Simple norms, less regulation and faster execution are the need of the hour for the start-up ecosystem to thrive.

This view was echoed by a panel of experts, ranging from investors and entrepreneurs from across the start-up ecosystem, during a panel discussion jointly organised by BusinessLine and Bloomberg TV as part of a series on the countdown to Budget 2016.

Sanjay Mehta, an angel investor and member of the SEBI’s start-up council, said most start-ups struggle due to lack of funding at an early stage and one of the main reasons for that was the unenthusiastic angel investor community. Angel investors shy away from investing in multiple ventures because of the angel tax on investment.

“It is an investment and not a capital gain so how can the government tax the funds being raised for investments purpose? I guess the coming Budget should look into a clarity on the angel tax,” Mehta said, adding this also puts a pressure on the start-ups as they have to pay 33 per cent of the fund raised as tax.

He also talked about steps to allow secondary exits for start-ups at stock exchanges and to allow listing of funded start-ups.

Another major issue that start-ups face is an uneven tax structure that every State has. E-commerce firms that sell across the country have to go through complex and different tax structures for different States, he pointed out.

Dhruvil Sanghvi, founder of logistics services provider Loginext, said GST is something that everyone is looking forward to and this will do away with the complex tax structure and improve efficiency at a time when companies are looking at omni-channel (offline and online) as a business model. “Entrepreneurs are not waiting for the government to come out with reforms but are changing their business models to make their way up,” Sanghvi added.

Neeraj Jain, founder of Zoppr, a hyperlocal player, said GST will definitely be a boon but it doesn't really impact the hyperlocal players as they operate in small localities. He, however, said he does not expect any major sops for start-ups this year.

Vinod Murli of Innoven Capital, a firm giving small capital loans to start-ups and SMEs, said that while he doesn’t expect any largesse this Budget, the positive thing is the noise being created around start-ups and e-commerce and that the Centre is talking about it.

Robust roadmap

“I don’t expect the government to initiate any drastic reform in this Budget as the political climate of the last 18 months has clearly demonstrated that it will be difficult to get passage for such Bills. It will be helpful to have clarity on the management of the fiscal deficit with a robust and detailed roadmap for the short to medium term. This government has shown keenness to listen to various stakeholders in the start-up ecosystem and some of this feedback has found its way to guidelines but that needs to be captured formally as well and hopefully this budget will help in covering some part of that distance,” Murali added.

Ashish Jhalani, founder of etailing India, said that while the sector has a big potential to improve the GDP, a few regulatory hurdles are detrimental to the sector. Citing an example of logistics and infrastructure spends, Jhalani said that even though India spends about 13 per cent of the GDP on roads and infra compared to 8 per cent in the developed countries, infrastructure is poor compared to many developing countries.

Tech adoption

Pramod Saxena of Oxigen, a mobile wallet firm, said that the RBI has been very progressive in terms of easing norms related to transactions. Gurpreet Singh of inventory management firm Browntape said the adoption of technology has been phenomenal and it is now normal for people to use phones to search for products and services online.

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