Budget 2021: Startups Seek Cuts In GST Rates, Suspension Of Basel Norms
Budget 2021: Startups have been burdened with heavycompliances under various laws
Budget 2021: Due to the impact of COVID-19, the micro, small, and medium enterprises (MSMEs) and the startup industries have witnessed dwindling investments, limited workforce, pay cuts, etc. Experts demand some major policy changes in order to provide necessary relief to these sectors. ''The startup industry expects a cut in the GST rate as it would revive the start-up sector to leverage professional services for growth and will boost the operations. the current GST rates leave very little on the table for the Indian start-up industry,'' said Mr Rahul Tekwani, Founder and Managing Partner, Branding Edge Strategic Communication and Advisory LLP, a leading communication strategy company. (Also Read: Budget 2021: Interest Subvention Scheme For MSMEs Must Be Extended, Says Industry Body )
''I also expect the government to make digital marketing programs and courses mandatory in the education curriculum which would result in the early grooming of the talent coming into the corporate ecosystem,'' added Mr Rahul Tekwani.
Startups have been burdened with heavy compliances under various laws that have affected their operations. Experts seek the relaxation of stipulations concerning the appointment of independent directors and women directors and appointment of key managerial personnel under the Companies Act is.At present, all inflows and outflows of funds into and outside the country are scrutinised rigorously by the Reserve bank of India and need to conform to certain reporting standards. The adherence to strict requirements affects the flexibility of start-ups to work seamlessly with global players. Other experts also seek the suspension of basel norms for three years.
''Startups have seen a decrease in lending by banks due to the covid-19 situation. Banks need flexibility in lending, which can only be brought about by the temporary suspension of Basel Norms. MSME loans in India are linked to corporate loans for which credit rating is required. Rating agencies assign the rating based on the market base of a business, which means that a small enterprise would have an insignificant market base. This would lead to a higher interest rate and would affect bank's lending flexibility. In this background, the start-ups hit by Covid-19 must be able to obtain sufficient borrowings in order to function,'' said Mr. Neeraj Dubey, Partner, Corporate Law, Singh and Associates.