One thing has become a established fact for sure, that the current Modi Government — keeping aside all that political swamping, has perhaps been the most active regime in India, ever, when it comes to being enthusiastic about startups and the new age entrepreneurial community as a whole.
But enthusiasm alone can’t win you battles, can it ? And hence lies the quintessential cruciality of the “Startup India Standup India” event today. It will be a litmus test for the current regime to actually show, that they are committed towards the “Startup India” dream, and it isn’t just a mere propaganda.
Some of the biggest names in the space globally — SoftBank Corp.’s founder Masayoshi Son, Uber’s Travis Kalanick and WeWork’s founder Adam Neumann — all would be there to interact with entrepreneurs and help Government form policies. How much input does Govt. actually take fro it, that will remain a question.
To start with, Government needs to come up with a more lenient tax regime for startups and new-age companies. Taxation has been an issues, plaguing the system and startups from time immemorial. India needs to move along the lines of US on that, by allowing a more lenient tax structure for companies which are generating lesser revenues.
This way, India’s emerging startups and new-age companies would be able to shift focus on using revenues for operational expenses of the company and run it, instead paying numerous taxes.
We talked to Anurag Jain from CarDekho parent GirnarSoft, and here’s what he things on the tax issue,
The government authorities can boost the entrepreneurial spirit by simplifying regulatory compliances to start and operate a company for the first three years. The authorities should also reduce direct taxes.
Right now, an entrepreneur in India has to pay income tax, service tax, value-added tax, excise duty, shops and establishments’ tax, professional tax, among others. An exemption on indirect taxes on services consumed and rendered by startups is also necessary. This will ease regulatory overhead on the startup.
Anurag further believes, that domestic investments should be kept out of the tax regime. He adds,
The government should also waver taxes on domestic funding and investment. More initiatives to strengthen raising debt and working capital schemes must also be taken. Incubation facilities where services are provided at a subsidised rate is an urgent need.
Lastly, startups require increased tenure for carrying forward losses. We also need the ability to accumulate losses in case of merger and acquisitions.
And even though Government’s SIDBI has started offering working loans to startups and new-age entrepreneurs, capital continues to be an issue for those, who do not wish to rely on venture capital from star-eyed investors and instead want to bootstrap their way to success.
While easing Tax is a point, regulatory hurdles too haven’t really been sorted out the way, they were supposed to. Government in its budget last year, announced numerous schemes and capital initiatives for startups — things which are yet to fully materialise. The Rs.10,000 crore fund that the government proposed in July 2014 for example, is yet to see the light of the day.
PM Modi first showed real concerns regarding India becoming a start-up destination from the ramparts of the Red Fort on the 15th of August last year. He believes that entrepreneurs will not only help the country progress through technology, finance and the like, but will also play a key role in job creation.
On the 15th of August, from the Red Fort, I talked about India becoming a start-up destination… Subsequently, the talk about whether India can indeed become a Start Up capital of the world. On January 16 we are coming out with an action plan on start-ups,
PM Modi said.
Startup India, Stand up India programme will connect bright minds from IT in all colleges through live connectivity… Youth all over India have the talent and the capability to propel India’s growth.
The vision is that all of the 1.25 lakh bank branches all over the country should encourage at least one Dalit or tribal entrepreneur and at least one woman entrepreneur.
What actually happens and materialises, we’ll ave to wait and watch for it today. And while the waiting part has to be taken care of by you on your own, we sure will help you in the watching part, by providing you a comprehensive coverage of all the announcements from the event. Stay Tuned.
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This story is being continuously updated with more inputs from CXOs and industry experts. Stay Tuned.