Union Budget 2024-25: Major Reforms Announced to Boost Start-ups and Attract Foreign Investment

New Delhi: In a significant move to invigorate the Indian start-up ecosystem, the Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, announced the abolition of the ‘angel tax’ for all classes of investors while presenting the Union Budget 2024-25 in Parliament today. This initiative aims to bolster the entrepreneurial spirit, foster innovation, and provide a substantial boost to the start-up landscape in India.

Highlighting the importance of attracting foreign investment, Smt. Sitharaman proposed a reduction in the corporate tax rate for foreign companies from 40% to 35%. This strategic move is designed to draw foreign capital, essential for addressing India’s developmental needs.

In her budget speech, the Finance Minister unveiled plans to develop a comprehensive financial sector vision and strategy document. This initiative will address the financing needs of the economy, enhance the sector’s capacity, and build requisite skills. The document will set the agenda for the next five years, guiding the work of the government, regulators, financial institutions, and market participants.

To support India’s climate commitments and green transition, the Minister proposed the development of a taxonomy for climate finance. This framework is expected to increase the availability of capital for climate adaptation and mitigation efforts.

Smt. Sitharaman also announced plans to seek legislative approval for an efficient and flexible mode of financing for leasing aircraft and ships, as well as pooled funds of private equity through a ‘variable company structure’. This initiative aims to streamline the financing process and attract more investments.

In a bid to facilitate foreign direct investments (FDI) and promote the use of the Indian Rupee for overseas investments, the Finance Minister outlined plans to simplify the rules and regulations for FDI and Overseas Investments. This simplification aims to prioritize foreign investments and expand opportunities for using the Indian Rupee in international transactions.

To further promote the diamond cutting and polishing industry, which employs a significant number of skilled workers, Smt. Sitharaman proposed safe harbor rates for foreign mining companies selling raw diamonds in India. This measure is expected to enhance the industry’s growth and competitiveness.

Additionally, the Finance Minister introduced a simpler tax regime for foreign shipping companies operating domestic cruises. This move is aimed at realizing the potential of cruise tourism and boosting employment in this sector.

These comprehensive measures outlined in the Union Budget 2024-25 underscore the government’s commitment to fostering economic growth, supporting innovation, and attracting foreign investment, thereby positioning India as a global economic powerhouse.