 "E-commerce and consumer internet industry welcomes FM Sitharaman's Budget")
E-commerce and consumer internet industry has welcomed tax breaks and incentives in Finance Minister Nirmala Sitharaman’s Budget presented on Tuesday.
Kalyan Krishnamurthy, chief executive officer of e-commerce giant Flipkart Group, said the Budget is a bold move to enhance India’s human and organisational capital. He said it spares no effort in incentivising the youth to upskill and join the formal workforce. He said the provisions of the Budget will remove bottlenecks in the supply chain and lend significant support to industries by encouraging clusters, establishing e-commerce export hubs, and improving credit flow to MSMEs (micro, small, and medium enterprises).
“Reducing the TDS (tax deducted at source) rate from 1 per cent to 0.1 per cent will significantly free up working capital for sellers. Development of DPI (digital public infrastructure) applications for urban governance shows the government’s focus on improving and easing daily life,” said Krishnamurthy.
Krishnamurthy also said the government's commitment to green energy and critical mineral missions underscores a forward-looking strategy to ensure sustainable development.
“This comprehensive and inclusive Budget aligns with our nation's aspirations to achieve 'Viksit Bharat' and lays a strong foundation for a prosperous and equitable society,” said Krishnamurthy.
Amazon said that on behalf of its sellers, the e-commerce firm welcomes the Government of India's decision to reduce the tax deducted at source (TDS) rate from 1 per cent to 0.1 per cent for e-commerce operators. It said this significant policy change promises substantial working capital relief for micro, small, and medium enterprises (MSMEs). By reducing the financial burden on these businesses, Amazon said this not only facilitates ease of doing business but also strongly encourages the adoption of digital commerce.
Amazon also said that it welcomed India's government announcement that it would set up e-commerce export hubs across the country through public-private partnerships. In addition to reforms proposed by the Reserve Bank of India (RBI) for cross-border payments, Amazon said this would play a critical role in empowering Indian MSMEs to reach global markets. Amazon said e-commerce exports represent a sunrise sector for India, and it is seeing growing adoption of e-commerce exports by Indian businesses through the Amazon Global Selling program.
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“We already have an MoU with the Ministry of Commerce (DGFT) to leverage the Districts as Export Hubs initiative and boost MSME exports from India and will continue to collaborate with all stakeholders as we move closer to our goal of enabling $20 billion in cumulative e-commerce exports from India by 2025,” said an Amazon India spokesperson.
Dhiresh Bansal, chief financial officer at SoftBank-backed Meesho, said the e-commerce firm welcomed the government's forward-thinking measures in the Budget, which supports the equitable development of small businesses.
“Reducing TDS rates on e-commerce operators is a much-needed change which will enhance liquidity. Previously, small businesses had to wait a year to claim their refunds,” said Bansal. “This change will now lead to improved working capital efficiency, creating more parity between online and offline. We are excited to see the positive impact this will have on the nation’s economic growth,” said Bansal.
Arpit Chug, chief financial officer at fintech firm Razorpay, said Indian private equity and venture capital investments in 2023 stood at $39 billion compared to $62 billion in 2022. This decline was aggravated by the funding winter that began in 2022 and the implications of the Angel Tax, which was also levied on foreign investors. Despite these challenges, Chug said the startup ecosystem has significantly contributed to the country’s GDP and has played a crucial role in putting India on the global map.
“Today’s announcement of abolishing the Angel Tax for all tax classes as well as the reduction of TDS for e-commerce operators from 1 per cent to 0.1 per cent underscores the government’s commitment to nurturing entrepreneurship and startup growth in India,” said Chug. “This move is a major encouragement for startup investments, easing the tax burden, thereby paving the way for India to become a global innovation hub led by startups.”
“The abolition of the angel tax could potentially provide a boost for startups, propelling innovation and investment,”said Falguni Nayar, Founder and CEO, Nykaa.
Priyanka Salot, co-founder of sleep solutions firm The Sleep Company, said the Economic Survey 2023-24 indicates that India's e-commerce industry is projected to surpass the $350 billion mark by 2030. Salot said the establishment of e-commerce hubs and reduction of TDS rates for e-commerce operators will provide a significant boost to the growth of the direct-to-consumer sector. “It will also enhance the efficiency of their operations and enhance market accessibility, including that of exports,” said Salot. “We perceive this as a stimulus for the country's economic development, thereby strengthening India's status as a global e-commerce player.”