Under its Smart Cities Mission, Indian Government wants to create cities that are technologically equipped and have energy-efficient buildings. An energy efficient building offers suitable environment for offices and housing with minimal energy consumption and wastage of energy, thus minimizing energy. It offers best-in-class facilities, and efficient transportation system. The first such model city, is getting ready in Gujrat. Its work is in progress, it is called Gujarat International Finance Tec-City Co. Ltd or the GIFT City. This smart city is being developed as a central business district in Gujarat’s capital Gandhinagar. The Rs 78,000-crore project would provide residential, corporate, retail, and other facilities.  At the core this project is technology driven to ensure transport connectivity, resource management, water distribution, and even waste disposal management. It will also house India’s first International Financial Services Centre (IFSC).

GIFT City aims to be a ‘smart city’ for India’s growing finance and technology sectors. It hopes that a promise of ‘intelligent design’ and the most modern infrastructure including gas, electricity, and transport will attract businesses from other parts of India as well as overseas.

The idea of GIFT City was planned back in 2008 and became operational in 2015. The simplified regulations bundled with various tax and other advantages offer an inviting ecosystem making it a promising destination for both local and global investors. With a specific attention on financial services, it also becomes a promising landscape for both domestic and international financial giants. It provides distinguished benefits to the financial, IT/ ITeS (Information technology enabled services) companies making it a pivotal foundation at par with the various global financial and IT hubs. GIFT City is a vision of the Government of India and Gujarat aiming to serve as a centre for global banking, trade, and business.

An IFSC is a specific location within the mainland of the country treated as a foreign location with an intent to enable global business offering a worldwide regulatory regime. IFSC at GIFT City gives an opportunity to global and domestic businesses to set up a company, limited liability partnership and subsidiaries in the GIFT City under various business verticals. These include banking, insurance, stock exchange, alternate investment funds, aircraft leasing and other businesses as well such as ship craft leasing, etc. The Gift City will be giving Unified Regulator & Single Window Clearance.

IFSC in India are governed by a unified regulator named IFSC Authority (IFSCA) which encompasses regulatory powers of four financial services regulators in India namely Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Insurance Regulatory Development Authority of India (IRDAI), Pension Fund Regulatory & Development Authority of India (PFRDAI) enabling it to provide single window clearance for all necessary approvals under one umbrella in an easy manner.

GIFT City is declared as Special Economic Zone (SEZ). The SEZ is created to encourage exports and foreign investment especially for multinational corporations. SEZ offers benefits to the businesses operating in this zone, including duty-free imports and exports, easy regulatory processes, tax benefits. GIFT City is the first IFSC in India and to make it more attractive and enticing the Government of India also declared it as a SEZ.

GIFT IFSC has been designated as a foreign jurisdiction of a non-resident zone under the Foreign Exchange Management Act (FEMA) Regulations enabling friendliness for carrying out foreign exchange transactions in liberal manner. The entities setup in the GIFT IFSC can transact in, retain, repatriate the foreign currencies without limitations which are otherwise applicable to the mainland India.

Easy movement of foreign capital

The offshore status of the GIFT IFSC bundled with various relaxations and less restrictive financial regulations makes it an attractive destination for foreign investors allowing unrestricted movement of fund invested in the form of repatriation of profits, dividends, and investments back to the home country of the foreign investors.

Liberal policies and business friendly regulatory framework

The regulatory regime of GIFT IFSC is formulated to parallel the best practices accepted globally facilitating flexibility and reduced compliance burden. Amongst the plethora of such benefits a few noteworthy relaxations include exemption to non-residents from obtaining permanent account number (PAN) or filing return of income in India in certain circumstances.

Tax benefits to the IFSC Units setup in GIFT City

The IFSC units’ setup in the GIFT City, India offers various tax benefits like exemptions on corporate tax, tax holiday for ten years, reduced Minimum Alternative Tax (MAT) for increasing the profitability and hence growth of the business houses. It also offers numerous indirect tax benefits such as no Goods and Service Tax (GST) on services received by unit in IFSC, no GST on services provided to IFSC units / SEZ units / offshore clients. If the services are provided to the Domestic Tariff Area of mainland India, then the GST is applicable under Reverse Charge Mechanism.

