What does India’s budget mean for SME investment in the UK?
India has presented the country’s annual budget today, for the new fiscal year that starts on April 1. India was hit by a slight recession last year, due to pandemic restrictions, but is seeing some signs of a recovery. Today’s budget seems to balance between supporting growth and aiming to reduce the country’s deficit (from 9.5% of GDP in FY21 to 6.8% of GDP in FY22), and offers a boost to the country’s startup community.
Finance minister Nirmala Sitharaman announce welcome funding to small businesses and startups, with a year long extension to the startup tax holiday in place. £1.6bn – more than double last year’s figure – has been allocated to the Ministry of Micro, Small and Medium Enterprises (MSME). Other measures to be put in place include collateral free loans for businesses, and the launch of a fund of funds for MSMEs.
Elsewhere, boosts to healthcare, aviation, textiles, and infrastructure were announced. £35bn was designated to Covid-19 vaccine development and rollout – which will be key in getting the country back on its feet, post-pandemic. The finance industry was also allotted £20bn for bank recapitalisation, alongside other measures, including the launch of a Development Financial Institution, and infrastructure investment trusts to attract global funds.
India’s budget is also set to impact the UK – the countries’ trade and investment relationship is already worth around £24 billion and supports more than half a million jobs across the UK, providing great building blocks for a growing relationship going forward. With India representing the third biggest hub of start-ups globally it could become even more crucial in the coming years, and today’s boost to India’s startup industry will only make this more relevant.
Nayan Gala, founding partner at venture capitalist JPIN VCATS, shares his view on the budget: “It’s a very positive budget, without large raises in taxes across the board. It’s great to see big spending on agriculture and the health sector as key areas. The budget looks like a great step for India, and will help the country recover from the pandemic and will pave the way forward for the future.
The boosts to small businesses and startups are also very welcome, and will help India’s startup hub – already the third biggest in the world – continue to thrive. The government’s promotion of fintech environments through encouragement of digital payments is also a step in the right direction.”
