 "Brave new world: Promises of 3-year tax holiday, one-day registration delivered")
Finance minister Arun Jaitley has kept the promises made by Prime Minister Narendra Modi in January to start-ups ranging from unicorns, backed by marquee investors, to smaller entrepreneurs wanting to make it big. The Budget, however, didn't deliver any surprise package for start-ups, which are in many ways the flavour of the season.
While this sector, known more for its fundraising and dizzying valuations, which have now started getting downgraded, has got some sops and offers in bits and pieces scattered through the Budget, under various heads, there is nothing consolidated for them. Yes, there's three-year tax holiday and one-day registration of start-ups, both announced by the Prime Minister last month, to make entrepreneurs cheer the Budget. But, that alone may not be enough for Indian start-ups to realise their full potential, said experts.
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Manish Dashputre, co-founder, Medidaili, a start-up, summed up the essence of the start-up spirit in the Budget. "We welcome the 100-per cent tax deduction for start-ups for three years... However, tax exemption alone will not help spurt the government's ambition of boosting the start-up environment in India on a large scale." He also pointed out the need for a clear framework to translate policy into action.
Ease of doing business and enabling provision to help entrepreneurs set up their businesses in one day was also part of the Startup Action Plan announced in January. The Budget took it to logical conclusion. "To remove the difficulties and impediments to ease of doing business, we will introduce a Bill to amend the Companies Act, 2013 in the current Budget session..." This will enable registration of companies in one day, the FM promised.
Ashish Goel, chief executive officer (CEO) and co-founder, Urban Ladder, is impressed with the promise of easy formation of companies. "The move towards one-day registration for start-ups is encouraging... This will help towards building truly world-class Make in India companies too," he said.
According to Vijay Shekhar Sharma, founder and CEO of Paytm, "Support for entrepreneurship is clear in multiple parts of the Budget. Combined with improved ease of doing business, we can see increased job creation."
The announcement on research was also seen as a welcome measure. "Research is the driver of innovation and innovation provides a thrust to economic growth. I propose a special patent regime with 10 per cent rate of tax on income from worldwide exploitation of patents developed and registered in India," Jaitley said in his speech.
Although these three were the most important aspects related to entrepreneurs, the first mention of start-ups came in the 45th minute of the Budget speech. The reference was in the context of entrepreneurship in the transportation sector. "Entrepreneurs will be able to operate buses on various routes, subject to certain efficiency and safety norms, said Jaitley, adding that it would be a game changer for start-ups.
Even before any mention of start-ups, Jaitley spoke of Stand up India - the other part of the Startup India, Stand Up India scheme, a coinage that the PM came up with last Independence Day. Stand Up India already got the Cabinet clearance to boost entrepreneurship among scheduled castes and scheduled tribes. The FM reiterated it in his Budget speech.
Unlike in January, Budget announcements for the start-ups didn't enthral entrepreneurs the way PM Modi's speech did.
No mention of exit and listing a dampener
Although Budget has carried forward most of the steps announced at the Startup India Action Plan event in January, several entrepreneurs believe a lot more could have been done. A regime that would make exit as easy as registration of a start-up is need of the hour.
Last month, ministers, bureaucrats, investors and start-ups had deliberated at length on an exit regime, making the industry believe that Budget would take the discussion to its logical conclusion. However, there was no mention of exit policy in Finance Minister Arun Jaitley's 90-minute speech. Of course, Reserve Bank of India had done its bit by allowing foreign investors to sell their stakes in Indian start-ups to local companies.
Another big miss in the Budget was measures to make listing of start-ups, whether in India or abroad, simpler. This was also discussed at length on the podium last month, but has failed to find any mention. While many start-ups have been talking of listing, very few have actually taken the bold step.
Without these two critical inputs, it may be tough to bring in the Silicon Valley spirit in Bengaluru, Mumbai or Gurgaon, Indian hubs for entrepreneurs.
Apart from that, while Prime Minister had earlier announced setting up of a Rs 10,000-crore fund of funds to encourage start-ups, the modalities around it are still unclear. Also, the list of demands was long - high bandwidth, cheaper smartphones, better access to power and credit among other things.
