 "research, development")
Finance Minister (FM) Nirmala Sitharaman on Thursday announced the Centre will establish a ₹1 trillion corpus to boost innovation and research in sunrise domains.
The fund will have a provision of 50-year interest-free loans and will provide long-term financing and refinancing for long tenures with low or zero interest rates, Sitharaman said in her budget speech.
“For our tech-savvy youth, this will be a golden era,” Sitharaman said.
“This will encourage the private sector to scale up research and innovation significantly in sunrise domains. We need to have programmes that combine the powers of our youth and technology,” she said.
The FM also announced that a new scheme will be launched for strengthening deep-tech technologies for defence purposes and expediting ‘atmanirbharta’.
The startup and tech industry welcomed the announcement, and hope this will give the required boost for research and development (R&D) investments.
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The 2024 Interim Budget, primarily a vote-on-account, did not have any major announcements for the technology and startup sector, it did highlight a few measures of the government’s continuous focus on fostering entrepreneurship and innovation.
“The long-term financing and refinancing scheme with this corpus underscores the commitment to position India as a global leader in the world of technology. The focus on skilling, upskilling, and reskilling of youth will ensure an industry-ready workforce to navigate the headwinds of a volatile marketplace,” said Sindhu Gangadharan, vice-chairperson of the National Association of Software and Service Companies (Nasscom) and chairperson for its GCC Council.
Kunal Bahl, chief executive officer, of Snapdeal, said: “This will help the startups that are trying to do long-term oriented projects and have a long gestation period. Those firms would get loans at no interest or zero interest."
Indian startups saw over $500 million being invested in deep tech in 2023, according to a 2022 Nasscom-Zinnov report.
According to the report, this ecosystem comprises over 3,000 startups. As many as 1,900 of these are artificial intelligence (AI) firms; 570 are into big data and analytics, 60 in robotics, 60 in drones, 40 in cybersecurity, and 10 in space and satellite tech. These startups cumulatively raised $2.7 billion in the calendar year 2021, the report said.
Deeptech today holds the potential to generate substantial economic value across various emerging and legacy sectors, Nasscom said in a statement. “India today has a large resource of deep tech startups working across the entire range of emerging technologies, driving innovation and inclusive development. Therefore, it is welcoming to see the government’s focus on promoting deep tech in critical sectors such as defence,” said the statement.
The announcement is of significance as many believe this will give a boost to R&D investment. R&D spending as a percentage of the gross domestic product is only 0.4 per cent for the last financial year (FY23), according to data from Capitaline.
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What cheered the players was the extension of tax benefits for startups and investments made by sovereign wealth and pension funds to March 2025.
The budget exempts income of sovereign wealth funds like dividends, interest, and long-term capital gains for the investments made in India to continue if the investment is made on or before 31 March 2025 (Erstwhile 31 March 2024).
“Extending the tax exemption for startup and sovereign wealth funds until March 2025 is a positive step, ensuring sustained support for the startup ecosystem,” said Vikram Gupta, founder and managing partner, IvyCap Ventures.
