The latest announcement over corporate tax cuts, announced by the finance ministry is said to be reducing the cost of capital and incentivize more investments in the consumer Internet segment, according to tech startups and investors in the startup space. The corporate taxes for domestic companies fell to 25%, down from around 30%, as an effective invasion by Finance Ministry last week.

Alongside, the ministry also widened the scope of corporate social responsibility (CSR) activities by allowing domestic companies to deploy CSR funds towards incubators in various fields such as science, technology, medicine, besides incubators promoted by Centre or state or any state-owned companies.

According to Saurabh Srivastava, Chairman of Indian Angel Network, tax cuts will effectively reduce the cost of capital for companies which will likely result in a greater influx of funding into Indian startups. “Likewise, the decision of encouraging businesses to reroute their CSR 2% spending into state-sponsored incubators will further contribute towards driving innovation and entrepreneurship with renewed vigor,” added Srivastava in a statement.

“With corporates being given further permissions to utilize the CSR funds for funding incubators, it will create a close synergy between the industry and the startup ecosystem. One of the areas to support in this would be to look at the startups and organizations which are helping disadvantaged youth to upskill. It will help uplift and upskill several capable engineers across the country,” said Narayan Mahadevan, co-founder of Mumbai-based tech incubator BridgeLabz.