Saturday 12 March 2016

Posted by Howzto
No comments | 13:48
Start up India

Prime Minister Narendra Modi launched the ambitious "START-UP INDIA" movement to boost digital entrepreneurship at the grass root level. He spelt out the various salient features of the action plan that was unveiled at Vigyan Bhavan in New Delhi.

What is start up?
Early stage in the life cycle of an enterprise where the entrepreneur moves from the idea stage to securing financing ,laying down the basis structure of the business, and initiating operations or trading.

Top ten take away's from PM's speech that cheered the start up in the arena.
1. Tax exemption for start-ups for three years.
2 .Rs.10,000 crore corpus fund to support start-ups.
3. Capital gains tax to be exempted for venture capital investments.
4. 80% reduction in patent registration fee.
5. Government to ensure 90 day window for start-ups to close businesses.
6. Self-certification compliance for start-ups across India.
7. No government inspection for three years for newly formed start-ups
8. New scheme to provide IPR protection to start-ups and new firms.
9. Innovation program to start 5 lakh schools to target 10 lakh children.
10. Government is all set to launch an app to create a platform for interaction with start-ups.

India's economic and reform performance in 2015 has disappointed many. Despite outperforming its BRICS compatriots by being the fastest growing economy in 2015 at 7.5 percent, its 'bright spot' status does not leave room for complacence in 2016.Domestic private investment saw a dip in 2015 and the recent 'Mid-year Economic Analysis' confirm this.
The cause of this stall in private investment is driven by corporate India's complex confusion of over-expansion, debt default and risk aversion in an unfavorable investment environment, and important bills being stalled in parliament.

No economy like ours can grow without domestic private investment. Recovery is possible in 2016 if stalled private corporate investment can be restarted, to add to growth in public investment and private consumption. Start-up India will fill this vacuum as start¬ups and entrepreneurs are a way to create alternate private investment models. Start-up India can potentially be the catalyst to restart private investment flows into the economy. India, today is a hotbed for entrepreneurial activity because of the abundance of new ideas and the opportunities that these offers.
In a survey conducted by local circles, 14 percent of those polled reported that registration and taxation was found to be a serious challenge in starting up. Start-up India should address this complexity and incentives corporate spending into new ventures through fiscal interventions. Providing tax incentives when corporates invest in start-up businesses is an important step. The government's recent announcement to waive the 'seed-funding' tax imposed by the finance act, 2013 if domestic angel investors invest in start-ups, is a positive move. Start-up India should include a comprehensive set of policies for entry and exit of private investment. The implementation of GST legislation will play an important role for start-ups and entrepreneurs, as they can access the large Indian market as one open market without the complex requirements for inter-state trade that makes it difficult for small business.

The corporate insolvency legislation, in particular, is pivotal given the fact that a majority of start-ups fail, marking capital recovery a real worry among investors. Under the current insolvency systems in India, as per the World Bank report, the recovery rate for secured creditors from insolvency proceeding stands at 25.7 cents on the dollar-compared to the 72.3 cents in OECD (Organization for Economic Cooperation and Development) countries. The bankruptcy code proposes to have the corporate insolvency procedure resolved within a period of 180 days, with a fast track 90 day resolution process. It also makes provision for priority among creditors, giving the private investor a real chance at recovering the investment. Start-up India needs this policy for its success.
The last decade have seen a number of new Indian corporates get created on the back of private capital. We are now presented with a similar scenario where new and disruptive technologies, along with private capital, can change the business landscape, where a few intellectuals have monopolized the country's discourse on technology, economy and held growth hostage. Start-up India can bring thousands of entrepreneurs from across India into this discourse and drive the growth of a transformed and diversified economy and do so sustainably.

Article by- M. Poovizhi


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