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Start-up India beware of hurdles

  By Vijay Darda | 18-01-2016

After Prime Minister Narendra Modi’s announcements regarding the incentives for start-ups at the high profile show Start-Up India, it is surely time to say two cheers for the new bunch of entrepreneurs. The third and full throated cheer would come only when these dreams are realised. True technology and innovation are driving the eco-system of Start-Up India, but this is not a smooth story all the way. We have to be aware of the hurdles.

A three year tax holiday, a Rs 10,000 crore fund and self-regulation for labour and environmental laws are the key attractions of this new world of business. However, these measures shall come into place only after these are approved by the Parliament. Moreover for a start-up to be eligible for these sops, it has to be around for less than five years and have a turnover of less than Rs 25 crore and should be working towards innovation, development, deployment or commercialisation of new products, process or services driven by technology or intellectual property. Only when a company clears the test conducted by a government board, it will be entitled to several benefits including a three-year income tax holiday. Now past experience shows that government clearances are notoriously slow, and the speed gets further reduced when the issue relates to loss of revenue by the government. In such circumstances, often the person seeking the concession is made to look like a cheat, and this is a humiliating experience.

Besides, this apparent categorisation of activities ignores a very important sector in which entrepreneurship needs to be encouraged- namely the social sector. It is well-known that areas like health, and education suffer from a tremendous lack of resources and infrastructure support. Unless, start-up concessions are available in these sectors as well, there would be a mismatch in terms of services.

It was encouraging to see the top babus on board at the Vigyan Bhawan event, and their presence is an indication of their commitment to the Start-Ups programme. But how much of the promises of these gentlemen would be translated at the district level or other stages of implementation would be the key to success of the overall idea across the country. Already the economic affairs secretary Shaktikanta Das has observed that in India starting a company is like entering the Chakravyuh like Abhimanyu. It is easier to get in than get out. But this warning also comes with a promise that the insolvency and bankruptcy laws have been introduced and will really help in providing an exit option.

There is no doubt that companies like Uber, Oyo rooms, and Flipkart have been mega successes. Interestingly, all these have come up without government sops or concessions. This is actually the reality of great and good entrepreneurship. It comes from a faith in oneself and the strength of the idea. The government is more often than not a hurdle in this path, and Modi has done the right thing by pointing out this reality. “If the government doesn’t do anything, so much will happen. We have done a lot for 70 years. Where have we reached? Please tell us what not to do. If we decide not to do anything, they (entrepreneurs) will take us places,” he said.

It is not that the start-up phenomena is yet to begin over here. In fact this has been going on since 2010 and in the last five years the number of start-ups has gone from 500 to 5,000 and tens of billions of dollars have been invested by foreign and institutional investors. It should not be forgotten that all this happened during the Congress regime. But this is just an illustration of the potential that this sector has in terms of employment generation and value addition. So, the measure of a Modi driven Start-Ups programme would be an upscaling of this from a few thousand companies to at least a few lakh companies.

The economy has been lagging behind in the last 21 months, and the rate of job growth has been dismal. Start-ups are supposed to drive employment generation and we have that for instance in the Uber model a person driving the car in the National Capital Region can easily make up to a lakh of rupees per month, have flexible working hours and the ease of being one’s own boss. But then we need to create a few crore jobs every year, if we are to keep the unrest among the youth within restraint. There has been a driving up of expectations and it should be matched with performance. Or else the levels of frustration would be much higher.

In the technology driven sectors, one of the key issues flagged by the Congress vice-president Rahul Gandhi is the concept of net neutrality. He has emerged as a strong advocate of this feature of the IT policy after his interactions with more than 30 start-up entrepreneurs in Bangalore and Delhi. With Bangalore as the national capital of start-ups this is a vital input. The government would hurt itself and the entrepreneurs should not ignore this suggestion merely because it has come from a leader of the opposition. Net neutrality is not an issue just for the start-ups but also for the growing number of internet users.

With this initiative the Modi Sarkar has put in place its schemes for Make in India, Digital India and though it may be criticised for repackaging the old schemes, the fact remains that it has put its best foot forward. Now it is naturally time to deliver, and see the results on the ground. As and when that happens we shall say three cheers.

Before I conclude…

Congress vice-president Rahul Gandhi had a very successful visit to Mumbai. He was impressive in his exchanges with people from different cross sections of the society. The fact that he was prepared to take questions from the students at the NMIMS and respond to them with candour is a good sign for our public life. Popular politicians must make themselves available for this kind of interaction. His assertion that GST would be passed within 15 minutes if the government accepts the Congress suggestions should also be an eye opener for those who blame him for parliamentary disruptions.


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Start-up India beware of hurdles


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