Budget 2016: A conducive start-up regime needed
In today’s VUCA world adaptability and agility to the fast changing interconnected global economy are required, which can only be provided by systems and processes that take proactive and corrective actions on demand. The Annual Budget, which is essentially an annual estimate of the country’s income and expenditure, has lost much of its significance and relevance, much like the Five Year Plan that India once used to draw up. In the dynamic environment that we are living in today, even a week is too long a period for decision making. Decisions need to be taken fast and as and when required, instead of just once a year. The provisions and recommendations of the Budget, therefore, remain just that and never see implementation. And sometimes, implementation happens even when it is not provisioned for. However, that is a decision for the government to take and for now we need to use this existing tool in the best possible manner.
As head of a company which was a startup itself not too long ago, I would want this Budget to focus on creating a conducive ecosystem for similar start-ups in the e-commerce industry.
The Prime Minister’s ambitious “Startup India” movement was launched last month to boost digital entrepreneurship at the grassroots level. At the event, the industry was vocal and more or less summed up its expectations regarding the Budget in front of the Prime Minister Mr Narendra Modi. In the upcoming Budget we expect the Finance Minister to provide income tax exemptions, at least for the first few years to boost start-ups in the country. Not only because profits need to be retained by the company during the formative years to grow business, but also to avoid the hassle and time and money spent on maintaining and filing returns. The entrepreneurial teams should not be forced to devote any of their bandwidth to such activities at least for the first few years.
Besides, faster patent registrations and quicker exits for companies have been some of the promises made at the event. The industry was quick to welcome the “less interference and more support” tone of the programme. The Startup India action plan announcement contains sweeping policy innovations to foster more creative startups, and of course like any other plan, implementation in letter and, more importantly, in spirit will hold the key to its success. The Budget announcements will indicate whether the government is keeping its promises.
From the industry we would like to see more action by the government on the ground for startups -- policies and tax reliefs or breaks to be announced, how they are going to be implemented, who is going to be responsible for implementing them and how we are going to ensure that the final entrepreneur is positively impacted by this.
The government’s role in making the journey smooth for start-ups begins with providing basic infrastructure. That is a minimum requirement and that is not for the private sector or startups to build. Electricity, ports, roads as also last mile connectivity are the pillars on which entrepreneurs will build their own value propositions. That apart, certain basic norms, like how easy it should be to set up a business and how easy it should be to exit it and start afresh if things do not work out, would come under building the ecosystem by the government.
(This article has been published in all editions of the Financial Express)