As envisaged by the Startup India, Stand Up India initiative of Prime Minister Modi, announced in this year’s Independence Day address, the government wants to kick start start-ups by making the rules simpler so that innovators can unlock their entrepreneurial zeal. The major initiative is to simplify the tedious process of compliances under 22 different laws into a simple 2 page start-up Act, according to The Department of Industrial Policy and Promotion. (DIPP). “Compliances are a big issue for aspiring startups,” said the official. “We are trying to see whether we can bypass the multiple laws and draft a separate legislation instead.” Accordingly the plan is to launch a Start-up India plan next month.
India boasts the world’s 4th largest start-up community and Jobs created by Indian startups are expected to grow to 2, 50,000 by 2020 from 80,000, according to a Nasscom report.
The new policy will shorten delays in incorporation and address employee stock options. Lack of initial funding, cumbersome Foreign Exchange Management Act (Fema) documentation and access to external commercial borrowings are other issues that will be taken up.
This initiative seems well focused on start-ups only by clearly defining them and encouraging a young enterprise. It will be directed to companies with innovative practices, less than 5 year old. These start-ups will also need to conform to financial norms to ensure that the government incentives granted are not spread too thin. This becomes essential as the government is also considering tax sops for startups, which it doesn’t want other companies to take advantage of, at the cost of exchequer.
This new initiative will give a big boost to entrepreneurs as the current system is a maze, which consumes the energies of entrepreneurs that could be dedicated to more productive purposes. Often, they need to employ other professionals just to generate the required capital.
“It will be a colossal help if the government can do something about this,” said Rohan Malhotra, founder of Investopad, a startup incubator and financing company.
With 65% of the Indian population less than 35 years, there is every chance that Startup India, Start up India initiative becomes a reality quickly with India becoming one of the world’s largest start-up communities.