Modi pledges big measures to boost India’s entrepreneurs

Prime Minister Narendra Modi sought to infuse more energy into India’s start-up ecosystem with a bouquet of initiatives such as making tax-free the profits of these fledgling units for three years, Rs. 10,000 crore of government funding over four years, no visits by labour inspectors for three years, and quicker and subsidised patent clearances.

The startup ecosystem in India is about to be shaken up soon, as Prime Minister Narendra Modi will unveil the Startup Action Plan on Saturday, at an invite only launch event of Startup India, Standup India. “Looking forward to interacting with start-up entrepreneurs”, Modi tweeted.

Prime Minister’s “Start-Up India” initiative to be launched here on Saturday has evoked much interest and expectations from stakeholders.

As many as 1,500 startup founders from across the country convened the event aimed at celebrating the spirit of India’s youth in the concept.

Later in the presence of Modi at the launch, Jaitley said the Start-Up India event inaugurates a change of mindset in the country. Unveiling the 19-point start-up action plan, Modi said capital gains tax exemption will put start-ups at par with MSMEs.

He also said his government meant to club all related legislation involving start-ups and took a dig at the opposition in this regard.

Three-quarters of Indian startups that raised money from investors a year ago moved the legal home of their company out of India, said Mohandas Pai of Aarin Capital Partners.

When a start-up wants to close operations, an insolvency professional who shall be in charge of the company will be appointed.

The PM emphasised that the start ups should have a risk-taking capacity with passion for its success.

The prime minister joked that had he possessed more entrepreneurial flair, the one-time tea-seller would have been able to open a hotel chain.

This is excellent news in terms of innovation within the country, but the flipside of this scenario is that these entrepreneurs soon shift base to worldwide platforms because of India’s stringent tax regimes.

Critics said the plan doesn’t go far enough to encourage entrepreneurship in India.

Tax exemption will be given on investments above the fair market value. The action plan also promises a website and an app from registration of a company in one day. Clarity on taxation policies, increase in Foreign Direct Investment (FDI) limit in key sectors, single-window clearance, removal of tax on ESOPs, GST roll-out and more are some of the crucial issues that the startup community expects the government to introduce. A insolvency and bankruptcy Bill has been pending approval of Parliament and “you know why it is stuck there”, he said, in an apparent reference to the Opposition stalling its passage.

“Today’s gathering is not to tell us what to do”. Thus a suggestion made by entrepreneurs was to exempt start-ups from these taxes; there is also a need to remove the existing angel tax.