What Fintech leaders want from Union Budget 2018

FinTech industry has gained so much from year 2017. With looking upon the trends, this year too industry leaders are expecting more support from policy makers for incentivize digital payments and further improve the adoption rate. Here read what Fintech leaders expect from Union budget 2018.

Gaurav Hinduja, Cofounder of Capital Float.

“For the Budget 2018-19, we hope that the government will continue to push digitization of financial services and encourage consumers to use digital platforms for transactions. Initiatives such Aadhaar and UPI provide a good opportunity for banks, insurers, and fintech players to expand India’s efforts towards financial inclusion. Another area of focus should be reducing the cost of capital for the MSMEs by improving lenders access to low cost funding sources such as MUDRA & SIDBI and relaxing securitization norms” 

S. Sundararajan, Executive Director, i-exceed

“Ours is a country that has realized the significance of digitization and acted on it. The demonetization act set the wheels rolling in a big way for Digital India and the growth of digital payments has accelerated since then. However, there is still a large section of population, especially from rural areas, who are unable to get the best out of these digital initiatives. Fintech players are coming up with interest innovations to support regional languages, voice based transactions and AI powered natural language processing to facilitate financial inclusion. With the 2018 fiscal budget, we expect the government to take more active steps in encouraging such innovations.”  

Ravi B Goyal, Chairman & Managing Director, AGS Transact Technologies Limited 

“The last few quarters have been transformational for the FinTech and Banking Payments Services industry in terms of increased governmental policy push such as Aadhar pay, UPI and others. These policy initiatives have not merely encouraged consumers onto digital platforms but has also promote financial inclusion. However, it would be appropriate to point out that cash would still co-exists along with increased push towards digitization. As cash continues to be the preferred mode for transactions, especially in semi-rural & rural areas, we strongly believe that the government’s pro-business policies will usher in a new era of prosperity providing stimulus to cash and digital payments alike. 

As India’s leading end-to-end payment solutions provider, our ardent belief is that the ‘Make in India’ initiative holds huge potential for spurring economic upliftment of the people and enhancing national development. 

Furthermore, the forthcoming budget should announce measures to upgrade digital infrastructure, especially with regards to the protection of data stored online so that consumer confidence is enhanced.”

Charlie Lee, CEO, True Balance 

“2017 was a great year for the Fintech industry in terms of a positive policy environment, new technologies and innovation. The government so far has taken tremendous efforts to promote future digital penetration but there is still much more ground to be covered in order for this wave of digitization to be sustained. With India’s fintech adoption rate now second only to China, this year the industry will expect more policy support from the government to incentivize digital payments and further improve the adoption rate. The budget must account measures to upgrade digital infrastructure and digital literacy in rural India to achieve the above goal.  The sector will also benefit from a continued evolution of GST and a much-needed clarity on its implementation. We also look forward to SOPs for fintech companies providing data protection since along with the rise in digital payments and online lending, cybersecurity issues have also increased."

Rajeev Agarwal, CEO, Innoviti Payment Solutions.

“As hardware cost  is one of the bigger inhibitors to rapid and sustained expansion of digital payment acceptance amongst smaller retail merchants,  we hope the Budget takes a close look at options to reduce this friction. Conversely , if cash withdrawals from Banks were more actively dis-incentivised through surcharges, that would also help. An even more wide ranging move to push digital payments habit would be to allow individual tax-payers an annual personal income tax deduction claim for a specified percentage of their annual digital purchase spends.”

Aniketh Jain, CEO & Co-Founder of Solutions Infini 

"This year budgets are going to be significantly crucial as they happen post the year of notable reforms like Demonetization, GST implementation and insolvency & bankruptcy policy. This year budget also marks significant impact on the way our ecosystem functions. Bringing in policies that fosters growth in employment, direct tax reforms, creating more clarity on the way bitcoin operates and its significance on Indian economy can be familiarized for smoother functions. The last year's budget has taken various initiatives to improve the ease of doing business, controlling inflation, digitizing the financial and individual records. Increase in FDI (Foreign Direct Investment) is a pragmatic initiative that has opened up investments from various sectors. Government should capitalize on the growth trajectory of the past year to strengthen the existing framework of the policies and to create sustainable solutions that foster employment opportunities, transparent financial policies to make India USD 6 Trillion economy in a decade of time."

Swati Bhargava, Co-founder, CashKaro.com

“The first post-GST budget, and the last one for the current term of the Modi-led central Government, has pinned a lot of hope to be a populist one.

Our key expectation is a cut down in the effective corporate tax rate. Global corporate tax rates have fallen from an average of 27.5% to 23.6% today over the past decade. In India we pay a base rate of 30% as corporate tax which is much higher once coupled with surcharges and cesses. The road map for the next budget should include the reduction of corporate tax rate to something around 18% with withdrawal of tax incentives and exemptions as well as withdrawal of surcharges and cesses.

Secondly, out of Rs 10,000 crores Startup India Fund which the Government announced in 2016, only Rs 600 crores has been distributed. Today entrepreneurs struggle with basics like, how the Government defines a startup. The rules around eligibility to claim these benefits are unclear and the approval process is tedious. The new budget should create an environment conducive to business.

Also, Angel funding is the first source of encouragement for a startup and tax levied on the same is a major deterrent to its growth. Early stage investors should be spared these old policy measures. A popular scheme to take inspiration from is UK's Enterprise Investment Scheme (EIS). It protects 61.5% of investors’ investment through generous income tax reliefs as well as an exemption of capital gains tax on returns. If a similar tax relief comes to India, it will encourage investments in Indian startups.

Lastly, we also need to give incentives to the industries for larger female participation. Even subsidies for providing transportation and access to technology will create an impact. The budget should include expenditure for better infrastructure and to strengthen public safety for women. We need the basics to enable more women to join and remain in the workforce.”