Events &
Issues
New
Delhi, 2 March 2016
Impetus For Start-Ups
MAKE INDIA WORLD HUB
By Dhurjati Mukherjee
Prime Minister Modi’s announcement of creating an Rs 10,000
crores corpus to incubate start-ups in the country indeed is a judicious decision.
As entrepreneurs who use their own funds will now be able to claim capital
gains tax exemption if they reinvest their profits in new capital assets ---- a facility which is currently extended to
newly formed micro, small and medium enterprises (MSMEs).
Undeniably, there is need to encourage more start-ups,
which have already increased from 501 in 2010 to over 4500 last year. In fact,
this rising trend would be maintained in the coming years.
Besides, most of these are in the field of technology
and e-commerce which are depended on human talent rather than machinery. But some
units are also there in areas like housing, car rentals, careers etc.
Pertinently, Modi recently dispelled the notion that
start-ups were only confined to only IT but were in diversified fields opening
immense opportunities in his monthly Monthly
ki Baat programme. Underscored
by many units coming up in different parts of the country by knowledgeable and
qualified youths.
Moreover, he elucidated a 19-point action plan whereby
the Government would only play a facilitating role and not burden entrepreneurs
with complicated compliance requirements to ensure emphasis on innovation and
development.
Also, the help would be extended to start-ups which are
driven by technology or intellectual property. Although the plan was announced,
some of the measures are expected to be implemented after the Budget is passed
by Parliament.
Notably, some of the most points are: setting up 7 new
research parks in six IITs and IISc with an initial investment of Rs 100 crores
each and putting in place 35 new incubators in institutions with funding
support of 40 per cent from the Central Government, 40 per cent from respective
States and 20 per cent from the private sector.
Currently Indian entrepreneurs depend on overseas investors for around
80 per cent of funding which has been a major area of concern.
Besides, the action plan announced funding support for
innovation driven enterprises with an initial corpus of Rs 2500 crores and a
total corpus of Rs 10,000 crores over a four-year period. Additionally, a
credit guarantee fund is also part of the plan with a budgetary corpus of Rs
500 corpus per annum for the next four years.
Undoubtedly, this financial support would go a long
way in meeting some of the funding requirements of these units. Further, they
would also benefit from the Atal Innovation Mission which was set up with a
corpus of Rs 150 crores with the aim of helping struggling innovators secure
financial and market support for their skills and ideas.
Recall, April last the Niti Aayog had set up a 15-experts
committee comprising people from Government, academia and industry to develop
the contours of the programme and establish its terms and conditions. The committee’s
report proposed setting up of an initiative mechanism that would yield
immediate results.
There is no gainsaying that start-ups would be the
answer to today’s ‘Make in India’
initiative. There is reason to believe that such units would emerge as an
alternative growth engine especially at a challenging time for the global
economy. Finance Minister Jaitley asserted that the NDA Government was pursuing
a policy wherein more freedom was being given to companies and the whole
process of doing business simplified.
Further, if banks came forward to help techno-savvy
entrepreneurs and provide them funds, more units would come up. Meanwhile, each
bank branch would adopt a SC/ST entrepreneur along-with creating a women fund
to help set up their establishments. This could help in entrepreneurship development
and cultivate indigenous talent and skill steadily.
According to Practo’s founder-CEO Shanshank,
“the relaxation of financial and labour norms is a great step towards making
things simpler for young start-ups so they could focus on innovation without
getting entangled in some of these norms that are more applicable to larger
entities”.
An example, the Atal Innovation
Mission would foster innovation at a grass root level among students in schools
and colleges which would in turn encourage more youngsters to enter the field
of entrepreneurship help innovate and create some ground breaking products.
Importantly, India is
already a leading start-up hub and new entrepreneurs believe that with the
right support from the Government, the country could rapidly become “the
innovation hub of the world”.
Another entrepreneur pointed out
that the Government needed to play a pivotal role in various dimensions of the
start-up ecosystem, and the main focus should revolve around the 3P’s
(Promotion, Policy and Pravasi Indians (NRI)).
The Government should also help
provide a voice to start-ups by promoting them across the world which would help
them emerge internationally. Two, create start-up friendly policies which would
help nurture their growth by preventing hurdles like red tapism etc.
Significantly, the promise shown by
start-ups reveals that even if one of five units is successful the value added
would be huge and make up for losses of other units. As it stands, the Department
of Science and Technology which has provided Rs 100 crores since the 80s at the
rate of Rs 3 crores per annum is obviously insufficient.
The Niti Aayog’s expert committee
suggested recently that the Government increase this to Rs 200 crores per
annum. This would not only boost innovation through enhanced research and
development, pave the way for success of start-ups but also encourage setting
up of more units.
In sum, India has a big market which foreigners
are trying to intrude. Instead of allowing outside entities, opportunities have
to be seized by Indian entrepreneurs, preferably first generation ones who are
technologically equipped. They could achieve miracles if their skill, talent
and innovation are properly explored. Likewise the emphasis on digitalization
is unleashing more human potential and creativity than ever before.
Clearly, innovation is the key to
success and the Atal Mission needs a
road map to ensure success of start-ups if the country has to progress
at a faster rate. Certainly, if the Government along-with academic institutions
promotes research and innovation, the proliferation of technologically equipped
units including start-ups would generate employment whereby our large skilled
force would be gainfully engaged. ----- INFA
(Copyright,
India News and Feature Alliance)
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