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BW Businessworld

'Promote Entrepreneurship To See Growth'

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The start-up Inc in India has seen a boom in the decade, but nothing close to the potential. Innovation and enterprise seem to take a back seat in a nation known for its on the fly jugaad mind set. Unlike nations abroad where major impetus is given to new ideas, technologies and research here, we are still stuck in the old established practices whether about the running of a business or starting a business. Antony Alex, CEO of an education portal - - says start-ups need to be prioritised in the upcoming budget. A start-up himself offering online learning platform on Indian laws, he questions the inability of India to establish even a singly innovation hub like the Silicon Valley in USA. 

What are the main problems in the sector?
To begin with it is the tax regime and the long and tedious procedures required under the Companies law. India needs to increase its intellectual property and intellectual capital space vastly and very quickly if we are to stay relevant in a global knowledge based economy. Tax holidays/preferential tax treatment should be given for start-ups filing for patents in India & abroad (importantly filings under the PCT etc.)

Start-ups come with high risks and therefore it is important that there be some ease of opening and shutting down these enterprises. This in turn will attract more investment and create the much needed incubation needed o new ideas.

Even small aspects like tax refund can take months on end, considering most start ups work on small capital amounts these procedural and bureaucratic delays need to be removed.

Can the upcoming budget address any of these? How?
There is need to remove the hurdles and ambiguities to angel investments in start-ups, brought in during the 2012 budget. 

There should be no capital gains tax on investments in startups held for over 5 years. This can be subject to a maximum cap on returns from the investment (e.g. 10 times the original investment) or a total amount cap (e.g. 15 crores), whichever is higher. Moving from a largely private sector services economy to not only large scale manufacturing but also a technology based products economy is critical. Specifically, no capital gains tax for investments of more than 3 years in startups building products in critical "sunrise" sectors such as clean energy, biotechnology, nanotechnology, medical technology etc.

Setting up a (and allocating funds for) a body (like the NSDC) in partnership with organisations like CII/FICCI with the specific mandate of creating mandatory entrepreneurship education programmes that should be introduced in not only management schools but importantly in the pre-business (commerce etc.), engineering and pure sciences streams. In addition, this body should work with large corporations in India to set up accelerators at various universities across India and foster a much larger footprint for R&D in India.