Tax benefits to the Investor investing in IFSC GIFT City

The investor investing in the GIFT IFSC gets numerous fiscal benefits including the benefits such as interest income paid to non-residents on money lent to IFSC units in GIFT city are exempted from tax, transfer of specified securities listed on IFSC exchanges by non-residents are not treated as a transfer and  hence gains arising from such transfers are not treated as capital gains and are taxable in India , exemption from Securities Transaction Tax (STT) , exemption from  Commodity Transaction Tax (CTT), dividend received by investor in IFSC unit is subjected to concessional rate of tax, no GST on transactions carried out in IFSC exchanges.

Various financial benefits and incentives

The Government of Gujarat provides various state incentives in the form of financial incentives support schemes to attract companies and investors to GIFT IFSC. These incentives include grants, subsidies, and reduced operational costs due to OPEX (Operating expenses) support, CAPEX (Capital expenditure) support, employment generation incentives. The government has also announced various state level incentives and subsidies to Information Technology (IT) and Information Technology Enabled Services (ITeS) Companies.

Benefits of GIFT City for startups

To promote the innovation and ideas and entrepreneurship IFSC-GIFT City provides dedicated FinTech support and requisite startup friendly environment with an aim to shape and fulfil the aspirations and ambitions of start-ups and entrepreneurs.

Conclusion

The Government of India recognizes and reinforces that tapping the global capital and global market are the key drivers for the development of businesses across the borders and plays a pivotal role in the overall economic growth and to strengthen the position of the country in the global economy.

Globally, we see such cities at Aladdin City, Dubai, South Korea, Abu Dhabi, and Saudi Arabia.

Dubai has setup on a stellar commercial project at Aladddin City that will recreate the magic of the renowned Disney’s Aladdin series. Spread across 4,000 acres, the project will boast of suspended golden walkways and three main towers that will be designed like genie lamps. The city, to be built on the Dubai creek, will house hotel and commercial spaces with ample parking space. It is also in the race of being named as world heritage site by the United Nations Educational, Scientific and Cultural Organization.

Songdo International Business District at South Korea is being built on a reclaimed land near South Korea’s Seoul, the estimated cost of this project is $40 billion. This is a 10-year development project, which will be a business district with 80,000 apartments, 50 million sq ft of office space and 10 million sq ft of retail space, along with hospitals, hotels, schools, and cultural amenities. It will house Northeast Trade Tower, the tallest tower in the country, and Incheon Tower, an under-construction 151-floor twin tower. The city is smart in many ways, as it will provide charging stations for electric vehicles and automatic waste collection system. All the buildings in this city will be built on a par with LEED (Leadership in Energy and Environmental Design) requirements.

Yas Island at Abu Dhabi is being built on a man-made island, the city of Yas is being transformed into a business, entertainment, shopping, and leisure destination by Aldar Properties. The project is expected to cost over $40 billion and will occupy over 2,500 hectares, 1,700 hectares of which will be reclaimed land. The world-class entertainment activities will include a Formula One racing track by Etihad, Ferrari World, Marina Circuit, Yas Water world and Abu Dhabi Grand Prix, along with many restaurants. The Water world and Marina Circuit will provide a wide range of motor sports. 

Oil-rich Saudi Arabia has been slowly expanding into the petrochemical and refinery business district. After building the first Jubail Industrial City project, the Kingdom is expanding the city further by spending $80 billion. The industrial city is known to be one of the largest civil engineering projects and will house many industrial plants and an oil refinery that can produce 350,000 barrels of oil in a day. It will also have a desalination plant of 800,000 cubic meters in volume. The city will also be well-connected with roads, rail tracks and even highways. The project is expected to be completed by 2024. 

