Young Startups Hope For Investment Boost, Focus On Digital Space

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Many startups are also not planning to hire more people as of now.

Bengaluru: The young startup industry is keeping a keen eye on what Finance Minister Arun Jaitley has in store in Union Budget for fiscal 2018-19, to be tabled in the Parliament on February 1. In Bengaluru, often considered India’s startup capital, NDTV spoke to startups to find out what is on their wish list.

Goods and Services Tax (GST) still seems to be an issue for many young startups. Jayanth Sharma is the CEO and co-founder of Toehold, a company that helps provide training in photography, loans equipment and organises tours, in which photography plays a large part. His next trip with clients will be to Costa Rica to photograph humming birds.

“Coming from the tourism industry, one of the biggest hopes for me in this budget is GST-related stuff. Especially when it comes to package tours, we are in the lowest slab of 5 per cent but there is a caveat to that. We don’t get input credits. So because of that, the product pricing becomes more expensive. Because we can’t input the tax we have already paid for components of the package.

“As package tour operators, we would love to get GST credit paid for components of my big package. That will make the product a little less expensive than it is currently, which would help in more sales and tourism growth,” Mr Sharma said.

The total price for customers for a tour package then increases, he told NDTV.

“I am not able to give benefit to customers because whatever taxes are paid there is no input creditable (for it). So I have to add another 5 per cent GST and the product pricing goes up,” said Mr Sharma.

Travel site Cleartrip is also hoping for some announcements that would benefit the industry and get more people to book their holidays with the company. Anand Kandadai, Executive Vice President, Cleartrip Local, said, “Connectivity in India in terms of airline connectivity or infrastructure for roads or rail is really critical. Udaan was a really interesting scheme launched in 2016…25 more regional airports, 31 more helipads. I think, that is the beginning of the story. There are so many more unserved and underserved airports in the country. That needs to improve a lot more in terms of regional infrastructure.”

Udaan is a government scheme that aims to boost airport connectivity across the various regions of the country.

With so much of startup work being done online, industry stakeholders also hope for improvement in the digital space.
Mr Kandadai said, “We are a digital tourism company. We are keenly observing the allocation that is going to happen in the digital infrastructure space and the digital payment space.”

He acknowledged that Cleartrip Local – which lets users know about hyperlocal leisure activities – has been restricted in terms of its connectivity.

“We have restricted ourselves to tier 1 and metro cities,” he said.

Many startups are also not planning to hire more people as of now.

“It is kind of a semi-freeze time for us. I don’t think we are in a job vacancy place where we would add people. GST has made a lot of changes to the way we price our products and the profitability and revenues. So it is still a very tentative time. We are not on a big job hunt right now, ” said Sharma.

Mr Kandadai, however, was more optimistic about jobs in the tourism industry as a whole – and in startups that deal in that space. But he felt there was potential for more growth if some tax changes were made. “If you look at areas like homestays and village stays – there are very interesting angles. They are also under the GST ambit of 18 per cent. If you want to expand the regional growth story, this is important,” he said.

Startups have been concerned about tax laws that treat some investments as income. This has led to some hesitation among those who would otherwise think of investing in the startup space.  There is hope the budget would address this.

“We need a lot of startups to be getting investments. It will help if investors can get a little allowance in this regard,” Mr Sharma said.


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