MUMBAI, 03 FEBRUARY, 2022 (GPN): Mixed reactions came from eminent start-up and fintech leaders post Nirmala Sitharaman’s Union Budget on the various initiatives and policies announced. Long-term capital gains, digital currencies and the payments ecosystem are some of the key areas that they feel positive about.

Here are some insights offered by the industry leaders, such as Bizongo, Niyo, Global PayEX, Falcon, Zaggle, LXME, Constellar, TrulyMadly and TAC Security.

Trishneet Arora, Founder, Director & CEO at TAC Security – A global leader in vulnerability management that protects Fortune 500 companies

The last few years and more so the pandemic times, has seen India emerge as a global success story on use of digital technologies to transform lives of citizens. The Union Budget announced today further carries forward this resolve and empathetically places digital as the way ahead. The role of Blockchain technology and its leverage to introduce Digital Rupee in the country, reflects the long-term potential of this new-age concept. Though not explicitly mentioned in the budget, cyber security landscape certainly stands to benefit out of this ever-evolving stature of digital technologies in the country.

Sachin Agrawal, Co-founder & COO, Bizongo – a B2B e-commerce platform for customized goods

“The Budget Speech has given a strong policy impetus to boost India’s exports and start-up culture. First, the recognition of the logistics infrastructure as one of the seven engines of economic transformation is an important and exciting development. The PM Gati Shakti National Master Plan is a bold and much needed move to achieve coordination, modernization, and adoption of sustainable practices in the Indian economy. There is a combined focus on enhancing the physical infrastructure of roads and transportation, as well as promoting digital technologies. Currently, the fragmented logistics infrastructure costs our economy an estimated 14% of GDP. The National Logistics Policy estimates to bring this cost down to 10% over the next few years. Integrating digital technologies into the logistics infrastructure has become an industry-wide priority to achieve faster and safer mobility of goods.

Second, increasing collaboration among private and public stakeholders using the Unified Logistics Interface Platform. By inculcating the practice of data-exchange, groups ranging from Government to start-ups, and MSMEs will have better access to data. Removing information asymmetries is vital to ensuring a competitive and modernized industry. An important decision has been the extension of the ECLGS by another year, with an addition of a corpus of ₹50,000. To sustain the benefits of such schemes, it is important to explore methods of digitizing finance for MSMEs. This will help in coming up with resilient business models.

Third, customs have a vital role to play in the faster mobility of goods. A key component of boosting exports are customs reforms, which have been highlighted by the Finance Minister today. We believe, that the integration of customs reforms into the overall logistics plan will further accelerate economic transformation. By lowering the barriers to mobility, MSMEs will be able to avoid costs caused due to delays in the movement of goods, and ensure better capacity management. We are optimistic and hopeful about the future of the logistics and supply chain industry in India.

Finally, the decision to cap the surcharge on long-term capital gains from shares of unlisted companies is important for start-ups from an overall acceleration perspective. 2021 saw a record number of VC deals. This shows the growing faith of global investors in Indian start-ups. The surcharge cap of 15% will propel investments from venture capitalists and high-net-worth individuals and promote the use of ESOP by new-age companies for retaining and rewarding employees.”

Swapnil Bhaskar, Head of Strategy, Niyo – neo-banking Fintech

“The union budget 2022 has set a promising future for the digital banking and startup community with a clear focus on tech-enabled development. The Finance Ministry has acknowledged the growth of fintech innovation by lending its continuous support to ensure the benefits of digital banking through the setup of 75 Digital Banking units to mark the 75 years of independence. The continued support for digital payments from the previous budget will encourage and ramp up the further adoption and promotion of digital payment platforms. However, any support for the business sustainability of such payment companies having zero MDR on UPI is not visible.

