siliconindia | | FEBRUARY 20218UNION BUDGET 2021 TO RESHAPE & BOOST MSMES AND STARTUP ECOSYSTEMBy si TeamThe year 2020 was an uncertain year that was full of challenges for livelihoods and the over-all economy of the country, which was the result of the sudden occurrence of the COVID-19 pan-demic. The crisis has a multi-sector impact, and according to the International Labour Organization, has already transformed into an economic and labour market shock, impacting not only supply (production of goods and services) but also demand (consumption and invest-ment). With the COVID-19 pandemic impacting their cash cycles, MSMEs and the Indian startup ecosystem that are the base of India's inclusive growth story felt a significant impact and faced severe disruptions. As an im-portant part of the domestic and global value chains, the plight of the startups and MSMEs are of deep concern. However, the budget 2021 brought huge expectations, re-garding the boost of the domestic manufacturing across sectors, in line with the Indian government's focus for a self-reliant economy. So, let's have a look at how Budg-et 2021 can reshape the MSMEs and startup ecosystem of India.During the Budget 2021 announcement on 1st Febru-ary 2021, Finance Minister Nirmala Sitharaman proposed a slew of measures to help startups and MSMEs grow, in-cluding the incorporation of one Person Company without any restriction on paid-up limit. "This move will allow such firms to grow without restriction on paid-up capital and turnover, allowing conversion into any other type of company at any time, reducing residency limit for an In-dian citizen to set up an OPC from 182 days to 120 days, and allow also non-resident Indians to incorporate OPCs in India," FM Sitharaman said in her budget speech. She also mentioned that the government will increase FDI from 49 percent to 74 percent in insurance budget. In-dia's complex tax and financial regulatory regime are ma-jor reasons for our low rankings across `Ease of doing business' indices globally. However, the present regime has consistently stressed its focus on making regulations simpler and our jurisdiction predictable for doing busi-ness. With COVID-19 taking its toll on most MSMEs, the scene with most startups and e-Commerce companies is cautiously optimistic. Some of the larger startups have re-ported fundraising at record valuations while established e-Commerce companies have made the most of the `new normal'. Though, this year budget has something for eve-ry industry/sector. However, the major focus of the budg-et was Aatmanirbhar Bharat and how to infuse new life into the crumbling economy that is slowly standing up.Looking at the budget 2021 reformations several reac-tions from across the industries started pouring in. Speak-ing about MSMEs, George Alexander Muthoot, MD, Muthoot Finance stated "Reflective of the importance of the MSME sector, the government has provided Rs. 15,700 cr for it, double of last year's budgeted estimate and we stand steadfast with the MSMEs, individuals and entrepreneurs of India in financing and enabling their At-manirbhar Bharat ambitions"."Collateral free loans and fund of funds for MS-MEs will stimulate growth and provide solace to MS-MEs hit by the pandemic" stated Seema Prem, CEO & Co-Founder, FIA Global.Praising the decisions of the government, Deepak MV, Co-founder & CEO, Etrio said "This budget definitely demonstrates the commitment by the government to boost IN FOCUS
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