On The Path To Recovery

The startup ecosystem, which was grappling with liquidity concerns, is getting back to normalcy. Many startups are getting more funding and gaining traction than before

- Rajat Mishra

The year 2020 is nothing short of a nightmare for India’s entire startup ecosystem, which was on an upward spiral making the nation proud. However, COVID-19 induced lockdown brought everything to a screeching halt, barring fintech, telemedicine, and a few others, enabling digital offerings. In fact, four Indian startups gained unicorn status during the slump. With restrictions getting curbed, the sector is crawling back on track and is witnessing growth.

A Parliamentary panel in its report -‘Financing the Startup Ecosystem’ - notes that Indian startups must tread the path of self-reliant India and must cease their dependence on foreign investment for growth. It has recommended the abolishing of tax on long-term capital gains for collective investment in startups through angel funds, alternate investment funds, and limited liability partnerships. Amongst a raft of recommendations made by the panel, some important suggestions include expanding funding sources, incentives for long-term capital gains, and guidelines for rationalizing prices. The idea is to encourage domestic capital to revive the economy. The committee has made recommendations on expanding the role of Small Industries Development Bank of India’s (SIDBI) Fund-of-Funds to help disburse more funds to this new economy.