The micro-managed details of Indian Budgets often throw up interesting possibilities. This year, for instance, investing in a start-up that teaches yoga and sells associated products and services seems like an attractive option.
There are incentives for start-ups, so raising the capital will not be hard. Apart from standard yoga classes, potential income streams can be created by offering yoga-based physiotherapy modules for accident victims, who have taken out the new Re 1-a-month accident insurance. Interactive distance-teaching is another obvious option.
So any new yoga centre may want to invest in high-end viewcams, and create a slick website with loads of bandwidth to pump out its videos. It should also sell equipment and accessories such as yoga mats, spandex chaddis and leotards, etc. It may as well sell ayurvedic products piggybacking the yoga associations as well. A bulletproof e-commerce option is a must.
Creating an entirely new business model is unnecessary. Just check out the successful, well-established yoga-teaching chains, figure out what they do and find ways to do it better. A tech-savvy yoga centre can, for example, deliver much more online.
The incentive is that yoga has been declared a charitable activity, and the income will be tax-free. That's a huge gift, since relevant tax rates (service tax, corporate tax, etc) have mostly been hiked, either directly, or via surcharges.
While a charity cannot make a profit as such, the officers of the charity can pay themselves nice fat salaries and travel business class, claim generous expenses, etc. The Board of Control for Cricket in India (BCCI), for example, claims to be a charitable organisation. Budding yogis could do worse than emulate the BCCI's office bearers, when it comes to deft expense accounting.
The uninitiated may wonder why a tax break is being offered to the yoga industry since it is a multi-billion dollar business. The government missed all its tax collections targets by massive margins in 2014-15 and it is very likely to miss the targets again, in 2015-16. It should, therefore, be looking for more revenue and a yoga-centre should logically be asked to pay taxes like any non-yogic gym. Alternatively, all gyms and physical-training centres should be declared tax-exempt to create level playing fields.
Conspiracy theorists have suggested that the specialised exemption is a tacit thank you to sundry "godpersons", who campaigned for this government taking time out from their busy schedules of teaching yoga and selling yoga-related products. This is possible, of course.
However, if that is the case, the tax-free status is probably misguided. This will lead to heightened competition and that could hurt the incumbents. Savings on the tax front may be offset by the necessity to spend more to stave off competition since there are no obvious moats to prevent new entries.
Yoga centres will spring up here and there, and small-scale enterprises will move into the manufacture of yoga-related products, given tax breaks. Under the circumstances, established centres must find ways to protect income streams, and prevent teachers being poached. That may mean higher overheads on salaries and higher expenses.
Any aspiring yoga business has to build a serious brand. The teachers and the products must be screened for quality. In fact, the ideal yoga centre must draw upon the best practices of hairdressers-cum-massage parlours in terms of service standards. And it must sell its products with much the same professionalism as a good soap and soft-drink manufacturer.
Tax-free status will also inevitably mean additional notifications are required. "Yoga" must be defined in such a way as to prevent the entrance of new scamsters, without embarrassing current practitioners who may be close to the government.
Perhaps the Bureau of Indian Standards will be asked to certify yoga teachers, on the basis of their ability to scratch their left ears with their right toes, or the ability to demand the repatriation of black money while standing on their heads? Or maybe, it will all boil down to the ability to cross-dress elegantly.
Twitter: @devangshudatta
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
