What are the industry expectations from the Union Budget 2023 after a year that saw lukewarm growth for D2C brands and the startup community in India?
India is home to more than 600 direct-to-consumer brands. After the slow growth witnessed last year owing to a funding freeze for early-stage start-ups and a global economic slowdown, it is natural for Indian brands to feel a sense of trepidation.
We talked to some industry leaders and D2C brands thriving on Instamojo on what they expect as the Budget delivery date of February 1, 2023, draws closer.
Industry expectations from Union Budget 2023
Here are some things that the Union Budget should address in their upcoming budget:
Tax benefits
The D2C digital-first community is hoping to look at special tax incentives or lower rates of tax this coming February. There are whispers going around that indicate tax benefits for sectors like ed-tech, agri-tech, health-tech and fin-tech will see an uptick.
Investment
Even though the D2C startups did raise more than $1.9 Bn till December 21, 2022, it was disappointing when compared to the funding boom of 2021.
This budget should ideally encourage more funding for the sector. Sampad Swain, CEO & Founder of Instamojo, expects more support for start-ups in their early growth phases, considering investors have been shying away because of its high-risk nature.
Startups that are working towards innovation, digital transformation, sustainable business practices and community upliftment, should especially get added financial support and encouragement.
Related read: eCommerce for SMEs: 4 things the government should do to promote small D2C brands
eCommerce draft policy
Currently, there are no regulations against online retailers in India. This has made it easy for online marketplaces like Flipkart, Amazon & Snapdeal to take off in India.
But now the government is working on a draft policy that will ensure that eCommerce websites abide by Indian laws to protect the consumer interest and consumers themselves at the same time. This will also promote healthy competition and enable growth for MSMEs.
There are expectations that the Union Budget will address and finally release the policy that has been in limbo since February 2019.
Related read: Government launches framework to fight fake reviews: Here’s what your online business needs to know
Digitization
The government is expected to raise spending on infrastructure, modernize business capabilities and broaden digitization.
With the tremendous growth in eCommerce in Tier 2 and Tier 3 cities, there needs to be a hyper-focus on improving these sectors.
“Our view is that the Indian government can launch a new start-up focused ministry. They can create tremendous impact by creating a Startup India API that has integrated within it – the ONDC marketplace, and integration with different no-code tools like Instamojo, and master classes by different startup founders.” – Sampad Swain, CEO & Founder, Instamojo
Digital-first education
The government needs to engage and incentivize organizations that are making digital education feasible across the country. The focus should be on mobile-based learning capabilities considering 750 million Indians are now smartphone users.
On Instamojo, we provide online education and resources to MSMEs on mojoversity- a digital skilling platform. These courses come with certifications at the end and can be completed on any device.
Infrastructural improvement
This budget is expected to announce more launches under the National Logistics Policy and the Gati Shakti scheme.
“To make the $5 trillion GDP dream a reality, doubling down on digital infrastructure is vital. Hence, the budget should be centred around digitization initiatives that empower the MSME sector. The impact generated would be felt in the improved urban and rural mobility as we see more ports, roads, airports and other infrastructure developing. This will culminate in reducing logistics costs – from roughly 13-14% of the GDP to 8%. The eventual target would be to mark India’s presence in the top 25 countries with the best Logistics Performance Index(LPI)” Saahil Goel, Co-founder and CEO, Shiprocket
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