Most stakeholders of startup community hailed India's budget for this fiscal year, which was announced on February 1, 2023. Finance Minister Nirmala Sitharaman in her budget speech had introduced a slew of initiatives for startups, which she said is vital for a country’s economic development.
Months down the line, India's startups have however struggled with prolonged funding winter while the 'great layoff' season didn't spare startups as well.
New-age businesses downsized their workforce, cutting over 28,000 jobs during the initial three quarters of 2023. Startups undertook significant restructuring endeavors to preserve finances and focus on crucial operational areas, navigating through a prolonged period of limited funding opportunities.
Startup funding remained stagnant, plunging to a seven-year low of $8.8 billion. Investors adopted stringent scrutiny, causing delays in deal closures, impacting both early and late-stage investments.
Previously, the government has enacted multiple measures to foster the growth of startups in the nation. Through initiatives like the Startup India program, Fund of Funds for Startups (FFS) scheme, Startup India Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS), financial aid is extended to startups across different phases of their business cycle.
Introduced in January 2016, the Startup India initiative aimed to establish a robust ecosystem conducive to fostering innovation and driving private investments within the startup domain.
As startups pulsate with innovative ideas and dynamism, mirroring the nation's positive spirit, they eagerly anticipate additional measures in the upcoming interim budget amid challenging times.
The streamlining of tax and regulatory frameworks stands pivotal for enhancing domestic venture capital competitiveness and attracting more investors. Facilitating global capital flow and enabling exits through IPOs and M&A activities remain crucial for the ecosystem's resilience.
Anticipating the government's focus on regulations governing crowdfunding and angel funding platforms to align with international standards, startups await efforts to entice international fund houses to invest in Gift City, fortifying the startup ecosystem.
Looking ahead, the focus on building local capital capacity and expertise is crucial for the sector's long-term sustainability. A comprehensive policy approach addressing funding challenges and fostering a conducive environment for startups is eagerly awaited by India's vibrant startup community.
Source Name : Economic Times