Photo-op Over! Babus Back in Startupland with Red Tape

Out of 34 key irritants, 8 have been resolved, 15 have been promised action plan, 11 have been left high & dry
While the action plan announced for startups by prime minister Narendra Modi on Saturday presented an unprecedented picture of inter-ministerial coordination as a slew of announcements were made spanning half a dozen of government departments, officials and experts confide that several reform measures are still stuck due to bureaucratic hurdles.This includes concerns around convertible notes, taxation on mergers and acquisition, recurring payments and entrepreneurship-related courses among others. iSPIRT said that policy advocacy group has been closely associated with the government during the preparation of the action plan and had put together a list of 34 key irritants that need to be resolved to arrest the exodus of startups. Out of these 34 items, only eight have been resolved on Saturday while action has been promised on 15 of them and 11 of them have been left high and dry.

“No doubt the Startup India Action Plan has provided various important exemptions and incentives to startups. However, the key question is this -Whether the Action Plan adequately addresses the irritants that make the Indian startup ecosystem unattractive? In our view, the answer is no,“ said the blog post. For creating a vibrant startup ecosystem, it is imperative that the investments from foreign sources are made easier.

A senior official of the industry said that while the is sue of convertible notes is a pressing one, there has been little respite on M&As, since there is no clarity on taxation of money kept in escrow accounts. “The reforms are stuck due to some archaic laws and till the time they don’t evolve the framework, everything they will do is a band-aid fix which may open loopholes for someone else,“ said the person who did not wish to be identified hinting at legislations such as FEMA (Foreign Exchange and Management Act), 1999.

The department of industrial policy and promotion was also keen to have universities offer a minor in entrepreneurship to their students. The proposal is yet to get a go-ahead from the ministry of HR development, said a source. In the blog, iSPIRT said that of the thirty four issues, ten each came under the Revenue Department and the RBI, nine came under the MCA, and the remaining came under multiple departments such as the DEA, DIPP, RBI, MCA, and Sebi.

ET VIEW

Time for Consolidation

Now that the government has conducted the big bang meet and announced a package for startups, what lies ahead for aspiring entrepreneurs? The big unicorns need to consolidate, drive efficiencies and be ready for a shake-out. Opportunities are, no doubt, opening up for new ones in the domestic market, with open technology, growing smartphones and easier capital.Newer startups would do well to learn from leaders in India and abroad as they get ready to disrupt more areas. The government would do well to address shortfalls in infrastructure.

Source: The Economic Times
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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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