The e-passport facility is going to be a game changer as now start-ups like Niyo can further innovate on products customised for such segment and add enormous value and convenience. Skilling programs through the launch of Digital DESH e-portal will help the youth of India and support the development of the gig economy. Implementing courses offered in GIFT city in Financial Management, FinTech Science, Technology will encourage the youth of today to sharpen their financial literacy and usher in a new era of financial entrepreneurs. This will also reduce the shortage of skilled tech engineers. Overall this is a progressive budget and Hon’ble Finance Minister Nirmala Sitharaman has tried to addresses concerns of the industry through various initiatives announced in her speech. We hope these are implemented in a time bound manner so that all stakeholders can gain from it and country can achieve its ambitious growth targets.” 

Rupesh Nambiar, Chief Finance Officer, Global PayEX – an AI-powered cloud platform for working capital optimization in Accounts Receivables & Payables

“This Union Budget’s focus on Fintechs and digital payments platform and ecosystem is a testament to its commitment to realize its vision of an economically self-reliant nation and driving a less-cash economy. Here the initiation of 75 digital banks will be a landmark move that will provide a hybrid model for those who are still experimenting with digital banking and push digital transactions in India.

Further, the completely paperless and online e-Bill System for use by all central ministries for their procurements will not only enable the suppliers and contractors to submit online their digitally signed bills and claims but also bring in greater flexibility, transparency, and obvious cost efficiency to MSMEs and corporates. By eliminating manual efforts and errors accompanying these processes, the real gains from this move will be seen in increased working capital management, enhanced transactional speed across the supply chain, as well as improved cash flow. As the Government of India lays the foundation to steer the economy over the Amrit Kaal of the next 25 years, FinTech will continue to play an important role in the country’s financial ecosystem.”

Prabhtej Bhatia,

Co-founder, Falcon – an embedded payments digital startup

“We will be eagerly looking to see how this space emerges and will be one of the first to integrate with the ecosystem as the new digital currency will bring traceability, affordability, reach and financial literacy across the payments ecosystem. I think the government has given a great push to boosting digital payments in India – both through fiscal measures to augment the infrastructure and through specific measures like launching Digital Banking Units and bringing Post Offices to offer core banking services. This will definitely widen the scale of digital financial infrastructure in the county and also boost the embedded finance space as there will be faster adoption of Fintech solutions from all players targeting  the semi-rural and rural parts of the country. Also, this budget has identified the growing importance of Fintech in the economy with several measures such as Fintech courses through world class institutions to train the workforce in India. This will go down as a seminal decision taken by the government in proliferating the Fintech ecosystem in the country for years to come.” 

Avinash Godkhindi, MD and CEO, Zaggle – B2B2C SaaS FinTech company

“The honourable FM has presented a balanced budget with a strong push for digitalization, financial technology and digital payments specifically. As one of the very few profitable SaaS Fintech players, we believe the biggest news is the issuance of the digital currency by RBI which will open a wide range of options and opportunities. Additionally, the endorsement that digital payments are user friendly and economical is a big boost to the morale of FinTechs and all digital payments ecosystem players, the continued support is most welcome. The aim to take digital banking to every citizen is extremely heartening, positive and a bold statement. The plan to create 75 digital banking units in 75 districts is great. Possibly the best way to execute this would be for scheduled banks to partner with FinTechs to roll out these effectively. The Union Budget 2022 has various encouraging initiatives that will propel aspiring entrepreneurs and boost Fintech and startups. To further ease business environment for startups, the government has announced the existing tax benefits for startups to be extended by one more year up to 31^st March 2023. Overall the FM has presented a growth oriented budget focusing on capital expenditure that will go a long way in providing the much needed support for India’s long term growth story and help create employment opportunities for the wider section of the society.”

