The revolutionary growth demonstrated by start-ups necessitates the government to take more initiatives to address the pressing challenges, said B V R Mohan Reddy, chairman of NASSCOM and executive chairman of Cyient.

“The government has announced many initiatives for encouraging start-ups. Due to Initiatives like Startup India- Standup India, there is a great momentum and enthusiasm amongst start-ups as well as investors. Start-ups are an important element of our economy and society. We have seven to eight unicorns in the country today, which was unheard of in the last decade,” he said.

“More initiatives are needed in the areas of facilitating ease of doing business to further boost startups. Tax exemption on direct and indirect taxes including minimum alternate tax (MAT), where start-ups lose a big chunk of cash flows is the need of the hour. This will reduce compliance burden and reduce cash outflows,” he further said.

The FY 2016-17 budget has to encourage them by waiving off tax on capital gain, and should allow carrying forward of losses even if there is a change in ownership structure.

Prof Sobhan Babu from IIT Hyderabad and founder of Plianto Technologies said, "Giving tax exemption to start-ups is a good move. But this will not solve the major issue facing by startups, which are building products. Most tenders require bidders to have turnover of few crores in last two to three years. Due to this clause, most startups are unable to compete with established players in bidding process. Some support from government is expected in this direction."

Ministry of Commerce will do its best to solve the financial difficulties being faced by start-ups, said Union minister Nirmala Sitharaman while expressing the hope that budget 2016-17 will allocate required funds for Start-up India programme. She said "The government will be a lot more flexible in dealing with issues raised by start-ups and we are not just looking at tech-based or application-based start-ups".