Top Startup News: Paytm's Bittersweet Week, Angel Tax To Be Removed?

This week has been eventful for the startup world. Paytm secured crucial funding approval but faced new challenges with a Labour Ministry summons. Startups and MSMEs are looking forward to the upcoming budget, with DPIIT suggesting the removal of the angel tax.

In this weekly startup news roundup, we’ll give you an overview of the latest updates, from government policies affecting MSMEs to exciting collaborations and competitions in the AI sector.

So, let's get into it!

Paytm Secures Lifeline Amid Crisis

Struggling fintech giant Paytm has secured a crucial approval. A government panel has greenlit a Rs 50 crore investment in its payments arm, Paytm Payment Services. This approval, pending finance ministry clearance, could be a game-changer. Paytm Payment Services is a vital part of the company's business, accounting for a quarter of its revenue. Previously, concerns over Paytm's Chinese ownership (via Ant Group) had stalled the investment. This approval, after a two-year wait, removes a major hurdle and allows Paytm Payment Services to potentially resume normal operations.

Labour Ministry Summons Paytm Over Alleged Job Cuts

Fintech giant Paytm faces fresh challenges as the Labour Ministry summons its parent company, One97 Communications, over allegations of forced employee terminations. This follows complaints filed by former staff alleging rule violations and termination without proper compensation. The Ministry's Regional Labour Commissioner in Bengaluru issued the summons, raising concerns about Paytm's recent job cuts. While a Paytm spokesperson acknowledged the "difficult transition" for some employees, they offered no specifics on the allegations. Reports claim terminated staff were pressured to resign without notice or severance packages.

Beyond Paytm, what can startups and MSMEs expect from the upcoming budget? There's exciting news as DPIIT has extended support for removing the angel tax, signaling a potential boost for the startup ecosystem.

Government May Relax 45-Day Payment Rule for MSMEs

Positive news for India's MSMEs! The government is considering relaxing the current rule mandating large corporations to pay MSMEs within 45 days of purchasing goods or services. This move comes in response to concerns raised by MSMEs that the existing rule could inadvertently discourage large companies from working with them. Some MSMEs fear they might be bypassed in favor of larger firms or those not registered under Udyam. An official announcement regarding a potential change is expected during the upcoming Budget presentation on July 23rd.

Startups Hopeful as DPIIT Recommends Angel Tax Removal

Good news for Indian startups! The Department for Promotion of Industry and Internal Trade (DPIIT) has recommended scrapping the angel tax. This tax, levied on investments exceeding a startup's fair market value, has been a hurdle for early-stage funding. While the final decision rests with the Finance Ministry, the recommendation signals a potential boost for the startup ecosystem.

Michelin and DPIIT Join Hands for Innovation and Entrepreneurship

The tyre giant Michelin has partnered with DPIIT to launch the AI Startup Challenge! This is an opportunity for innovators to showcase their brilliance and develop cutting-edge solutions using artificial intelligence in manufacturing, supply chains, and infrastructure. The top 3 startups will win paid pilot projects with Michelin worth up to Rs 5 lakh each. Successful participants could also secure long-term contracts and mentorship from Michelin's top executives.

Surge in AI Investments: Big Money Betting on Artificial Intelligence

Investments in AI startups more than doubled in the last quarter, reaching a whopping $24 billion. This surge follows the success of AI models like ChatGPT, with investors eager to discover the next big breakthrough. From healthcare to self-driving cars, AI is poised to revolutionize industries. However, experts caution that real-world results from these investments will take a few years. Is this a gold rush or a long game? Only time will tell, but the future of tech is undeniably getting smarter.

Calling All Student Entrepreneurs: IGNOU Startup Competition!

The Indira Gandhi National Open University (IGNOU) is hosting a Startup Competition exclusively for students and alumni. Whether you've already launched your dream business or are finalizing your big idea, this is your chance to shine! The top 3 ventures will receive the coveted "Best Startup Award" along with cash prizes, including Rs. 10,000 for first place. Shortlisted participants will receive invaluable support, training, and mentorship to help their ventures flourish.

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