

Budget 2019 : What’s in for SMEs and Startups

E-mail Print PDF

Budget 2019

Budget 2019 : What’s in for SMEs and Startups

"With job seekers becoming job creators, India has become the world’s second largest start-up hub" said Piyush Goel while presenting the interim budget for 2019. The glass may be half empty for those seeking a big ticket announcement, but remains half full as the interim budget offered a roadmap for the future addressing the aspirational growth for the sector. Here is what budget 2019 brings to the table for SMEs and startups for their intermediate and long term future.

Artificial intelligence to be a part of startup ecosystem

While most people look for tangible takeaways from the union budget, some of the announcements offer a spiral effect on the SME and startup sector for the future. The focus on using Artificial Intelligence (AI) in the startup ecosystem along with the Centre of Excellence and National Program for AI is one such announcement. Not only can AI be now used to offer beneficial tools and solutions, it offers opportunity for startups especially in the fields Fintech, healthcare and technology to offer innovative solutions.

Easy availability of loans for SMEs

Raising capital for setting up of a new business or working capital needs has always been a raw nerve for Indian SMEs. The digital growth in the fintech sector along with the need to resolve credit woes have lead to an easy availability for finances for SMEs and startups. The finance minister in his budget speech mentioned how a government portal is facilitating loans of up to Rs 1 crore loans in less than 59 minutes, brining to an end the endless long delays for capital needs for businesses in the past.

Tax relief and interest subvention for SMEs

Tax relief especially for the SMEs and startups is always center stage in every budget and the interim budget was no different. While there were no major announcements especially over the long pending demand of doing away with the ‘angel tax’, the tax relief measures do impact a whole lot of smaller businesses in a positive manner. For example, the reduction of corporate tax rate from 30% to 25% over a four-year period announced in the Budget for 2015-16 benefits more than 99% enterprises including SMEs and startups.

To ensure startups and SMEs can focus on their business without worrying about filling monthly GST returns, businesses with less than Rs. 5 Crore turnover have been offered the cushion to file quarterly GST returns. This helps over 90% of businesses including SMEs and startups going a long way in ensuring ease of doing business. What’s more when filling GST returns, enterprises are now offered loans with a 2 % interest subvention on both fresh and incremental loans. Easy loan availability also helps in more GST compliance bringing the unorganized smaller enterprises into an effective and transparent business ecosystem.

GeMs to act as MSME growth catalyst

With SMEs facing a sales war globally, the government marketplace (GeM) has made it easy for SMEs to sell their products. Going forward the finance ministry has announced 25% material procurement for all government projects to be sourced by SMEs including 3% exclusively from women owned SMEs.

Improved connectivity and setting up of one Lakh Digital Villages - a boom for Startups

In what can be termed as a massive business opportunity for Startups, the government’s plan to set up one Lakh digital villages offers a host of opportunities. From Fintech startups to healthcare, education and tech startups, there is a room for growth for the startups to increase growth penetration and act as a bridge between urban and rural India.

Transformation of entrepreneurial mindset for the future

Offering tax sops and incentives is just one half of the story. The other half is having a vision for the future. The finance ministry has announced continuation of state and district level competitions to promote skill development. Improved digital connectivity to smaller centers across India is also seen as a massive boost to offer growth of entrepreneurship in smaller centers. Eventually the government plans to transform mindset for the youth in smaller centers to adopt the benefits of startup India and Skill India and promote an entrepreneurial life.

Conclusion: While there was not much scope for the finance minister to offer any game changing sops in the interim budget, the budget offers significant takeaways including both tangible and non tangible benefits for the SMEs and Startups.


Get the Flash Player to see this player.

Follow SEI

Facebook Twitter Linkedin Youtube RSS Feed
Small Enterprise India Newsletters


Take Our Online PollVoice your opinion
What do you expect from the StartUp India Action Plan?