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Insights into Editorial: Does India really need a Start-up Act? + Mindmaps on Issues

Insights into Editorial: Does India really need a Start-up Act? + Mindmaps on Issues

14 November 2015

Following Prime Minister Narendra Modi’s Start-up India and Stand up India campaign, announced in his Independence Day speech in August 2015, the central government has decided to introduce a policy framework aimed at easing the regulatory environment for start-ups.

How would such policies help start-ups?

Such policies would enable start-ups to bypass existing, complex procedures for matters such as company registration, labour registration and income tax for a certain number of years or till such companies achieved a predetermined revenue threshold.

Why do we need start-ups policy?

India is one of the most powerful engines of global startup activity and has attracted about $8 billion in venture capital funding over three years. Estimates say that at least two startups are born every day in India, but once they attain any degree of scale, they domicile themselves overseas citing the hostile regulatory environment in the country.

What is expected from the government?

  • Reduction in the number of laws and simplification of existing regulatory compliances.
  • Reduction in excessive red tapes.
  • Speed up the processes to start or shut down a company in the country.
  • Creation of suitable infrastructure.
  • Improvement in ease of doing business.
  • Indirect financing in terms of tax exemptions.
  • Make a single law to regulate startups instead of the current 22 laws that a new business has to comply with.
  • Create an ecosystem that can flourish with ‘Digital India’ initiative.
  • Make it easier for investors outside the country to move funds in and out, by relaxing foreign exchange regulations.
  • Address issues like delays in incorporation, employee stock options, lack of initial funding, cumbersome foreign exchange documentation and access to external commercial borrowings.

Significance of start-ups:

  • The Indian startup ecosystem is among the top five in the world. Currently, there are over 4,000 start-ups running in the country.
  • According to a report by the National Association of Software & Services Companies (Nasscom), startups have created more than 80,000 jobs so far.
  • As many as many 11,500 startups could come up by 2020 creating 250,000 jobs.

It is believed that start ups help create more jobs and ensure inclusive growth. Thus, ensuring that startups thrive in India is crucial for country’s overall growth.




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