Additional sectors are expected to receive fiscal incentives through the production linked incentive (PLI) scheme in the Budget, set to be presented on February 1.
The centre may consider providing funds to certain infrastructure projects. (File)
New Delhi: The Indian government is set to announce further measures to strengthen the startup ecosystem in the country in the upcoming Budget, scheduled for February 1st. According to official sources, the government may also address inverted duty issues in certain sectors to promote domestic manufacturing. Additionally, the government is expected to announce fiscal incentives under the production linked incentive (PLI) scheme for more sectors in an effort to boost domestic manufacturing and encourage private investments in the startup ecosystem.
The
government has already taken a number of steps to promote startups in the
country, including the Startup India initiative, which was launched in January
2016. The initiative includes the Fund of Funds for Startups (FFS) scheme, the
Startup India Seed Fund Scheme (SISFS), and the Credit Guarantee Scheme for
Startups (CGSS) to provide capital at various stages of the business cycle for
startups.
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Inverted
duty structure refers to taxation of inputs at higher rates than finished
products, which results in a build-up of credits and cascading costs. The
government has already taken a series of steps to promote startups in the
country. Under the Startup India initiative, Fund of Funds for Startups (FFS)
scheme, Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for
Startups (CGSS) are implemented to provide capital at various stages of the
business cycle of a startup.
The
government may also consider providing funds to infrastructure projects
approved by the Network Planning Group (NPG), which was constituted under the
PM Gati Shakti initiative. On October 13th, 2020, Prime Minister Narendra Modi
launched the Gati Shakti - National Master Plan aimed at developing integrated
infrastructure to reduce logistics costs. The NPG includes representatives from
various connectivity infrastructure ministries/departments and their heads of
network planning division for unified planning and integration of proposals.
All these departments approach the NPG first for approval before making a DPR
(detailed project report) at the planning stage.
Overall, the Indian government's efforts to
strengthen the startup ecosystem and address inverted duty issues are expected
to promote domestic manufacturing and encourage private investments in the
startup ecosystem, with the announcement of fiscal incentives under the
production linked incentive (PLI) scheme for more sectors, and fund allocation
for infrastructure projects approved by the Network Planning Group (NPG) under
the PM Gati Shakti initiative.
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