Budget 2023-24: Rural entrepreneurship for agritech innovations, an eco-friendly push, and more

Team LetsVenture

The growth of the startup ecosystem can be attributed to several factors. However, one of the most crucial factors has been continued support from the government. Today, India is home to over 84,000 startups registered at DPIIT, and at least 107 Unicorns.

“India is now the third largest ecosystem for startups globally, and ranks second in innovation quality among middle-income countries,” said Nirmala Sitharaman, Finance Minister while presenting the Union Budget 2023-24.

While presenting the budget before the Parliament, the Finance Minister also said that the economic growth of India is estimated to be at 7 percent this year.

Here is a roundup of announcements concerning the startup ecosystem in the Budget.

A digital public infrastructure for agriculture will be built as an open source and interoperable entity so that relevant information is available for all stakeholders. This will help in creating inclusive and farmer-centric solutions. The infrastructure will maintain information regarding crop planning and health, improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, and support for growth of agri-tech industry and startups.

An Agriculture Accelerator Fund will be set up to encourage entrepreneurs in rural areas to build innovative agritech startups. The Fund will aim at bringing affordable solutions to farmers’ challenges, leverage modern technologies to transform agricultural practices, and increase productivity and profitability.

In a push for sustainable mobility, the FM has announced Viability Gap Funding to support battery energy storage systems with 4,000 MWH capacity. The government will also formulate a framework for Pumped Storage Projects for hydroelectric energy storage as well.

Green Credit Programme will be introduced under the Environment (Protection) Act to incentivize environmentally sustainable actions by companies, individuals and local bodies.
In an attempt to encourage indigenous production of Lithium-ion cells used in batteries for electric vehicles, the Finance Minister announced that customs duty on the import of capital goods and machinery used in the manufacturing of lithium-ion cells will be removed.

The Finance Minister also proposed reducing customs duty on seeds used in manufacturing eco-friendly and Lab Grown Diamonds(LGD), stating it is an emerging sector driven by tech and innovation that India must seize. One of the IITs will receive a research and development grant for five years to work on indigenous production of LGD seeds and machines and to reduce import dependency.

With a vision to “Make AI in India and Make AI work for India,” the budget proposed setting up three centers of Centres of Excellence for Artificial Intelligence in top educational institutions of the country. Industry players will also be partnering with them for conducting interdisciplinary research as well as developing scalable problem solutions in agriculture, health, and sustainable cities.

National Data Governance Policy will be put in place to encourage innovation and research by startups and academia by enabling access to anonymized data.

To encourage entrepreneurship and enable continued growth for the Indian startup ecosystem, the budget proposed an extension of the date of incorporation for income tax benefits to startups from 31st March 2023 to to 31st March 2024. Also proposed is the carry forward of losses on change of shareholding of startups from seven years of incorporation to 10 years.

Encouraging digital skills, the central government announced the launch of a unified Skill India Digital platform for enabling demand-based formal skilling, linking with employers including MSMEs, and facilitating access to entrepreneurship schemes.