Budget spells growth for Online Industry
- Feb 29, 2016
StoreHippo reflects on the Budget
The Union Budget for 2016-17 was unveiled on 29th February 2016 and the government proposed nine pillars for transforming India. On the whole, the budget spelt growth for the startups, SMEs and the online industry. To boost the Startup India Action Plan and the Digital India scheme, the Finance Minister has given due focus on digital payments and various incentives to startups. This is in tune with Prime Minister’s Digital India and Startup India plans. The steps to further improve Ease of Doing Business will drive entrepreneurship which is essential for job creation. The budget also promotes Skill India initiative by allocating Rs. 1,700 crore for 1500 multi-skill development centres. Overall, the budget creates a strong foundation for sustainable growth in rural & urban India plus lays out a massive target for improvement of infrastructure in India.
StoreHippo reflections on the budget offerings:
Start-Up Sector : The FM Arun Jaitley announced the following for startups and SMEs:
- 100% tax deduction programme (except MAT) for 3 years over a period of five years for startups approved before FY 2019 under the Startup India scheme.
- Registration of a company will take no longer than just a day under the Government’s 1 Day Incorporation Policy.
- The corporate income tax rate for the next financial year of small enterprises (companies with turnover not exceeding Rs. 5 crore in the financial year ending March 2015) is proposed to be lowered to 29 % plus surcharge and cess.
Rajiv Kumar, CEO & founder of StoreHippo said, “The FM has announced nine pillars for transforming India and one amongst them is ‘Ease of Doing Business’ which will enable the people to realize their full potential. The tax holiday and easy registration will give a boost to entrepreneurship in India, and more people will be ready to take the entrepreneurial plunge. Starting a business in India has not been easy in the past due to many legal and technical hassles but now Govt. has created a favourable climate for small businesses and start-ups to flourish. Now, more people will be ready to start a business and we will see more number of technology based startups.”
Another pillar announced by the government for transforming India is Infrastructure Investment. The step-up of funds for infrastructure sectors, particularly roads and highways, is impressive. A few key announcements are as under:
- Total outlay on infrastructure in 2016-17 is Rs. 2,21,246 crore.
- Rs. 97,000 crore allocated for all roads. Total outlay on roads and rails will be Rs. 2.80 lakh crore.
- 10,000 km of national highways in 2016-17 and 50,000 km state highways to be converted to NH roads.
- More than 70,000 road projects were languishing at the beginning of the year. Nearly 85% of these projects have been put back on track.
- There are 160 airports and airstrips which can be revived.
Rajiv Kumar opines, “This is an important announcement since with improvement of infrastructure comes better roads, highways and improved connectivity in turn leads to efficient logistics. The success of a business like e-commerce largely depends upon logistics. In fact, last mile delivery is difficult for many e-commerce firms. If logistics, the backbone of e-commerce improves; it spells growth for online sector. Better infrastructure will lead to efficient logistics system.
Another important announcement has been of two schemes for digital literacy for rural India which will cover 6 crore households in the next three years.
Rajiv Kumar feels, “Digital literacy is the foundation of building a Digital India. The e-commerce sector will benefit in the long term. National Digital Literacy Mission will raise awareness levels and it can have a positive impact on development of business ideas in e-commerce sector that use digital technologies.
The government has realized that to boost job creation, the country needs to promote entrepreneurship and reduce the hurdles to start a business. The Budget has kept its focus on inclusive growth and on enhancing the competitiveness of the Indian economy. Overall, the Union Budget for 2016-17 spells growth for the E-commerce sector as it promotes digital literacy, Make In India, Infrastructure Development and Ease of doing Business. It will spur the growth of entrepreneurs and reduce the digital gulf in the country.
The views of Rajiv Kumar, CEO & Founder StoreHippo can be viewed at http://www.equitybulls.com/admin/news2006/news_det.asp?id=179671