The Hudson Yards project, located in the West of Manhattan, is being developed over an operational train yard. The project, which is a joint venture between New York City Department of City Planning and Metropolitan Transportation Authority, will be a 17-million square feet mixed use project boasting of commercial, residential, retail and leisure development. The project will also have its own subway stop. The first commercial tower, which has already locked in global brands, including Coach and L’Oreal as tenants, is 52-storeys high. The entire project is expected to cost over $20 billion.

Business Incubation is a unique and highly flexible combination of business development processes, infrastructure and people, designed to nurture and grow new and small businesses by supporting them through the early stages of business progress. Though in the initial phase of business new entrepreneurs do bootstrapping – which is building a company from the scratch with nothing but personal savings and, waiting for the cash coming in from the first sales. In the initial phases of businesses entrepreneurs depend a lot on other’s help in areas such as management of funds, marketing and sales, networking, hiring the right people, maintenance of day to day expenses and accounting etc.

Incubators provide numerous benefits to owners of startup businesses. Their office and manufacturing space is offered at a low cost, almost below market rate, and their staff supplies advice and much-needed expertise in developing business and marketing plans as well as helping to fund, helping the businesses to grow. In India, startups typically spend an average of two years in a business incubator, during which time they often share telephone, secretarial backup, office, and production equipment expenses with other startup companies. This helps them to reduce the overhead and operational costs. While there are some independent incubators, there are many run by venture capital firms, angel investors, government, some major corporations, universities, educational institutions such as IITs and IIMs, and some renowned B Schools. Some incubators have an application process, but others only work with companies and ideas that they come in contact with through trusted partners. A good example of an incubator is Idealab.

Idealab was founded by Bill T. Gross in March 1996. Prior to Idealab, Gross founded GNP Loudspeakers, an audio equipment manufacturer. It got acquired by Lotus Software and Knowledge Adventure an educational software company, later it was acquired by Cendant. Idealab has historically hired many alumni of California Institute of Technology from where Gross passed out. Gross now sits on the Institute’s board of trustees. Idealab has created, invested in, and spun off a diverse array of companies such as AirWave Wireless, vendor of wireless network management software acquired by Aruba Networks in 2008, Answer.com, Aptera Motors, electric car manufacturer, Blastoff.com, CarsDirect, Citysearch, acquired by IAC/InterActiveCorp, Commission Junction etc.

Business incubation programs are often sponsored by private companies or government entities and public institutions, such as colleges and universities. Their goal is to help create and grow young businesses by providing them with necessary support and financial and technical services. There are approximately 150 business incubators nationwide in India, according to the National Business Incubation Association.

Not all business incubators are alike. An entrepreneur must however choose a suitable incubator to suit his/her business idea. For example, the Amity Innovation Incubator is a pioneering concept in the context of Indian Universities. Supported by DST (Ministry of Science & Technology) GOI, in a very short time of its existence it has earned desirable position for itself with start-ups which have regularly been on top of the innovation curve and have been recognized on platforms like ‘The Power of ideas’, Red Herring Global winner, Tata NEN and NASSCOM Innovation Awards to name a few. It is located in Noida and founded in 2008. Its focus area is Rural Innovation and Social Entrepreneurship, Information and communication Technologies (to include Social media and ecommerce, Mobile computing and technologies, Analytics, Cloud computing and Big Data), Education and Education Technologies, Food and allied Technologies, Biotechnology and Life Sciences, Nanotechnology and Material Sciences. It funds up to INR 1 Cr. Some of its notable startup projects are ApnaCircle.com which provides opportunities for careers and social networking. Anduril Technologies which specializes in the business domains of Payments, Microfinance, Telecom and ERP.

It is advisable for new entrepreneurs to visit National Business Incubation Association Website to find the incubator that best suits their requirements. You can find an incubator in your state, also you can visit economic development agency, located in the phone book under the listing for your state government. You can also call the information offices of your local colleges and universities to see whether they have any business incubation programs.

