Year 2016 brought good news for the startup ecosystem with the government announcing key action points for the Startup India-Stand up India scheme announced on the independence day last year. In a ceremonial event in Vigyan Bhawan of the national capital, Prime Minister Narendra Modi addressed a huge throng of startup entrepreneurs and announced his all-inclusive action plan to promote ventures that would boost employment generation and wealth creation.The event drew tremendous cheer from the audience for PM’s 19 point action plan to provide an ever more increasing support to the budding entrepreneurs in India. The agenda was clear and was fulfilled with the announcement of a number of perks to those who are a part of exponentially growing startup ecosystem- be it the declaration of tax havens, incubation programs, rationalization of service tax rules, or legal support. With this, entrepreneurs have high hopes from the upcoming 2016-17 budget unlike bygone years where there was no hand-holding from the government.
The government is expected to not let go off this wave of entrepreneurship in vain. The announcement of INR 10,000 crore to promote startups across different verticals has raised hopes as well as doubts as to what this fund shall constitute. It is expected that a large chunk of this investment pool will go on fund programs aimed at strengthening the digital infrastructure of the country. Incubation programs, development of innovation parks, easy access capital etc. are the need of the hour and it is expected that the budget will constitute significant norms to regulate these functions.
Apart from these, the upcoming budget is expected to lay down the foundation for significant tax breaks such as exemption from capital gains tax, and tax holiday for a period of 3 years, which was promised by Prime Minister at the Vigyan Bhawan event. Additionally, tax exemptions on incubation, partnership with academia, investments, and seed funding regulations are expected out of the budget session this year.
The bucket list also includes easy entry and exit of foreign Investors. RBI has allowed the foreign investors to sell their stakes to domestic companies. This will make an easier exit route for foreign venture capital funds. Simple registration and listing norms have made the thought of getting into entrepreneurship easy. Fast track patent assistance, better access to power and credit, and high bandwidth, and other promises are expected as well. However, only when the fine print of the budget document is out will one get to know the true nature and magnitude of support expected for the startup culture in the country. These reforms shall play a major role in India’s account for Global GDP by 2020, against 4% now.