In addition to a US$1.5B fund, the government has also announced an app to make startup registration easy in a day. But will these just remain on paper?
Prime Minister Narendra Modi announced the much-trumpeted ‘Startup India, Standup India’ initiative in Delhi on Saturday. The programme is aimed at boosting the startup ecosystem by providing a conducive environment for early-stage ventures to do business and raise funds in the country.
While the tech industry, by and large, hailed the new friendly policies, some opine that there is nothing new. Many such announcements were made in the past, but nothing has changed on the ground, they say.
Anyway, the key among the many announcements that the PM made at the Startup India event is the INR 10,000 crore (approximately US$1.5 billion) startup fund.
In a country like India, where private investors rule the roost, this fund will bring cheers to millions of startups and SMBs. Although the modalities are yet to be worked out, no doubt, this will give startups a much needed boost.
But the new startup fund was not the show stopper at the event — funding is not the key challenge faced by Indian companies as there are umpteen VCs and angel funds, in addition to thousands of individual investors. In my view, the most striking was the announcement of a mobile app for startup registration.
The government is rolling out an app for entrepreneurs in April this year that will enable them to register their company in a day. Entrepreneurs will be able to exchange information and interact with various regulatory bodies and start their company in a single day. All the paperwork can be done via the app.
This is a great step in the right direction. In economy that revolves significantly around the growth of SMBs and where red tape and corruption is rampant, the ease of startup registration is a huge welcome.
As of now, registration involves multiple steps, multiple stakeholders and massive paperwork. It begins with obtaining a Digital Signature Certificate (DSC) for the proposed director/promoter not having a DSC and it takes more than a month to complete the process. In the process, the entrepreneur might also end up paying bribes and kickbacks.
No wonder many Indian startups that took birth in India moved to Silicon Valley or Singapore, where registration and running a company is much easier.
The US is a great place to register a startup, even though the laws in the US are different from state to state. For instance, the state of Delaware has the best startup-friendly policies. At the same time, in Singapore there are many government entities that lend their support to startups, such as the Economic Development Board, SPRING and the Accounting and Corporate Regulatory Authority.
In India, huge taxes levied on startups are a dampener. In an interview in October last year, Department of Industrial Policy and Promotion Secretary Amitabh Kant said that the regime for startups is complex and difficult. “Out of the many startups that succeed in India, 60-65 per cent relocate to Singapore. So, [the] challenge is to create a world-class regime to bring these startups back.”
A few months ago, Indian software think tank iSpirt also echoed this view. Its Co-founder, and one of India’s leading startup experts, Sharad Sharma said that more and more Indian startups would be domiciled outside India if the government doesn’t provide a better environment.
With more than 4,100 enterprises, India is the third-largest base of tech startups in the world and the number is set to grow manifold over the next few years, according to technology giant Google. Many global startups have presence in India. Leading VCs and corporates, including SoftBank, Tiger Global and Alibaba, have invested big money in a number of successful companies.
Many more VCs are expected to come and all they want is great infrastructure, with smartphone is growing fast and Internet is reaching even the remote parts. So, the government should make sure that the new policies announced at the ‘Startup India Stand up India’ are implemented at the earliest.
Otherwise, as one of the Facebook users pointed out, the Startup India will become a stand-up comedy’
Image Credit: 10000 Startups
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