 "Startup India: Stand-up moment for start-ups")
The day-long wait on a weekend was worth it for hundreds of start-ups who had gathered at Vigyan Bhavan in New Delhi on Saturday in the hope of tax breaks and easier business environment for entrepreneurs. Prime Minister Narendra Modi arrived sharp at 6 pm following more than eight hours of deliberations among the start-ups, investors and policy-makers. The PM announced the sops past 7 pm, only after he had received thunderous applause in the packed auditorium on his address that sounded like a pre-election speech.
In the end, what was on offer was quite wholesome, though the government called it Startup Action Plan. Modi started with saying the government would not come in the way of start-ups, reminding many of his popular slogan — minimum government, maximum governance. The PM gradually raised the bar, announcing a slew of measures. There will be self certification-based compliance, he said, and the crowd clapped loudly. There will be no inspection for three years, the PM went on, and the sound of claps grew louder. The list followed — creation of start-up hub, mobile app to enable registration in one day, fast-track mechanism for patent application, panel for legal support in patent filing, 80 per cent rebate on patent application fee, relaxed norms in public procurement for start-ups and so on. (WHAT START-UPS SAY)
By this time, the audience was euphoric, wanting more from the PM. Modi continued to woo the start-ups, while narrating his experience at the Silicon Valley in between. Exits will be simpler and faster for those who don’t want to continue — it was one of the biggest demands of the start-up companies. The exit clause will be included in the Insolvency & Bankruptcy Bill 2015 that will make exit possible within 90 days. “You know rest of the problems,” the PM said referring to legislative bills getting stuck in the Parliament. Speaking in the language of start-ups, he inspired them to send messages on Twitter and Facebook to make things happen (in the Parliament).
Earlier in the day, revenue secretary Hasmukh Adhia had said the Budget would look at several announcements around start-ups.
Adhia said some other tax incentives to encourage start-up ecosystem, like rationalising service tax rules, are also likely to be announced in Budget on February 29. At the same event, finance minister Arun Jaitley said the Budget will announce a friendly tax regime, encouraging setting up of start-ups in the country.
As if that was not enough, the PM promised start-up fests, both national and international, as he had seen in his overseas trips. Before making his announcements, that may have led to late night parties for many young start-ups, the PM listened carefully to 10-odd entrepreneurs, and referred to many of them in his address.
Provisions for fast-tracking closure of businesses have been included in ‘The insolvency and Bankruptcy Bill, 2015’. Start-ups, who have simple debt structures, can be allowed to wind up within a period of 90 days after filing an application Tax exemption to start-ups for 3 years
Start-ups set up after April 1, 2016, shall be exempted from income-tax for a period of three years Tax exemption on investments above fair market value
Exemption would be available to venture capital funds to invest in start-ups above fair market value (FMV). It would also include investments made by incubators above FMV Tax exemption on capital gains
Tax on long-term capital gains in unlisted entities would be cut from present rate up to 20 percent Starting a start-up in a day through mobile app
A mobile app would be made live in April 2016 that would, for budding start-ups, act as a window for information exchange and interacting with government and regulatory bodies. It would help start a new company in a single day as all paperwork would be filed through the mobile app and portal A panel to aid start-ups with legal support and assistance in filing of patent application
Government appointed facilitators shall help start-ups in filing and disposal of patent applications
The govt would bear the cost of it Norms of public procurement for start-ups to be relaxed
Public sector units would give start-ups preference. 80 percent rebate on filing patent applications by start-ups
Start-ups to be given 80 percent rebate in filing patents to help them lower costs of setting up business
FOR PROMOTING START-UPS Launch of Atal Innovation Mission– Entrepreneurship promotion
* Sector-specific incubators to be established
* 500 tinkering labs with 3D printers in universities
* Pre-incubation training to potential entrepreneurs
* Strengthening of the existing incubation facilities
* Seed funding to high growth start-ups Innovation promotion
* Institution of innovation awards: 3 per state/UT and 3 national level
* Providing support to State Innovation councils for awareness creation and organising state-level workshops/conferences
* Launch of Grand Innovation Challenge Awards for finding low-cost solution to intractable problems
FUNDING HELP FOR START-UPs
“When I was listening to Ritesh Agarwal, I wondered, as a tea-seller why didn’t I think of a hotel chain,” he said, referring to the founder of OYO Rooms. He also referred to Uber and said that even Travis didn’t know an app would become that big. “Now every solution is in an app”. Then he urged start-ups to connect with the narendramodi app to share their success stories with the world.
