National Startup Day: CoinDCX Chief Posts Earnest Appeal to India’s Govt, Web3 Community

As India observes National Startup Day on Tuesday, December 16 – CoinDCX's Sumit Gupta has detailed a glaring issue, crippling the growth of the crypto sector in India.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 16 January 2024 16:49 IST

National Startup Day: CoinDCX Chief Posts Earnest Appeal to India’s Govt, Web3 Community

Photo Credit: Pixabay/ Shaurya Singh

Global crypto startups raised $2.1 billion in 2023, i.e 80 percent lower compared to 2022

Highlights

A total of 1,819 startup deals were finalised in Web3 sector in 2023
This marked a 32 percent decrease from the 2,671 deals recorded in 2022
Indian crypto industry is calling for a community effort to boost startup

The startup ecosystem of India, emerged as the third largest in the world, with over 99,000 recognised firms and 108 unicorns. In regard to the Web3 ecosystem, industry players have identified setbacks, that is slowing down the overall growth of the sector. As India observes the National Startup Day on Tuesday, January 16 – CoinDCX's Sumit Gupta has detailed a glaring issue that, according to him, is crippling the growth of the crypto sector in India.

In a sharp attack, Gupta has blamed India's one percent TDS reduction law on each crypto transaction, as a big reason that's slowing down the growth of the Web3 ecosystem.

“Despite our remarkable progress, with over 112,718 DPIIT-recognized startups and a staggering $42 billion (roughly Rs. 3,48,555 crore) in funding in 2022, why does the Web3 sector face such daunting challenges due to the current TDS regime,” the founder and CEO of CoinDCX posted on X.

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In 2022, when India was levying taxes over crypto incomes and transactions, the Finance Ministry said it was aiming to keep track of otherwise largely anonymous crypto activities. In India, crypto gains are taxed at 30 percent and each crypto transaction sees a one percent tax deducted at source (TDS). Soon after these laws were deployed last July, the average daily transaction volume on Indian exchanges WazirX, CoinDCX, BitBNS, and Zebpay dipped significantly – never to rise notably again until recently.

In its latest study, Delhi-based think tank Esya Centre has advised the government to slash its 1 percent TDS on crypto transactions to 0.01 percent. In doing so, India could garner more revenue from the Web3 sector than what it's managing to churn at present while also supporting the growth of this up-and-coming sector, the report said.

Despite constant criticism of this one percent TDS law on each crypto transaction, India has not changed its stance on the matter.

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“The introduction of VDA taxes in 2022 led to a disheartening brain drain of Web3 talent from India. This distressing exodus, primarily driven by harsh taxation treatment represents a formidable barrier that locks up crucial capital and stifles liquidity, both vital for growth and innovation in the Web3 space,” Gupta noted.

Calling to accelerate community effort to boost crypto startups in India, the CoinDCX chief has urged the government, once again, to reduce the TDS from one percent.

“A lower TDS rate could potentially increase overall tax revenue by stimulating more active trading and investment, a crucial step as we aim to become a $5 trillion (roughly Rs. 4,14,94,925 crore) economy. Opportunity to earn support and trust from the India web3 builders respecting the Indian laws. This is an earnest appeal to safeguard the interests of Indian Web3 builders and to establish our position as pioneers in this transformative space,” he added.

Today, on National Startup Day, as I contemplate India's extraordinary growth as the third-largest startup ecosystem globally, I am confronted with a pressing question that challenges the hustling entrepreneurial spirit of web3 builders.

Despite our remarkable progress, with…
— Sumit Gupta (CoinDCX) (@smtgpt) January 16, 2024

On a global level, the number of crypto venture capital deals witnessed a deceleration in 2023. A total of 1,819 deals were reportedly finalised in the crypto-startup arena -- marking a 32 percent decrease from the 2,671 deals recorded in 2022.

As per a report by AltIndex, crypto startups raised $2.1 billion (roughly Rs. 17,427 crore) globally in 2023, clocking a decline of 80 percent compared to 2022. In order to foster the sector's growth, the India Blockchain Forum has also announced the launch of a Web3 Ecosystem Directory.

“With the launch of the Web3 Ecosystem Directory, we are paving the way for the seamless growth and adoption of the blockchain industry in India. We extend our invitation to startups, entrepreneurs, enterprises, academia members, students, and developers to come together and propel India's Web3 growth story,” the India Blockchain Forum said in its official announcement.

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Further reading: Cryptocurrency, India, Web3 Startups, India Blockchain Forum

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More