New Delhi: Finance Minister Arun Jaitley tabling the Union Budget for 2017-18 in the Parliament in New Delhi on Wednesday. PTI Photo/TV Grab(PTI2_1_2017_000028B)

Union Budget 2017 presented yesterday in the Parliament by Indian Finance Minister Arun Jaitely proved to be a dud one for the Startup industry. It was a major disappointment when compared to last year’s budget when the government had announced a host of initiatives for the industry such as the much ambitious and appreciated ‘Start-Up India’ program.

Considering the fact that the Indian Prime Minister Narendra Modi has been such a staunch promoter of the startup industry, the industry was expecting much more in the budget than what was announced yesterday.

One of the areas where the startups were expecting some help from the government was a greater tax relief. According to industry experts, extending the tax holiday for startups from the existing five years period to seven years and giving tax breaks to firms that clock less than Rs 50 crores in turnover in a year doesn’t hold much relevance for the startups.

Rating the Budget an above average 6.5 on a scale of 1 to 10, Ajith Mohan Karimpana, CEO and Founder of Furlenco, an online furniture retailer, in a statement to huffingtonpost said that the Finance Ministry’s move of reducing the corporate tax rate for companies with a turnover less than Rs 50 crores might prove to be of no use for a majority of new age startups as a lot of them take at least five to seven years and a much larger turnover base to start making profits.


Industry members have also pointed out to the fact that the budget has failed to address several measures announced in the pre-budget phase such as easier access to unsecured loans, increase in tax holiday period and simplification of taxes etc.

The only ray of hope that could be seen for the Indian Startups in the newly announced Budget 2017, was the proposed reduction of profit linked deduction for startups to three years out of seven years which will further help in improving the ease of doing business and is expected to drive entrepreneurship in the country.

Some experts have even compared the Union Budget with last year’s Startup India initiative, both of which have left the Indian startup industry asking for more. According to them, whether it is the year tax holiday or the profit linked-deductions for startups, all of these are benefits which are virtually redundant.

The main reason for this is that a majority of startups take a long gestation period in order to break even. Hence, if the government would have added fiscal incentives for private sector to support the establishment of more incubators through industry academic partnerships, that would have been a great move.

Another thing that surprised the startup industry was the fact that the budget gave no clarity on GST implementation, which was one of the measures that startup industry had set its eyes on. Some experts thought this was because the government didn’t want to repeat the same sentiments that the demonetisation announcement had derived from the masses, hence, it played safe by refraining from announcing any path-breaking changes when it came to direct taxes.

However, the removal of Foreign Investment Promotion Board (FIPB) was seen as a positive change amongst the entrepreneur community as they are hopeful that this would improve the ease of doing business in the country.

The Modi government’s focus on digital payments and cashless mode made indirect beneficiaries out of a lot of startups and brought them unexpected cheer.

While Budget 2017 didn’t offer much to the Startup world, the Budget last year made headlines when the government announced a Rs 10,000 crores fund-of-funds for the startup industry. However, even after a year since the announcement the fund still remains unspent.

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