AnglePrime is another business incubator located in Bangalore which is focused on startups in the middle that need seed capital (initial capital required for a business) it invest in not more than 3-4 companies a year. Angle Prime was founded in 2011 and its focus area is Mobile internet, ecommerce and tablet/mobile app. It funds up to 2 lakhs to 6 lakhs; some of its notable startups are: Ezetap which is a universal payment platform and Hacker Earth which provides enterprise software solutions that help organizations with their innovation management and technical recruitment needs.

Centre for Innovation Incubation and Entrepreneurship (CIIE) was setup by IIM Ahmedabad with support from the Government of India and Gujarat Government it operates through an autonomous not-for-profit entity. CIIE comprises of IIMA faculty, alumni and other individuals and partners with like-minded organizations to foster entrepreneurship through incubation, ecosystem development and academic initiatives. It is located in IIM Campus in Ahmadabad; it was founded as a research institute in 2002 and was turned into a full-fledged incubation centre in 2007. Its focus area is Information Communication Technology, and Social Entrepreneurship. It funds up to INR 20 lakhs. Its notable startups are Travelyaari, which is largest online bus booking portal headquartered at Bangalore; Innoz, is a young and exciting venture on mobile & wireless innovation which was founded in 2008; Thrillophilia is India’s biggest online platform for adventure tourism for discovering and booking travel experiences.

If an incubation program seems interesting to you, be prepared to submit a well prepared and detailed business plan. The plan will be reviewed by a screening committee to determine whether or not you meet the criteria for admission. Incubators carefully screen potential businesses because their space, equipment, and finances are limited, and they want to be sure about their choosing to nurture businesses with the best possible chance for success.

Through running a business initially in incubation entrepreneurs can:

Share basic operating costs: Tenants in a business incubator share a wide range of overhead costs, including utilities, office equipment, computer services, conference rooms, laboratories, and receptionist services. In addition, basic rent costs are usually below normal for the region in which the new business is operating, which allows entrepreneurs to realize additional savings. It is worth noting, however, that incubators do not allow tenants to remain in the program for long; most lease agreements at incubator facilities run for two to three years.

Get consulting and administrative assistance: Incubator managers and staff members can often provide insightful advice and/or information on a broad business spectrum of business issues, from marketing to business expansion financing. Small business owners should remember that the people that are responsible for overseeing the incubator program are usually quite knowledgeable about various aspects of the business world. They are resourceful.

Access to capital is easy: Business incubators provide entrepreneurs with access to the kind of early-stage capital that emerging companies desperately need. According to a recent survey of National Business Incubation Association members, 83 percent of incubator owners and directors provide access to seed capital.

Respect and credibility comes easily: Many entrepreneurs have stated that when their start-up businesses are accepted into business incubator programs, the rewards include an aura of legitimacy and credibility among both vendors and customers. The fact that a business has been accepted into an incubator offers due diligence value to potential investors because incubators allow only diligent business plans.

It develops comradeship with fellow entrepreneurs: The presence of fellow entrepreneurs’ works as motivating factor. You see another business going through different stages; you witness ups and downs in other businesses as well as yours.  Incubators by gathering entrepreneurs together under one roof, create a dynamic climate wherein business owners can provide encouragement to one another in their endeavors; share information on business-related subjects; and establish networks of communication that can serve them well for years to come.

All over world incubators run on common idea: The concept of incubation works in all communities, practically all industries, all demographics on a particular strength of an ability to aid companies that fulfill specific needs, technology transfer, stimulating mankind and creating jobs.

India’s largest incubator for startups is T-Hub also known as Telangana Hub. On 5 November 2015 the first phase of T-Hub was set in operation by E. S. L. Narasimhan, Governor of Telangana and Ratan Tata, Chairman Emeritus of Tata Sons, and Telangana IT & Panchayat Raj Minister K. T. Rama Rao. It is spread in a 70,000 square foot building called CatalysT, it is entirely dedicated to entrepreneurship. It is a partnership between the private sector and the Government of Telangana along with three of India’s leading academic institutes – IIIT-Hyderabad, ISB and National Academy of Legal Studies and Research.

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:

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.