Indian Prime Minister Narendra Modi unveiled a number steps, ranging from tax waiver for three years, ending inspector raj and a mega fund to help boost the start-ups. After a day-long event, Modi
said that the government would only play the role of a facilitator and not burden entrepreneurs with complicated compliance requirements.
“If the government doesn't do anything, so much will happen. We have done a lot for 70 years. Where have we reached? Please tell us what not to do. If we decide not do anything, they (entrepreneurs) will take us places,” Modi said at a jam-packed Vigyan Bhawan in New Delhi. Modi had announced the Start Up India campaign in his Independence Day speech last year to accelerate the pace of creating jobs at a time when employment growth in the government and the brick-and-mortar economy remained slow. On Saturday, Modi who shared the dais with prominent names from Indian start-ups as well as global giants such as Uber founder Travis Kalanick and SoftBank chairman and CEO Masayoshi Son - put in place the first building blocks, by defining a start-ups and detailing the action plan to help these businesses grow. To begin with, any entity which has been around for less than five years and has a turnover of less than £2.5 million qualifies to be defined as a start-up, provided it is working towards innovation, development, deployment or commercial of new products, process or services that are driven by technology or intellectual property .
If a company clears the test conducted by a government board, it will be entitled to several benefits including a three-year income tax holiday. In addition, the government announced capital gains tax benefits. Although the plan has been unveiled some of the measures can only be implemented after the budget is cleared by Parliament.
The policy recognises the potential that start-ups can play in the coming years after a recent spurt which saw the number of in the technology space jump over nine times from 501 entities in 2010 to over 4,500 last year. The increase has come with the rise of Flipkart, Snapdeal, Ola Cabs and Paytm, which have become household names and attracted huge investor interest. Currently, Indian entrepreneurs depend on overseas investors for over 90% of the funding, which has been a major area of concern.The government sought to address this partly through a £1 billion fund and a £200 million credit guarantee fund. While the corpus was seen to be small, industrial promotion and policy secretary Amitabh Kant said that the steps announced were just the beginning.
Finance Minister Arun Jaitley said the scheme would ensure minimum interference from the government with attractive tax incentives. “Start-Up India will change conventions. Government will merely be a facilitator for start-ups,” the minister said addressed the inaugural session.
“We ostensibly broke away from the license raj in 1991, conceived with idea that government will decide which businesses can run,” Jaitley said. “Our effort in last few years has been to restrict role of the state in policy domain," he said, assuring Start-Up India scheme will follow that path. Commerce and Industry Minister Nirmala Sitharaman said the government now looks forward to engage with entrepreneurs to remove “all the burdensome regulations for start-ups.”
