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The entrepreneur community is only cautiously cheering the Budget. While some of the announcements – like the announcement of a Rs 5,000 crore India Opportunities Venture Fund with SIDBI – have been hailed as a great step, it's the moves that have not been done that start-ups are censorious about.
Mr Sanjeev Aggarwal, co-founder of Helion Ventures, feels the one billion dollar venture cap fund for MSMEs will give a fillip to the entrepreneurial climate
. “All of India's venture cap fund availability currently is $500-600 million. This new fund should make available capital for young entrepreneurs who find it very hard to raise debt,” he said.
On the other hand, he brushes aside as insignificant the proposal to remove the restriction on venture capital funds investing in just nine sectors.
Although on the surface the proposal sounds exciting as it will give VCs a 100 per cent tax exemption from exits, it's only going to benefit a very small number.
Only domestic funds – and that too those registered with Securities and Exchange Board of India can avail of the tax exemption.
Mr Aggarwal points out how most venture capital funds operate from foreign shores like Mauritius.
Four years ago, domestic VC funds investing in nine areas - nanotechnology, hardware and software development, seed research and development, bio-technology, research and development of new chemicals and medicines, production of bio-fuels, construction of hotel-cum-convention centre with seating capacity of more than 3,000, development and operation of any infrastructure complex, dairy and poultry facilities – were given 100 per cent tax exemption from exits. Under the current budget this restriction on sectors has been done away with.
IT entrepreneurs find nothing to cheer about in this move as it makes no difference to them. According to Mr B. Hari, Chairman, Ontrack Systems Ltd. – a West Bengal based software and system integrator company, says, “The decision really doesn't help the sector in this regard. It might help in developing entrepreneurships in other areas,” he added.
Mr Mohit Gundecha, CEO of YourNextLeap.com, a consumer internet start-up helping students and young professionals plan their career, says that the increased emphasis on using IT strategy for direct transfer of subsidy is promising for the domestic IT companies, including start-ups.
The doubled infusion into the National Skill Development Corporation (NSDC) to Rs 1,000 crore, should help in availability of skilled manpower to the industry, he says.
“But I was expecting some corporate tax exemptions for SMEs. I am disappointed by the Government's move on increasing the service tax to 12 per cent. In a tight budget environment, it will eventually impact business flow,” he laments.
> Chitra.n@thehindu.co.in and >abhishek.l@thehindu.co.in
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