🥡 Takeaways

1. Get ready to party in Goa (on the Government’s dime).

2. Infrastructure will be used to kickstart the economy (while reducing subsidies).

3. Manufacturing is being pushed with incentives that are upto 6% of production costs of an item. Many opportunities in insurance, farming, education, etc. are also visible through the budget.

4. Read the full budget speech here.

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Before we start, we want to take a moment to thank all of you for the continuous support! We released our 50th episode on the podcast, and got featured as a Top Pick on Spotify. We’ve released a budget special that you can check out here!

🧐 Studying the budget for …. Market Research!

One of the topics that’s propped up time and again on our podcast is Market Research - especially for building profitable, bootstrapped businesses.

• Preetam talk’s about it SuperLemon’s story.

• Bhavik and Darshan talk about it in Creative Stylopack’s story.

• Mohit and Rajat talk about it in Kimirica’s story.

• Sahil & I talk about it here.

Basically, we’re suckers for businesses that are built by exploiting existing marketing gaps (Creating markets is extremely hard). To spot market gaps, you need to learn how to do Market Research.

Understanding the budget is a market research exercise.

We spent the last couple of days trying to make sense of the budget. We are by no means experts on these topics, and we were only looking at it to understand the impact on businesses and the opportunities that it can create.

We don’t care about the numbers, call us lazy, but we believe no-one actually remembers the numbers. Instead, it’s important to understand the broad areas the government is investing in and it’s intent.

🏅Let’s talk about Intent

Broadly speaking, the government has shown positive intent with the budget, probably the most progressive budget of the current government’s tenure.

• Infrastructure Expenditure has gone up significantly and this means we can expect more projects such as Metros, Ports, Water/Gas Pipelines, Highways, etc.

  • Subsidies have reduced and instead, the government has increased capital expenditure into long term assets.

  • These projects have huge downstream impact on creating a favorable business environment for the economy to grow:

    • Creates infrastructural assets that attract Foreign Direct Investment (FDI) Inflows. Extremely important for our future growth.

    • Kickstarts commerce in the market as government contracts buy raw materials, hire sub-contractors and labor. It stimulates the economy and creates demand. Demand builds interesting new businesses.

• Ease of Doing Business has been a focus area for the last few years. Ever year, Social Media discusses how we climbed from one really bad ranking to another really bad ranking in the ease of doing business index.

  • The government has tried to implement policies that are ‘intended’ to make the life of a business owner easier but it doesn’t always work.

  • We’re still far behind when it comes to makes life easier, but the budget lays out some policies that are a step in the right direction.

  • Check out the Podcast where Sarthak goes deeper into changes in Taxation, compliance and other measures that can promote ease of business.

💰Opportunities from the Budget

🔗Manufacturing is a big focus:

• Production linked incentives of upto 4%-6% of production costs and hiked custom duties point to the Industries that the government is keen on building in India.

• Opportunities in

  • Advance chemistry cell (ACC) battery used in consumer electronics, electric vehicles, renewable energy;

  • electronic and technology products;

  • automobiles and automobile components;

  • pharmaceutical drugs;

  • telecom and networking products;

  • textile products; food products;

  • solar PV modules;

  • air conditioners,

  • LEDs and specialty steel.

• 7 Textile Parks will be set up to promote garment manufacturing in India. The reason the government wants to focus on this is because its a labor intensive industry and therefore can generate high employment.

  • We have lost the Garment Manufacturing battle in the last few years to Bangladesh and other South Asian countries.

  • Fashinza is an interesting startup in this space.

• Indigenous Toy Based Learning is a focus area for the government. We recently spoke about the EXACT same thing on our Munchies Episode.

🌉Infrastructure

• Massive opportunities across the board for private contractors to bid for these government projects of all sizes, across different industries.

  • In my previous job, I extensively worked with contractors and these people almost always had political backing. We’re yet to find a story of an entrepreneur who grew big as a contractor without favorable political conditions. If you know of one, we’d love to host him on the podcast. If not, it is what it is.

• There are startups who playing on the fringes of Infrastructure building solid businesses.

  • Ofbusiness with their lending to contractors and Bidassist tender management platform come to mind.

🚗 Scrap Policy

• Long awaited Vehicle Scrappage policy will help reduce our reliance on imported scrap and build a circular economy for the Auto Industry and second steel producers. Of course, it will also promote new car sales.

• There are interesting niches within this segment:

  • Build an offline business of buying scrapped cars and segregating the different kinds of scrap

  • Processing scrap to raw materials for secondary steel

  • Scrap metal export business should also be interesting to explore

• What helps is that this is an extremely unsexy business. We love unsexy businesses, there are usually opportunities to build profitable businesses.

📚Education:

• Government wants Indian education institutions to partner with foreign institutions.

  • A trend that we’re seeing with the new age institutions.

  • For ex: ISB, Ashoka, Plaksha all partner with foreign institutions.

🌞Climate:

• Clean air in Urban Indian Cities is an epidemic in the making. A big budget has been dedicated (Rs. 2k Crore Big) to fight. Startups like Nanonclean, Chakr, Devic Earth are doing interesting stuff in this space.

🌽Agriculture & Fisheries:

• Operation Green Scheme will promote processing and value added products of 22 perishable products.

• Food Processing has been a focus area for a while and the government continues to spend it. Exciting industry with low Capex to find interesting opportunities.

• A Multipurpose Seaweed Park in Tamil Nadu.

  • Are we suddenly going to see ton of Sushi Restaurants in Tamil Nadu?

  • Nope, as our friend Rishabh points out, seaweeds are used as raw materials for different industries.

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📜Insurance:

• Increase in the FDI Limit in the Insurance sector to 74% will give a huge boost to the Insur-tech startups such as Acko and Digit.

• There are also more opportunities to build B2C as well as B2B businesses to improve the way Insurances are sold and to optimize the way the claims are processed.

  • Check out our interview with Arun Balakrishnan of Xceedance on his journey of building a GIANT Global Insurance Products & Services business in 7 Years. Massive industry that looks intimidating from the outside.

💃🏻The Biggest Opportunity of them all…

The Government of India is setting aside Rs. 300 Cr for the celebrations of Goa’s Diamond Jubilee year of the state’s liberation from Portuguese rule. Yup, Goa’s going to have a one massive party!! Let’s all go.

That’s it for now, we’ll keep you posted as and when we find more Trends basis the governments planned expenditures. Until then, let’s all collectively pray that the execution of this budget is top notch! One can hope…

P.S - This was our first topical newsletter & podcast, do tell us what we could've done better :) Reply to this email or comment below!

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P.P.S: We're thinking of building our team and are looking for interns. Check out our podcasts and more about us here. If you vibe with what we're trying to do (even we're yet to figure it out, you'll be that early!), we are looking for some full-time/part-time interns. We are looking to put some fuel to The Indian Dream and see where this goes. Our biggest pain point is the  Social Media Distribution. We create way more than we efficiently distribute. Come help us fix this? If yes, email us to tell us more about you:

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