The 2024 Union Budget, a continued plan for Viksit Bharat has rolled out plans that lays the foundation of economic growth. The focus is on infrastructure development, employment generation and the initiatives to push ease of doing business.
At the heart of this budget is a substantial allocation of INR 1.52 lakh crore for farming and allied sector. Also, FM announced lowered taxes and levies to boost consumption. Initiatives to boost financial support for setting up 50 multi-product food irradiation units. Setting up of 100 food quality and safety testing labs with NABL accreditation will be facilitated. Setting up of e-commerce export hubs in PPP mode to enable MSMEs and artisans to export products and the development of spiritual and cultural landmarks like the Vishnupath temple in Gaya and Mahabodhi temple in Bodhgaya are some of the significant highlights of the first full budget of Modi 3.0 govt.
Here’s what India inc is speaking about it:
A fair budget, says stakeholders
Tarun Joshi, CEO and Founder of IGP.com hailing the budget says it’s a staid and fair budget for a record seventh time.
“We greatly appreciate this budget’s focus on artisans. The government has announced that it will set up e-commerce export hubs in PPP mode to enable MSMEs and traditional artisans to sell their products in international markets. This will help promote our local crafts and give it a global audience. The various measures such as credit guarantees and credit support will help MSMEs flourish. Overall, we are reasonably happy with this budget,” he said.
Sunil Agarwal, Director of Vinod Cookware also commends the union budget for its strategic focus on strengthening MSMEs.
“The allocation of INR 100 crore to the Credit Guarantee Scheme and the enhancement of the Mudra Loan limit to INR 20 lakh are decisive steps toward empowering small businesses. As for the manufacturing industry, the provision allowing MSMEs to acquire machinery without collateral is particularly noteworthy, as it paves the way for enhanced productivity and growth,” he said.
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Moreover, the reduction in GST rates and the simplification of compliance procedures underscore the government’s commitment to fostering a cohesive business environment, he added.
“The planned expansion of the SIDBI with 24 new branches by 2025 is guaranteed to further support MSME clusters across the country. These measures collectively enhance the ease of doing business and provide a strong foundation for economic development.”
Emphasis on agriculture and food value chain
The Union Budget’s emphasis on agricultural development, particularly the creation of large-scale vegetable production clusters, is a significant step forward in strengthening the country’s food value chain.
Abhay Parnerkar, CEO, Godrej Tyson Foods Ltd feels this initiative aligns perfectly with our vision of a robust and sustainable food ecosystem.
“Additionally, the focus on natural farming is commendable and will undoubtedly contribute to the overall health and well-being of our nation with enriched farm to table experiences for consumers. We are optimistic about the potential of these initiatives to enhance food security, improve farmers’ livelihoods, and drive economic growth. I also firmly believe the growth in frozen food category will reduce wastage and nutrition loss in the food value chain” he said.
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Scrapping Angel tax is good
This year’s budget has been pragmatic for the startup community. Commenting on the highlight of the union budget, Dimpal Kaushik, Director Finance, Scuzo Ice ‘O’ Magic said that abolishing the angel tax will substantially advance the startup culture.
“This change will help attract investment from national and global sources which in turn will enhance the growth of startups by providing them with increased funds. The abundance of inflow can ease startup growth generating better employment and innovation.”
Additionally, the suspension of angel tax will exclude bureaucratic complications, making compliance easy for the companies. “Talking about motivation, an influx of funds will create the ecosystem of sustenance and growth and hence will encourage more ambitious minds to start their own venture thus driving the economic growth. Angel tax will also produce an easier market for global startups as well to choose the Indian market as an attractive spot to do business.” She said.
Weighing in, Neeja Shah Goswami, CEO, Whiskers India said, “Abolition of angel tax marks a significant leap forward for India’s startup ecosystem, fostering a fertile ground for innovation and entrepreneurial growth.”
She also added that by prioritising equal support for both the IT and agriculture sectors, the government underscores its commitment to balanced economic development and inclusive prosperity. Furthermore, substantial investment in transit infrastructure offers hope for improved urban mobility, promising better commute experiences in major cities.
“These strategic initiatives not only stimulate economic activity but also reflect a progressive vision for a more connected and sustainable future. The budget’s holistic approach addresses critical needs across sectors, positioning India as a dynamic hub for innovation, agriculture modernisation, and urban infrastructure development,” she said.
Commenting from the VC and PE sector perspective, Vikram Gupta, Founder and Managing Partner, IvyCap Ventures feels angel tax abolition is a big relief.
“This has been a long-standing demand within the industry, and it was music to our ears when we heard the announcement. The impact of this move is expected to be substantial, potentially adding 30 to 40% more capital from angel investors into the startup ecosystem in the near term. This influx of capital will benefit startups significantly,” he said.
Secondly, the overhaul of the long-term capital gains tax (LTCG), reducing it from 20% to 12.5%, even without indexation, is another substantial change. This adjustment is poised to boost the domestic pools of capital in the startup ecosystem, increasing from the current 15% to over 25% in the next three to five years. This shift means the growth rate of domestic capital will be higher than that of foreign capital entering the ecosystem.
“These changes will encourage more startups to remain local rather than seeking registration outside India in places like the US or Singapore to raise capital. Overall, these budget provisions are set to generate a significant positive impact by fostering more domestic capital. I am quite excited about these developments, which bring very positive news for the entire VC and PE industry.”
While the budget has been noted for its focus on infrastructure development, employment generation, and support for spiritual and cultural tourism, it has received a mixed reception from the hospitality and tourism sector.
Hospitality stakeholders pointed out that the budget did not address some critical demands of the tourism and hospitality sector, such as GST rationalization, the granting of infrastructure status, and essential policy reforms.
Long pending demands not met
The restaurant sector contributes 2% to India’s GDP, directly employs 8.5 million people, and significantly contributes to various central and state taxes.
On the GST front, the players have been proposing two options for GST slabs: a 12% GST rate with Input Tax Credit and the current 5% GST rate without Input Tax Credit, applicable to all restaurants. Allowing ITC will enable restaurants to pass on the benefit to customers. However their demands are not met this time.
Rahul Singh, Founder & CEO of THE BEER CAFÉ said, “Implementing a simplified and standardized license and permit policy nationwide will give businesses the necessary impetus to plan expansion across regions, creating employment opportunities and other positive economic effects.”
“Regrettably, our previous requests and recommendations have not been adequately addressed. We hope that the focus on infrastructure development, skill enhancement, and employment generation at the macro level will eventually benefit our sector.”
Amit Jaiswal, CFO at Royal Orchid and Regenta Hotels also feels the budget has once again disappointed the sector by not granting infrastructure status.
“The government needs to take a well-considered approach to grant the hotel industry a comprehensive infrastructure status as it is a substantial source of employment and a valuable contributor to the country’s gross domestic product. The hospitality industry could have benefited from more specific announcements like rationalizing GST to ensure parity in room rates and promote stability in the hospitality sector.”