Baldeep Singh Pahwa, General Manager & Country Head, Constellar India – an exhibition body currently hosting India’s largest fintech festival – Fintech Festival India in partnership with Niti Aayog

“Looking at the emphasis given to the fintech industry in today’s union budget, it seems that the government considers fintech sector as the bloodline of the Indian economy. Government’s move to empower post offices with core banking segment will benefit the growth of rural economy, farmers and senior citizens across the country. While digital transfers of funds have grown rapidly in urban India, it is now time for the rural India to grow at 3x speed, which necessitated access to net banking, mobile banking, and other ATM services between post office accounts and bank accounts was needed. 75 Digital Banking units set up by scheduled commercial banks in 75 districts across the country will strengthen the digital ecosystem in those areas that lack financial inclusion. With a boost to start-up and fintech ecosystem, we will see huge investments in the said economy.

The budget has reiterated the importance of the need to accelerate on the growth path. Policy initiatives have been good and we look forward to progress on the implementation front in a time bound manner.”

Priti Rathi Gupta, Founder, LXME – India’s first financial platform for women

“The focus of this year’s Union Budget was to sustain the economic growth that we have witnessed after the Covid-19 outbreak and to enhance it moving forward. All the amendments and proposals were made keeping in mind the growth of all the sectors of the country where digitalisation acted as a key engine for economic growth. Hefty funds have been allocated for driving these projects at a large scale. Tax deduction limit increased from 10% to 14% on employers contribution to NPS account of state govt employees. This will create a level playing field for the government employees and strengthen the social security benefits.

As the union government hinted earlier to bring cryptocurrencies under the tax net, the government has imposed a 30% tax rate on the transfer of virtual digital assets, regardless of the holding period.  There would be no tax relief available to offset the loss of the virtual digital asset against any other income. Gift of cryptocurrencies to be taxed at receiver’s end. Now,  the gains from virtual digital assets like cryptocurrency will be reported by the taxpayers as this announcement gives them a sense of clarity from the government. FM announces central bank digital currency, which will be a digital rupee using blockchain and other technologies. It will be issued by the RBI in 2022-23. With an increased digitalisation in the country, this move by the government can act as fuel to the country’s growth by making the systems more transparent and efficient. In fact,  the government has proposed to set up 75 digital banking units in 75 different districts by Scheduled commercial banks which will enable users to actively participate in banking transactions. A new provision to allow taxpayers to file an updated return has been announced.

Updated returns can be filed within 2 years from the end of the relevant assessment year in case they miss to report any income when the returns were being filed. This will provide convenience to the taxpayer. The surcharge on the long-term capital gains (LTCG) has been capped at 15% irrespective of the asset class. This will benefit the HNI investors as this measure will lead to more disposable income and hence more savings!

Post offices will come under the core banking system, enabling financial inclusion and access to accounts through net banking, mobile banking, ATM, and also providing online transfer of funds between post office accounts and bank accounts. This will help in increasing the accessibility of the services offered by the post office and will contribute towards financial inclusion.  In 2022-23, 80 lakh houses will be completed for identified eligible beneficiaries of PM Awas Yojana – both rural and urban. Rs 48,000 crore has been allotted. This will provide affordable housing to the urban poor and will help the government in achieving the objective of providing the basic necessity of shelter. To promote sustainable development, the government is planning to introduce Sovereign Green Bonds in the financial year in 2023, for mobilizing resources in green infra, to reduce the carbon intensity of the economy. To conclude, along with major developments seen across sectors, the infrastructure sector has seen a major allocation of funds from the government. This would lead to economic growth in the real estate investment segment, attracting investors towards REITs and InvITs.”

Snehil Khanor, Co-founder & CEO, TrulyMadly – an online dating app for finding ‘your forever’

“The budget’s increased focus on pushing forward the entire startup ecosystem is admirable. With initiatives, such as a tax incentive for three consecutive years out of ten years from incorporation will continue the early-stage acceleration of startups and fuel the entrepreneurial growth in India. Additionally, the surcharge cap of 15 percent on long-term capital gains from shares of unlisted companies will promote investments in the start-up ecosystem by private equity and venture capital firms. We strongly believe that the entire movement towards digitization supported by initiatives, such as the initiation of digital banks and e-bills will be a fillip for startups and achieving the Prime Minister’s dream of $5-trillion economy.”