To promote a start-up culture, the government has extended the period of incorporation by one year to April 1, 2024.
03 Feb 2023 | 6380 Views | By Amit Vijay M
SMEs, EV startups, and battery makers will be the largest gainers of the Rs 88,198 crore allocated for climate-related measures in the Union Budget 2023. This amount accounts for 2.0 percent of the total expenditure in fiscal year 2024, compared with 0.9 percent in fiscal year 2023.
These sectors' growth engines are ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
SMEs, EV startups, and battery makers will be the largest gainers of the Rs 88,198 crore allocated for climate-related measures in the Union Budget 2023. This amount accounts for 2.0 percent of the total expenditure in fiscal year 2024, compared with 0.9 percent in fiscal year 2023.
These sectors' growth engines are set for a huge boost in the green adoption space as these provisions are revenue spending linked through subsidies.
To promote a start-up culture, the government has extended the period of incorporation by one year to April 1, 2024, to be eligible for tax benefits outlined to them. Start-ups can also carry forward losses on change of shareholding from seven years to ten years of incorporation.
The infusion of the roughly Rs 9,000 crore corpus will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. It will also aid in faster growth of micro, small, and medium enterprise (MSME) credit, which will allow for a one percent reduction in their cost of borrowing.
The turnover limit under presumptive taxation for micro entities has been revised to Rs 3 crore from Rs 2 crore earlier. Also, the provision for carrying forward losses on change of shareholding of startups has been extended to 10 years from the date of incorporation from seven years previously. “This is likely to reduce the taxable income by 20 percent, assuming a Rs 3 crore turnover, and improve SMEs margins by 7.5 percent,” one analyst tracking taxation and finance said.
SME EV maker Okaya Electric Vehicles Managing Director, Anshul Gupta said, “The viability gap funding announced to support the Battery Energy Storage Systems, along with a framework of Pumped Storage Projects, is designed to reduce the revenue required to recover costs and offer better returns, especially for the Private sector.”
As per CRISIL estimates, battery projects of 4 GWh that get government support through Viability Gap Funding will form 2.7 percent of the overall battery storage demand of 150 Gwh (37.5 GW) and 1.7 percent of the total storage demand of 220 Gwh (55 GW) till fiscal 2031.
“The policy on pumped storage will provide a fillip to projects of 22 GW estimated to come up till fiscal 2031, out of which nearly 7 GW of infrastructure will be set up by private players. Overall, this is a small step in the right direction for India's clean energy transition in power,” claims an analyst at CRISIL.
Barnik Maitra, the Managing Partner of Arthur D. Little India said that the biggest takeaway from Budget 2023, when central grants and state loans are taken into account, is a total of Rs 15 lakh crore of capital outlay which, at five percent of the GDP, is an unprecedented budgetary allocation in India’s history. Maitra also said this huge capex growth will also spur the growth of the SME sector, with the strategy of the government being to crowd in private investments by significant government capital allocations.