Budget 2021 allocated INR 20.83 crore for the Startup India program.

Razorpay had a great session on the Budget of 2021 and its impact on the startups.

The panel comprised of @RajatAgarwal167, @viditaatrey, @somani_utsav & @shashankmehta05

Best takeaways from the session

● Insurance and Insuretech ●

The Foreign direct investment (FDI) limits have been increased from 49% to 74% which will increase foreign ownership and control.

This is an extension to the last budget's increase from 25% to 49% which resulted in an increase in FDIs

How does it impact the Insuretech industry?

"It'll mostly impact the core insurance companies who are licensed insurers like Acko & Digit. Looks like Christmas came early for them." ~Rajat

Btw, Digit announced its funding round and the unicorn valuation 15 days before the budget.

Also, expect global competition and more penetration due to these changes.

Utsav mentions that there are still some T&C like:

• A majority of directors & key management needs to be Indian citizens.

• Prior approval of insurance regulator, for Insurance intermediaries.

Utsav mentioned that Neo-Insurance companies will benefit from this, such as @BimaPeBharosa

Instead of being an information aggregator, they are trying to get an IRDA License

@Rahul_J_Mathur, correct me if I'm wrong and share some thoughts on the industry as well

● Gig Worker Economy <> Organising ●

Govt. has announced to organize the gig economy by creating a safety net for them by either an employment cause or in some other way.

"It should be discussed with the industry and secondly there should be a compliance time for companies to work out the unit economics." ~Rajat

"It'll also lead to an increase in the workers in the gig economy." ~Utsav

"In the long term, this increase would benefit the businesses as well." ~Vidit

"The 2nd order effect could be an increase in HR-Tech startups for the blue-collar workforce."

● Incorporating startups overseas | YC Phenomenon ●

"Rajat mentioned that the no. of startups registering in India is increasing. Earlier the notion was that if you register abroad it is easier to raise funds." ~ @RajatAgarwal167

Read more here: https://inc42.com/features/y-combinator-india-flip-structure-startups/

Utsav mentioned "Entry is not the point of concern, the exit is. In incorporating overseas"

Tax filings and many interpretations of the law have made it difficult for exists.

Also if you have global operations and customers it's a hassle to move money in & out of India.

Also listing overseas is also not allowed for private companies as of now. We have been waiting for many IPOs like Flipkart and Zomato.

There are still no guidelines and playbooks for IPOs in India.

You can listen more here by @TheKenWeb https://the-ken.com/unofficial-sources/the-flipkart-and-zomato-ipo/

Utsav: "SEBI has been trying to ease up the restrictions to list, but some of these restrictions are not worth the while"

Rajat: "Most of the tech. companies are not profitable and hence cannot list in India but they can do an IPO overseas"

● Taxation of ESOPs | Unrealised gains ●

Shashank: "When people exercise their ESOPs it comes into the general gains which is the highest tax bracket, so employees wait for a buyback"

Vidit: "ESOP is a superpower of early-stage startups to attract high-quality talent, as you can't pay more or equal to the market std."

"This budget is very focused on infrastructure building B2B supply chains are going to be very robust in future and if companies can build around this it'd be great" ~Rajat

Listen to the complete conversation here:

I write more such threads periodically, check out some of them.

Like & RT if it adds :) https://twitter.com/utkrsh99/status/1351074465241817088