The days of despair and disappointment are over, the PM stressed, while asking the audience what was done in the last 70 years, indirectly referring to the Congress rule.
Complimenting start-ups on their drive, the PM said, “This is not the first time that Vigyan Bhavan is filled up. But this is the first time there’s so much energy in Vigyan Bhavan.” The applause to that was quite like an election rally. Later, responding to the announcements, Paytm founder Vijay Shekhar Sharma said, “This is policy on steroids. The PM has addressed every problem which we as a sector talked about. For me, the key takeaway from the whole announcement was compliance regime based on self-certification. The tax holiday for three years is just cherry on the cake.”
Radhika Aggarwal, co-founder and chief marketing officer, ShopClues, the latest to join the unicorn club, said, “The PM has acted as a disruptive start-up himself. Policies around taxation, dissolving of companies are just a step in the right direction. Overall, it is a much better policy than I expected.”
Sandeep Aggarwal, founder and CEO, Droom, said, “The PM has inspired the nation with the launch of the Startup India, Standup India mission. His keywords — business impact, affordable excellence, innovation, self-certification compliance and job creation assure us of sustainable nation building.”
Rajesh Gandhi, partner, Deloitte Haskins & Sells, said narrowing the gap between tax treatment of listed and unlisted shares will be beneficial to investors wanting to invest in start-ups. “This will certainly help to boost investments including foreign investment in start-ups,” he said.
The expectation was set high by months of preparations for the event. While the seating capacity was barely 1,500, demand for passes crossed 200,000. The PM himself had announced in the last episode of his radio programme, Mann Ki Baat, the details of the initiative would be unravelled on January 16.
Masayoshi Son, founder of Softbank, a marquee investor which has funded several Indian start-ups including Ola and Snapdeal and is the biggest financial name behind China’s Alibaba, was the star attraction of the marathon event. Son promised to seriously accelerate investment in India, while pointing out that the 21st century belongs to this country.
Uber founder Travis Kalanick also mentioned India as part of the important narrative of the company. Other international guests included WeWork’s Adam Neumann, who is looking at India for investment.
The event saw rivals brushing shoulders, though they were placed in different sessions. Uber’s Travis and Ola’s Bhavish Agarwal; Snapdeal’s Kunal Bahl and Flipkart’s Sachin Bansal for instance.
In the end, what was on offer was quite wholesome, though the government called it Startup Action Plan. Modi started with saying the government would not come in the way of start-ups, reminding many of his popular slogan — minimum government, maximum governance. The PM gradually raised the bar, announcing a slew of measures. There will be self certification-based compliance, he said, and the crowd clapped loudly. There will be no inspection for three years, the PM went on, and the sound of claps grew louder. The list followed — creation of start-up hub, mobile app to enable registration in one day, fast-track mechanism for patent application, panel for legal support in patent filing, 80 per cent rebate on patent application fee, relaxed norms in public procurement for start-ups and so on. (WHAT START-UPS SAY)
By this time, the audience was euphoric, wanting more from the PM. Modi continued to woo the start-ups, while narrating his experience at the Silicon Valley in between. Exits will be simpler and faster for those who don’t want to continue — it was one of the biggest demands of the start-up companies. The exit clause will be included in the Insolvency & Bankruptcy Bill 2015 that will make exit possible within 90 days. “You know rest of the problems,” the PM said referring to legislative bills getting stuck in the Parliament. Speaking in the language of start-ups, he inspired them to send messages on Twitter and Facebook to make things happen (in the Parliament).
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Many of these measures would be part of the Union Budget. Looking at finance minister Arun Jaitley, the PM said, “he will have to do it now”, and announced Rs 10,000 crore corpus fund for start-ups and a credit guarantee scheme for Rs 500 crore a year for four years. Tax exemption on capital gains and income tax holiday for three years were among the other big-bang incentives announced to “promote growth and profit”. There was more—tax exemptions on incubation, investments, partnerships with academia, launch of Atal Innovation Mission, seed funding and research parks.
Earlier in the day, revenue secretary Hasmukh Adhia had said the Budget would look at several announcements around start-ups.
Adhia said some other tax incentives to encourage start-up ecosystem, like rationalising service tax rules, are also likely to be announced in Budget on February 29. At the same event, finance minister Arun Jaitley said the Budget will announce a friendly tax regime, encouraging setting up of start-ups in the country.
