In order to promote the growth of startups and entrepreneurs in India, the government has increased significantly the allocation for Fund of Funds to ₹1,054.97 crore as well as for the Make in India kitty in the Budget 2020-21.
Finance Minister Nirmala Sitharaman on Saturday (February 1) announced a host of measures, including relaxing tax incentives and setting up of investment clearance cell for startups and entrepreneurs.
The government has set up a Fund of Funds for Startups (FFS) with a corpus of ₹10,000 crore. Small Industries Development Bank of India (SIDBI) is the operating agency for the FFS.
The allocation for the fund of funds in the revised estimate in 2019-20 was ₹431.30 crore.
It has marginally reduced the allocation for Startup India programme in the Budget.
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According to the budget documents, the allocation for Startup India programme has been cut to ₹50 crore for 2020-21 from the revised estimate of ₹57.84 crore in 2019-20.
Startup India initiative aims at fostering entrepreneurship and promoting innovation by creating an ecosystem that is conducive to the growth of budding entrepreneurs.
Himanshu Patel, Partner, Deloitte India, said that the government has been quite progressive in addressing the tax issues faced in the entire start-up ecosystem.
He said that during the last three Budgets, the government has addressed matters relating to angel tax, rationalizing profit linked tax holiday to eligible start-ups, exempting long terms capital gains in certain situations.
On the other hand, Make in India programme that received increased budgetary allocation include a scheme for investment promotion (₹140 crore), and ease of doing business (₹20 crore).
Overall, the total allocation for Make in India initiative was increased to ₹1,281.97 crore for 2020-21 as against the revised estimate of ₹651.58 crore in 2019-20.
Make in India campaign, which aims to transform the country into a global manufacturing hub, was launched on September 25, 2014.
The cumulative allocation for the department of industrial policy and promotion (DIPP) has been hiked to ₹6,605.55 crore for 2020-21 as against the revised estimate of ₹6,490 crore in 2019-20.
However, the cumulative allocation for the department of commerce has been reduced to ₹6,219.32 crore for 2020-21 as against the revised estimate of ₹7,219.32 crore in 2019-20.
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The total allocations for export promotion schemes such as Market Access Initiative and Interest Equalisation Scheme has been reduced to ₹3,260 crore for 2020-21 as against the revised estimate of ₹4,313 crore in 2019-20.
Global trade information platform Connect2India.com CEO Pawan Gupta observed that the start-up ecosystem in India is growing and with the finance minister highlighting the digital revolution, use of new-age technologies, proposed opening up of the data and data centre and increase in digital connectivity, this all augur well for the vibrant start-up community in India.
(With inputs from agencies.)