Startups and Interim Budget 2024

The Interim Budget 2024 reflect the growing interest of India to emerge as manufacturing hubs for deep tech and high end emerging technologies. There is a strong realization that unless India invests and encourages the youth for greater participation in developmental journey, the services sector will not take it to a developed nation. One of key problems of startups are the long-term and low cost fund requirement.

Let us explore the relevant takeaways for startups in this interim budget:

1. Rs one trillion fund:

i. One trillion fund: This fund will be created to provide support to support start ups with 50 years low or nil interest loans to fuel their growth and innovation in emerging sectors.

ii. Aim is to boost research and innovation in high-tech manufacturing, such as semiconductors, electronics, drones, med-tech, space, renewable energy, green power generation.

iii. The modalities and operationalization of the fund will be shortly worked out by the relevant ministry.

iv. The fund will provide much needed support to private enterprises in these sectors

v. The fund will reduce dependence of the nascent startups on equity funding. In the absence of any long-term fund support, the entrepreneurs are forced to dilute significant shareholding at low value.

2. Tax Advantage:

The tax breaks for startups for any three years out of 10 years, for incorporation was expiring on 31^st March, 2024. This is being extended till 31^st March, 2025. Any startups incorporated till 31^st March, 2025 can avail the benefits. However, the turnover limit of Rs. 100 cr will continue.

More clarity will come when full budget is presented in July, 2024.

Conclusion: The Interim Budget unfolds promising prospects for startups in India, offering a significant one trillion fund and extended tax benefits. By facilitating low-interest loans and encouraging innovation in emerging sectors, the government aims to reduce dependence on equity funding. As India paves its way to become a global tech player, these measures signify a crucial step in empowering startups and driving economic growth.