The Covid-19 pandemic has forced people to re-imagine every facet of our day to day lives, starting from healthcare systems, business models and educational infrastructure. At the epicentre of this watershed moment has been the unprecedented adoption of technology, propelling a ‘never seen before’ cultural transformation.
Some of the demands that the industry is asking include simplification of GST rules, startup and investor friendly initiatives from Union Budget 2022, among others.
Investor and Startup Friendly Initiatives
In the upcoming union budget 2022, the industry expects government’s support towards the tech driven startups to create a sustainable fintech ecosystem, considering the Covid-19 pandemic helped in greater push towards digital solutions.
“The Indian D2C ecosystem has evolved significantly in the recent years. However, the need of the hour is to further expedite market expansion through investor and startup friendly initiatives. It is expected that the e-commerce policy will be implemented keeping the interests of consumers and D2C retail businesses in mind. There is still a lot of work to be done in terms of simplifying investments and taking steps towards boosting investor confidence in the Indian markets. Foreign investors could be offered incentives and benefits to enter the Indian D2C retail,” said Saroja Yeramilli, founder and chief executive officer, Melorra.
Also Read: Budget 2022: Fintech Firms Seek Tax Relief For Ease of Lending, Digital Transformation
Measures to Ease the Liquidity flow to NBFCs, Fintechs
The Union Budget 2022 comes at a crucial moment, as the country is reeling under the pressure from rising concerns around the Covid pandemic. Hence, considering economy’s efforts to fully recover and set on a growth path, the government’s recognition of the enhanced operations and effectiveness of fintechs to reach out to the unserved and underserved population has encouraged the industry.
Madhusudan Ekambaram, co-founder and CEO, KreditBee and co-founder, FACE (Fintech Association for Consumer Empowerment) said, “we expect this emphasis to become more prominent in the upcoming budget. It is essential that the Government announce measures to ease the liquidity flow to NBFCs and fintechs.”
“Further, while ensuring the right degree of regulation, relaxation of norms and tax liberalization to some extent will allow the fintech sector to boost their reach and operate effectively to offer innovative credit solutions to the borrowers. Focus should also be on enhancing the country’s digitization bid, to empower the consumers to avail various credit products,” Ekambaram said.
GST Relaxation
As the pandemic-hit period impacted all businesses, fintech startups have expectations from the budget in order to push forward economic recovery. Hence, looking forward to simplification of the GST rules.
Abhishek Goenka, head and CIO, RPSG Capital Ventures, said: “We have had a fantastic 2021 from the startup ecosystem perspective, and with further Government support this growth could reach new heights. This could include simplification of GST rules with respect to availing of credits and monthly procedural requirements. Also an offset of capital gains by investing in other startups could help boost investments and contribute to the growth of the overall startup ecosystem.”
Insentivise Debt Instruments to MSMEs and Startups
In the absence of bank funding, debt capital providers for MSMEs & startups should be incentivised by the government. For instance, while banks & AAA rated companies can raise debt at 5-6 per cent, A-rated companies or lower can secure debt at 10 per cent or higher. NBFCs and FinTech in the space of MSME & digital lending need adequate debt capital to penetrate underbanked segments and create millions of jobs in the process.
Further emphasising the need to stimulate the MSMEs in the country, Rumki Mazumdar, Deloitte Touche Tohmatsu India LLP., said: “Since micro, small, and medium scale enterprises (MSMEs) are the biggest job creators of India, the government will have to emphasise reviving the sector by enabling the ecosystem that supports these enterprises. Identifying their pain areas and devising a solution to help them become a part of ‘Atmanirbhar Bharat’ will aid in their recovery.”
With FM Nirmala Sitharaman getting into the swing of Budget 2022, at the backdrop of several promises to keep, the technology sector will wait with bated breath for its rightful share.
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