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  • Budget reaction by to Mr. Sushanto Mitra, Founder & CEO, Lead Angels

    Published on February 1, 2019

    India has become the 2nd largest start up hub in the world. The Indian govt. is launching a national program to develop artificial intelligence & has identified 9 priority areas that the AI program will focus on. However tax reliefs for start up investments has not been addressed in this budget. Startups generate the highest number of new jobs per unit of invested capital compared to private or government investments. In most western economies, therefore individuals are encouraged to invest into startups by providing 33%-100% write-offs of the amount invested every year. The government of India could encourage investments into startups by considering such investments being included in the list of investments covered under 80C thus encouraging startup investing. Currently, capital gains from profits made in real estate transactions are exempted if the proceeds are re-invested in a residential property under certain conditions. This encourages individuals to invest in residential properties. This has partly led to excessive investment in this sector leading to glut in some of the markets and dead inventories. The same exemption could be extended to investments into startups so as to encourage the movement of capital into this sector which is more productive for the overall economy. Startups could also be considered for GST exemption for the first three years of their operations as a means of increasing time and resources thereby focusing on survival & growth, crucial for their company and nation.

    Many if not most Indian startups futures are linked on higher consumer spending. The budget has created spending power for both rural and urban middle class consumers and hence positive. How large an impact that will be of course only time will tell”.