The driving range of budding entrepreneurs

It was just another Monday when the DIPP submitted a list of suggestions from the Indian start-ups to the finance ministry. The commerce minister hinted at tax sops for start-ups and that intimated at a boost to Indian start-ups. The driving range for entrepreneurs looks promising for now and hope the fairways are as green when the upcoming union Budget is announced by the finance minister.

In fact, it was just last year when PM Modi had announced 80% exemption in patent fee for start-up businesses. The Atal Innovation Mission has an initial corpus for Rs 500 crore.

I caught up with Amarjeet Singh, Partner KPMG, who told me how 80% of start-ups fail, and explained from what happened in 2016 to what one must ideally expect in 2017.

The ‘tee-off’ point for start-ups in India came last year when a fund of funds of Rs 10,000 crore for start-ups had been established, which is being managed by SIDBI. Start-ups were to also get income tax exemption for 3 years in a block of 5 years if incorporated between April 1, 2016 and March 31, 2019.

A lot of such hurdles need to be overcome. The fairways prima facie are green for the start-up industry with over 40% of India’s population being below 20 years of age.

Singh explained that there has not been much success after the last Budget as the central government has been trying hard and the state governments adoption is low.

A number of entrepreneurs in India this year complained that the eligibility criteria was too rigorous for the Start-Up India initiative by the government. Singh subscribed to change and better governance.

Singh feels the upcoming Budget should have Indian start-ups exempt from compliances. I’d go a step further and subscribe for simpler tax norms. Singh felt the tax holiday should be extended to 5 years within a block of 10 years and that exemption provisions should be rolled out in the GST. The Union Budget must perhaps make sure that the start-ups are allowed to carry forward their losses in spite of multiple rounds of dilution in case of change of guards. He also presented a case of MAT exemptions in the first few years.

While these are regulation changes, I looked at the Silicon Valley and analysed what really worked for them. With regulations in place, the right people with right skill sets make up for the right ecology. A disruptive idea can hit a hole in one with the right set of clubs. And the aforesaid should be what we need to all watch out for.

Singh concluded on how brick and mortar was passé and the longer yards would be achieved by tech and fintech industries, which he was the most bullish on.

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The author is a business journalist and an anchor at WION