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Budget 2017-18 a welcome relief for e-retail start-ups
Feb '17
The government has conveyed through the Union Budget 2017-18 that it is committed towards liberalising the foreign direct investment (FDI) policy to attract more investments, ensuring an influx of funds into the e-commerce start-up eco-system. A reduction of tax rates for MSMEs is also a positive move for the seller eco-system, according to e-retailers.

“Government has signaled clear and loud that it is committed to liberalising FDI policy to attract more investments. Once the FDI reforms are announced, they will not only attract fresh funds into the current start-up ecosystem, but will also promote new ventures in many untapped or undeserved sectors of economy,” Sujayath Ali, co-founder and CEO, Voonik told Fibre2Fashion.

“It (tax reduction for companies with turnover of up to Rs 50 crore) will not impact tech start-ups and e-commerce companies directly. But it is a very positive move for the seller ecosystem. Lakhs of sellers are finding new avenues with the growing e-commerce industry in the country. These sellers will benefit from the government move and will be able to plough back money in further scaling up,” continued Ali.

E-commerce sites are also appreciating the government’s move to encourage digital payment in the country.

“Digital payments play a pivotal role in ensuring consistent customer experience and increasing verified transactions. New merchant enabled Aadhar payments will bring many new consumers who do not have a debit card, into the digital payment environment. This will help start-ups improve their user identification and engagement,” said Ali.

“Government has planned to take digitisation of transactions to the grass roots level and believe it is a good step towards a stronger economy. The convenience of digital payments will instigate the consumers to spend more and I believe it is a positive sign for us,” Manu Agarwal, founder and CEO of Naaptol, told F2F via email.

Profit-linked deductions for start-ups have been reduced to 3 years out of 7 years, which will be beneficial for them.

“The increased period for profit linked deduction for 3 years out of 7 years as against 5 years is welcome, as start-ups are not expected to make profits for the first few years. The proposal to allow start ups to carry forward losses in spite of change in 51 per cent of shareholding provided original promoter shareholding continues is a big relief and a welcome move,” said Abhishek Goenka - partner direct tax at PricewaterhouseCoopers India. (KD)

Fibre2Fashion News Desk – India

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