As if that was not enough, the PM promised start-up fests, both national and international, as he had seen in his overseas trips. Before making his announcements, that may have led to late night parties for many young start-ups, the PM listened carefully to 10-odd entrepreneurs, and referred to many of them in his address.
| PM’s BIG BANG ANNOUNCEMENTS |
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Start-ups set up after April 1, 2016, shall be exempted from income-tax for a period of three years
Exemption would be available to venture capital funds to invest in start-ups above fair market value (FMV). It would also include investments made by incubators above FMV
A mobile app would be made live in April 2016 that would, for budding start-ups, act as a window for information exchange and interacting with government and regulatory bodies. It would help start a new company in a single day as all paperwork would be filed through the mobile app and portal
Government appointed facilitators shall help start-ups in filing and disposal of patent applications
Public sector units would give start-ups preference.
Start-ups to be given 80 percent rebate in filing patents to help them lower costs of setting up business
FOR PROMOTING START-UPS
- Start-up India Hub
An entire start-up ecosystem that would be a set-up and a friend, mentor and guide for start-ups through their entire journey - Setting up of 7 new research parks modelled on the research park at IIT-Madras
Seven new research parks with an initial investment of Rs 100 crore each would be set up - 35 new incubators in institutions
* Sector-specific incubators to be established
* 500 tinkering labs with 3D printers in universities
* Pre-incubation training to potential entrepreneurs
* Strengthening of the existing incubation facilities
* Seed funding to high growth start-ups
* Institution of innovation awards: 3 per state/UT and 3 national level
* Providing support to State Innovation councils for awareness creation and organising state-level workshops/conferences
* Launch of Grand Innovation Challenge Awards for finding low-cost solution to intractable problems
FUNDING HELP FOR START-UPs
- Credit guarantee fund for start-ups
A credit guarantee mechanism through National Credit Guarantee Trust Company and SIDBI to be rolled out with a budgetary corpus of Rs 500 crore per year for the next four years - Funding support through fund of funds with a corpus of Rs 10,000 crore
The government to set up a fund with an initial corpus of Rs 2500 crore and a total corpus of Rs 10000 crore over a period of four years
“When I was listening to Ritesh Agarwal, I wondered, as a tea-seller why didn’t I think of a hotel chain,” he said, referring to the founder of OYO Rooms. He also referred to Uber and said that even Travis didn’t know an app would become that big. “Now every solution is in an app”. Then he urged start-ups to connect with the narendramodi app to share their success stories with the world.
The days of despair and disappointment are over, the PM stressed, while asking the audience what was done in the last 70 years, indirectly referring to the Congress rule.
Complimenting start-ups on their drive, the PM said, “This is not the first time that Vigyan Bhavan is filled up. But this is the first time there’s so much energy in Vigyan Bhavan.” The applause to that was quite like an election rally. Later, responding to the announcements, Paytm founder Vijay Shekhar Sharma said, “This is policy on steroids. The PM has addressed every problem which we as a sector talked about. For me, the key takeaway from the whole announcement was compliance regime based on self-certification. The tax holiday for three years is just cherry on the cake.”
Radhika Aggarwal, co-founder and chief marketing officer, ShopClues, the latest to join the unicorn club, said, “The PM has acted as a disruptive start-up himself. Policies around taxation, dissolving of companies are just a step in the right direction. Overall, it is a much better policy than I expected.”
Sandeep Aggarwal, founder and CEO, Droom, said, “The PM has inspired the nation with the launch of the Startup India, Standup India mission. His keywords — business impact, affordable excellence, innovation, self-certification compliance and job creation assure us of sustainable nation building.”
Rajesh Gandhi, partner, Deloitte Haskins & Sells, said narrowing the gap between tax treatment of listed and unlisted shares will be beneficial to investors wanting to invest in start-ups. “This will certainly help to boost investments including foreign investment in start-ups,” he said.
The expectation was set high by months of preparations for the event. While the seating capacity was barely 1,500, demand for passes crossed 200,000. The PM himself had announced in the last episode of his radio programme, Mann Ki Baat, the details of the initiative would be unravelled on January 16.
Masayoshi Son, founder of Softbank, a marquee investor which has funded several Indian start-ups including Ola and Snapdeal and is the biggest financial name behind China’s Alibaba, was the star attraction of the marathon event. Son promised to seriously accelerate investment in India, while pointing out that the 21st century belongs to this country.
Uber founder Travis Kalanick also mentioned India as part of the important narrative of the company. Other international guests included WeWork’s Adam Neumann, who is looking at India for investment.
The event saw rivals brushing shoulders, though they were placed in different sessions. Uber’s Travis and Ola’s Bhavish Agarwal; Snapdeal’s Kunal Bahl and Flipkart’s Sachin Bansal for instance.