After the hype and hoopla around the Startup India Action Plan, laid out by Prime Minister Narendra Modi in January, the start-up ecosystem, which was expecting to hear a series of friendly announcements, has been left disappointed.
While the Cabinet has approved the Stand Up India scheme to promote entrepreneurship among SC/ST and women, providing ₹500 crore for the same, there was very little said that could propel the existing start-up ecosystem to the next phase of growth.
Serial entrepreneur, investor and founder of Portea Medical, Ganesh Krishnan, expected to hear mass impact announcements, especially after the Start Up India promise in January.
“While a tax holiday for start-ups for the first three years was announced, it is irrelevant as start-ups do not make any profits in the first three years and even if they do, paying taxes is the least of their worries. Second, in order to qualify for government benefits, start-ups have to be approved by an inter-ministerial board that defines what constitutes a start-up. This is like going back in time to License/Permit Raj. None of the start-ups I promote have applied, as it would mean hiring a professional to do the needful. The government should specify what constitutes a start-up and ensure transparency. Third, there was no mention of doing away with ‘angel tax’. Most start-up founders raise ‘angel’ money from friends and family, who are taxed as they are not part of registered angel networks,” he said.
Echoing this, Sanjay Swamy, Managing Partner at Prime Venture Partners, said, “Nothing fundamental that will create an impact on the start-up sector has been announced and none of the initiatives mentioned in the Start Up India Action Plan has been further spelt out.”
He pointed out that there was no mention of eliminating the much talked about surcharge on digital payments, as also the two crore terminals needed to facilitate digital payments. Nor did the minister announce incentives to discourage cash payments. “The way forward to encourage local manufacturing is to promote buying of Made in India products; we expected to hear some policy announcements on that,” he said.
Mrigank Tripathi, founder CEO, Qustn Technologies, spelt out the big disappointments: no mention of exit policy and listing norms for start-ups, and not enough done for start-up founders to gain from capital tax exemptions. Also missing is an ecosystem of mentorship with hidden incentives, he said.