Startups planning to get into a business over the next 14 months will get to avail of incentives that were so far available only to those startups incorporated on or before March 31, 2022.

The period of incorporation of startups eligible to avail tax incentives has been extended by one more year, up to March 31, 2023, union finance minister Nirmala Sitharaman said while presenting the Union Budget for 2022-23.

Under this incentive, eligible startups can claim a 100 percent tax rebate on profits they make for three years out of the ten years since incorporation, but provided that their annual turnover is not over Rs 25 crore in any financial year.

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"Startups have emerged as drivers of growth for our economy. Over the past few years, the country has seen a manifold increase in successful startups," the FM said in her budget speech.

As per the Economic Survey, there are over 61,400 startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), of which at least 14,000 were added in FY22.

At a time when India's startup's funding ecosystem has been thriving, the FM said an expert committee will be set up to examine and suggest appropriate measures.

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"This is because venture Capital and Private Equity invested more than Rs 5.5 lakh crore last year facilitating one of the largest startup and growth ecosystem. Scaling up this investment requires a holistic examination of regulatory and other frictions," the FM said in her speech.

In addition, in a boost to rural and agri startups, the FM announced that a fund with blended capital, raised under the co-investment model, will be facilitated through NABARD.

"This is to finance startups for agriculture & rural enterprise, relevant for farm produce value chain. The activities for these startups will include, inter alia, support for FPOs, machinery for farmers on a rental basis at farm level, and technology including IT-based support," she added.

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Reacting to the announcement, co-founder of agritech startup Arya.ag Prasanna Rao said, "The Union Budget has set the ball rolling for the agritech sector in the country. The special focus around the post-harvest considerations related to millet farming is a welcome step and will help enhance the country’s farm produce quotient. The Budget has also placed agritech in the right limelight with the Finance Minister reposing faith on the role of these new-age players to transform the agriculture sector in the country under the PPP mode. Furthermore, Finance Minister’s assurance on government support to FPOs and small farmers to procure farming equipment as well as gain access to technology-led capabilities and services is also in the right direction. Overall the intent to inculcate a strong element of digitization in form of Kisan drones for crop assessment, in the agri value chain, will leapfrog India’s place in the global agriculture landscape."

Drone startups too, saw a boost in the Union Budget, with the FM announcing that startups will be promoted to facilitate ‘‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS).

The FM also said Defence R&D will be opened up for startups, along with industry and academia with 25 percent of the defence R&D budget earmarked for this purpose.

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Other announcements set to boost the startup ecosystem in India includes the FM’s announcement of establishing Centre for Processing Accelerated Corporate Exit (C-PACE) in order to facilitate and speed up the voluntary winding-up of these companies from the currently required 2 years to less than 6 months.

This, along with the announcement that IBC will be amended to help cross-borders insolvency resolution should help entrepreneurs restart, Nasscom said in a tweet.

Rolling out of an open platform for the National Digital Health Ecosystem consisting of digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities, could be a boost to HealthTech startups as well.

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(Edited by : Jomy Jos Pullokaran)