The Union Budget 2024 announcements have outlined strategic investments across various sectors, particularly in space technology, logistics, and research and development (R&D). According to senior industry leaders, these initiatives have the potential to position India as a global leader in the deep tech economy and strengthen domestic logistics infrastructure.
Top leaders from the start-up community said that they view Finance Minister Nirmala Sitharaman‘s decision to launch a ₹1,000 crore venture capital fund dedicated to the space economy, greater emphasis on R&D, and the abolition of the Angel tax as positive steps which will strengthen the country’s existing start-up ecosystem.
“The government’s announcement of a ₹1,000 crore VC fund to boost the space economy and a ₹1 lakh crore R&D fund is a strong testament to the recognition that the space economy will be at the forefront of India’s ascent in the deep tech economy,” said Anirudh A. Damani, Managing Partner, Artha Venture Fund.
According to Damani, this initiative not only encourages the success of ventures like Agnikul but also propels their ambitious plans forward, such as their goal to launch a rocket a week and dominate the global nano-satellite delivery market.
He further added, “The removal of the Angel tax will make it significantly easier for us to complete transactions faster and streamline the investment process. Previously, the requirement for income tax officers to understand and assess valuations led to unnecessary conflicts and delays, involving CAs, valuers, and tax officials. This simplification allows us to focus on our primary job—investing in and supporting innovative start-ups—without the burden of navigating through cumbersome tax regulations.”
Similarly, Anil Joshi, Managing Partner at Unicorn India Ventures, emphasised India’s capability to develop cost-effective breakthrough solutions. He said, “The ₹1,000 crore fund of funds for space tech is a testament to India’s capability in coming up with breakthrough solutions at low cost. This will certainly help space tech companies to look for much-needed early-stage capital to get started. This will certainly help mobilise over ₹4,000 crore, a great move.”
He also appreciated the abolition of the Angel tax, stating, “Angel Tax abolishment was long pending. Glad that Hon. FM has heard industry voices and has finally abolished it. This will certainly help in the expansion of angel investment in India and will take away a lot of the burden from the minds of everyone on tax notices for tax-paid investments.”
Echoing the sentiment, Mayuresh Raut, Managing Partner, Seafund, said: “This was an albatross that hindered much-needed capital to be deployed to deserving founders. Removal of this dreaded tax will give a huge fillip to start-ups in the country and free up investors to focus on the investments without having anxiety on how to deal with their implications.”
“A few other things that work well for deep tech-focused funds like us. The rooftop solar policy, the pumped storage policy, and research and development for small & modular nuclear reactors, Bharat small reactors, R&D for small modular reactors, R&D for new technology in nuclear form a neat troika to alter the energy map of India. Especially on the nuclear side, it positions India to replicate the renaissance that nuclear is experiencing in the US,” Raut said.
Turning to the logistics and supply chain sector, the budget’s focus on infrastructure, manufacturing, and skilling has been well-received by the industry. Ratna Mehta, Managing Partner, Fundalogical Ventures, said, “The logistics and supply chain is the lifeline of India’s growth story. The budget’s identification of infrastructure, manufacturing, and skilling as key areas for long-term development and subsequent allocation is a step in making India the logistics and manufacturing powerhouse of the world.”
According to her, the establishment of e-commerce export hubs is particularly significant for micro, small, and medium enterprises (MSMEs), enabling them to export local products more efficiently.
She also remarked on the abolition of the Angel tax, “Abolition of Angel tax will provide a boost to the budding Indian start-up ecosystem. It will encourage the flow of capital without tax leakages, especially relevant at a time when the funding crunch is impacting start-up liquidity.”
Moreover, the government’s initiative to create industrial centres in historic hubs like Gaya under the ‘Vikas bhi, Virasat bhi’ scheme is another notable move. Mehta believes this will boost infrastructure development, create employment opportunities, and reduce the urban-rural divide.
“This will boost widespread infra development and logistics in these regions and create employment opportunities, reducing the urban-rural divide as well as encourage distribution of income,” she said.
On the other hand, Bhaskar Majumdar, Managing Partner, Unicorn India Ventures pointed out that the allocation of a ₹1 lakh crore fund for R&D underscores the government’s commitment to fostering innovation but there is a need for an updated Intellectual Property (IP) regime to fully capitalise on this fund.
“This is recognition of the growing need for a deep tech economy. However, alongside the R&D Fund, the government should look at the Intellectual Property regime. The much-overdue Patent Policy needs to come out soonest to enable maximisation of the R&D Fund,” Majumdar said.
The industry leaders are of the view that as these initiatives unfold, they are “poised to create new opportunities,” drive economic growth, and enhance India’s competitive edge on the global stage.
