What Modi 3.0 Delivered for Startups in 100 Days: From Major Relief to Rs.1000 Cr Space Fund

India's startup ecosystem and small businesses have been at the forefront of policy changes under Prime Minister Modi's government. In the first 100 days of Modi's third term(Modi 3.0), a slew of reforms and initiatives have been launched to foster innovation, encourage entrepreneurship, and drive economic growth. These reforms are particularly significant for startups, MSMEs, and the broader business community. Here’s a detailed look at some of the key measures aimed at propelling India’s economic future.

Abolishing the 31% Angel Tax for Startups

A significant burden on startups since its introduction in 2012, the 31% Angel Tax has finally been abolished. This tax was levied on capital raised by startups through angel investors, often perceived as excessive and unfair by the entrepreneurial community. Its removal is a welcome relief for startups, allowing them to raise funds more freely and scale their businesses without the fear of steep taxation. This move is expected to encourage more investments in the startup ecosystem and foster innovation.

Lowering Corporate Tax for Foreign Companies

To make India an attractive investment destination, the corporate tax for foreign companies has been reduced from 40% to 35%. This is a crucial step toward improving India’s global competitiveness. By making the tax structure more favorable, India is positioning itself as a business-friendly nation, likely to attract foreign direct investments (FDI) across various sectors, including technology, manufacturing, and services.

A ₹1000 Crore Venture Capital Fund for Space Startups

Recognising the potential of the space sector, the government has announced the establishment of a ₹1000 crore venture capital fund dedicated to space startups. This fund will provide crucial financial support to startups working on innovative solutions in space technology. With this initiative, India aims to solidify its position as a leader in the global space economy. Startups will now have access to the resources required to develop cutting-edge technologies that could propel India’s space exploration ambitions.

The GENESIS Program: Supporting Innovation in Tier-II and Tier-III Cities

The GENESIS Program (Gen-Next Support for Innovation Startups) has been launched to provide targeted support to startups in Tier-II and Tier-III cities. While metros like Bengaluru, Mumbai, and Delhi have traditionally been the hotspots for startups, the government is now expanding its focus to smaller cities. This initiative aims to ensure that innovation is not limited to urban centers but reaches the vast talent pool in smaller cities, further democratising the startup ecosystem in India.

National Industrial Corridor Development: Building 12 Industrial Nodes

Under the National Industrial Corridor Development Program, the government has announced the creation of 12 industrial nodes. These nodes will be equipped with the necessary infrastructure and facilities to support investors and ensure ease of doing business. By developing these nodes, India aims to enhance its industrial base, facilitate trade, and create jobs. This move aligns with the government’s long-term vision of making India a global manufacturing hub.

Increased MUDRA Loan Limit for Traders

The MUDRA loan limit has been increased from ₹10 lakh to ₹20 lakh, offering greater financial assistance to traders who have successfully repaid their previous loans. This initiative aims to empower small traders, enabling them to expand their businesses and purchase necessary machinery or other assets. The increased loan limit provides much-needed financial support for small-scale businesses and entrepreneurs, boosting their growth potential.

Launch of a Credit Guarantee Scheme for MSMEs

A new Credit Guarantee Scheme has been introduced for MSMEs (Micro, Small, and Medium Enterprises). Under this scheme, small traders can obtain loans without the need for collateral, making it easier for them to access financing. This move is expected to provide a major boost to MSMEs, especially those looking to scale their operations or invest in new technologies. By reducing financial barriers, the scheme promotes growth and innovation within the MSME sector, which is the backbone of India’s economy.

Development of E-Commerce Export Hubs for MSMEs

In a bid to support MSMEs and traditional artisans in reaching the global market, the government plans to develop e-commerce export hubs under a Public-Private Partnership (PPP) model. These hubs will provide export services and offer easy access to international markets, allowing MSMEs to tap into the growing demand for Indian goods abroad. By fostering a conducive environment for exports, the government is helping small businesses grow beyond domestic borders, ultimately boosting the country's export potential.

The measures introduced under Modi 3.0 highlight the government’s commitment to fostering innovation, promoting entrepreneurship, and boosting the MSME sector. From the abolition of the Angel Tax to the establishment of a space startup fund, these initiatives provide the financial relief and support that startups and small businesses need to thrive in today’s competitive global economy. With these reforms, India is well on its way to becoming a global leader in innovation and entrepreneurship, creating a thriving ecosystem for businesses of all sizes.