India’s startup initiatives
A startup means early stage in the life cycle of an enterprise where the entrepreneur moves from the idea stage to securing financing, laying down the basis structure of the business, and initiating operations or trading. Start-ups are new business ventures that are carried out either by single individual or in groups. New entrepreneurs take a big risk in terms of financial issues, apart from creating innovative and successful products or services.
Start-ups are risky in nature, but successful entrepreneurs try to minimize risk and promote business venture through in-depth research, proper planning, and appropriate skill development. One of the main features of being a successful entrepreneur is his/her suppleness in adapting to recent trends, market growth, modern technologies, dynamism handling finances, foresight and risk taking.
On 28th February 2015 during his budget speech, current finance minister Arun Jaitley said that India needs to boost startups to create jobs. India needs to be made an investment destination, which permits the business startup of a business in accordance with publicly stated guidelines and criteria. He assured on this occasion that he is going to appoint a special committee that can oversee the possibility of replacing the existing multiple layer permissions which can be replaced by a pre-existing set of mechanisms that can facilitate the ease of doing business for entrepreneurs in India. Keeping the promise in line, government has formed a panel on 7th April 2015 by Department of Industrial Policy and Promotion (DIPP) to simplify the regulations and ease of doing business.
According to World Bank’s 2015 report on Ease of doing business on the basis of 11 defined parameters, based on the data of two cities i.e. Delhi & Mumbai, India’s ranking is given in the table below:
|India’s position on Ease of doing business|
|Indicators||Rank (out of 189)|
|Protecting Minority Investors||7|
|Trading Across Borders||126|
|Getting Electricity & Resolving Insolvency||137|
|Overall Ease of Doing Business||142|
|Starting a Business||158|
|Dealing with Construction Permits||184|
Soure: World Bank (2015)
World Bank’s statistics on India are not very promising for the startups and the entrepreneurs. But, Prime Minister Narendra Modi is all set to improve India’s ranking to first 50 countries from 142 in the World Bank’s ease of doing business rankings. Lot of efforts are being put in by the present government to ease the procedures t for starting new ventures.
Listed below are some of the initiatives taken by the Government:
Encouraging innovation: The 2015 budget has also established the AIM Platform or Atal Innovation Mission (AIM). AIM is established within National Institution for Transforming India (NITI) to provide innovation promotion platform involving academicians, and drawing upon national and international experiences to foster a culture of innovation, research and development. The 2015 budget has earmarked Rs.150 crores for the AIM Platform. This is a good beginning.
Reduction in corporate tax: The 2015 Budget has announced the reduction of corporate tax rate from 30% to 25% over the next four years, starting from next financial year. It is expected that the corporate tax rate will be reduced in a phased manner to 25% over the next four years. It is expected that the reduction in corporate tax rate will lead to greater investment, higher growth and more jobs. The corporate tax rate deduction to 25% will also be accompanied by scrapping various kinds of tax exemptions and incentives for corporate taxpayers.
Suitable environment for venture capital: 10,000 crore initiative has been created to accelerate investment from private firms to startups in the name of “equity, quasi equity, soft loans and other risk capital” to create a suitable environment for venture capital in MSME sector. In countries like US, Israel, and Singapore, public funding prevails to be the main source of funding in growing ecosystems of startups. The present government seems to take some lessons from such countries, and such a fund guides risk capital towards areas where it is required the most. The funding needs to be done on parameters of merits such as research, technology commercialization, product development, etc.
District level incubation: District level Incubation and Accelerator Program across the nation will be a good start to generate new ideas and promote entrepreneurship with all the necessary support. Though, it is a positive program, but incubators are not a uniform everywhere. Several ventures are provided services through different kind of incubators. Hence, a broad and nationally-accepted classification is needed to figure out the unique demands of resources from each set of incubators, to tackle complexities they encounter, and their paths for success.
Impetus on Skill Development: It is first time that MoS (Minister of State) has been given the responsibility of developing entrepreneurship in the country, though this task has been undertaken previously by multiple departments and agencies. UPA government witnessed entrepreneurship skill development with the departments of MSME (Ministry of Micro, Small & Medium Enterprises), NDA is doing under the scope of National Skill Development Agency. By 2022, India has targeted to obtain skill development for about 500 million people, primarily through encouraging private players to provide feasibility gap funding and skill development program initiatives. With this target in mind, and with the help of private players, it is ministries role to implement targets and also to create an ecosystem that ensures ease of doing business and nurtures entrepreneurship by eliminating bottlenecks during the process. Entrepreneurship needs a long standing boost in our nation.
Legal Bankruptcy Framework Designed: In India, bankruptcy framework is not established, which allows entrepreneurs to bounce back from their failures in business and try doing some other business again. Forming a company is not complicated in this country, as many assume, but destroying a formed company is extremely difficult, with many businessmen having their first startups failed, moving on to build their second or third prospering businesses is difficult. In this context, entrepreneur friendly legal bankruptcy is a important opening move. Now it is in the hands of industry and ecosystem players to engage seriously and create a simple but efficient framework for making things easier for failed entrepreneurs to close down their loss making businesses.
SETU: The government is building up an approach to be known as SETU (Self-Employment and Talent Utilization) which will strengthen all prospects of startups, and other self-employment initiatives, especially in technology-driven areas. By the time a great idea gets approval and the funds arrive, the people behind the ideas move on to accept high-package jobs in multinational companies, now this big boost from the government will help the budding entrepreneurs in making big.
eBiz Portal for Starting a Business Easy: This is the first Government to Business (G2B) portal launched by the current NDA government is owned by DIPP under Ministry of Commerce and Industry which integrates 14 regulatory permissions at a single place and has announced it has announced various labor reforms to boost job creation and entrepreneurship. The step by government is a move to facilitate the ease of doing business in India. The 2015 Budget has put forward the creation of an expert committee to examine the possibility and prepare draft legislation where the need for multiple prior permissions can be replaced by a pre-existing regulatory mechanism. This will facilitate India to become an investment destination by facilitating the regulatory mechanisms. Further, the 2015 Budget also talks about strengthening the EBiz Portal to make India a destination which makes starting of business easy.
Central Excise and Service Tax Registration in 2 Days: For making the start of a business and getting the registrations easier, the 2015 budget announced that central excise and service tax registration will be completed within two working days. This is again a great move.
MUDRA BANK: Allocation of 20,000 crore has been made by Micro Units Development Refinance Agency (MUDRA) Bank for the SME sector and it will enhance credit facility to boost the growth of small businesses and manufacturing units. Finance Minister also allocated Rs 1,000 crore for support of start-ups. Mudra Bank has been launched on 8th April 2015; it will provide credit of up to 10 lakh to small entrepreneurs. Positive news is that the bank got started in the month of April 2015 with the beneficiaries receiving the required help.
The Government’s ‘Make in India’ initiative and its push on growing the percentage of manufacturing to India’s GDP has the vigor to transform the fortunes of the micro, small and medium enterprises (MSMEs) in the country. Also, with focus on Digital India and Swachch Bharat Abhiyan, the sector will get the needed momentum.
Conclusion: The promises and initiatives taken by the government can have a great impact on the nation, provided the tasks are being completed and managed as per the plans. The Modi government still has four years to go which is a quite a long time. It is a good time for youngsters to take a plunge into starting their own ventures than waiting for getting employment in other’s firm. It is time youngsters show their entrepreneurial spirit. It is time for showcasing innovations and business ideas in various sectors. Happy days are here for startups.