TO promote a culture of entrepreneurship, the government on Saturday announced a slew of incentives including a Rs 10,000-crore corpus for innovation-driven enterprises, a three-year break from paying income tax on profits, a Rs 500-crore per year credit guarantee mechanism, and exemption from capital gains tax for start-ups.
After a full day of discussions at the launch of the ‘Start-up India’ programme attended by hundreds of young entrepreneurs, Prime Minister Narendra Modi unveiled his government’s action plan to help entrepreneurs, and asked them to play a transformative role in India’s development.
“We have millions of problems. There is no denying that. But we also have a billion minds. And these billion minds will easily find the solutions to the millions of problems,” Modi said in an hour-long address.
Modi had spoken about launching the ‘Start-up India’ programme in his Independence Day address last year. Promising minimum interference from government, he said start-ups would be able to self-certify their compliance with nine labour and environmental laws without being inspected, and would receive faster approvals — within a day — through a mobile app that is in the making.
The Prime Minister invited the entrepreneurs to partner the government in the development process, and asked them to look beyond the realm of information technology.
“Start-up is not just about mobiles and laptops… Start-up does not only mean a company with billions of dollars of money and 2,000 employees. If it is able to provide employment to even five people, it would help in taking the country forward. Young people have to change their mindsets from being job seekers to try and become job creators. Once you become a job creator, you will realise that you are transforming lives,” he said.
Earlier in the day, Finance Minister Arun Jaitley said the government was ready with an “entrepreneur-friendly taxation regime”.
“There are some steps which can be taken by notifications, which would be taken forthwith. Others require legislative provisions which can only come as part of the Finance Bill when the next Budget is presented,” he said, amidst cheers from the audience.
The cheers grew louder when Modi spoke in the evening, with young entrepreneurs applauding each measure being announced. He spent considerable time talking about the need to reform the patent regime in the country. He said his government was working on ensuring faster registration of patents, and bringing in a new scheme for the protection of intellectual property rights. The government will set up facilitation centres in several cities to provide free legal support and other assistance to small businesses in filing patent applications.
“There is a need to blend intellectual property (IP) with youth property (YP). We will also give 80 per cent rebate in patent registration fees for start-ups vis-à-vis other companies,” Modi said.
Another step the Prime Minister stressed on was ensuring a faster exit arrangement for start-ups that want close their businesses. He said businesses would be able to wind up within 90 days, and suitable provision will be made in the Bankruptcy and Insolvency Bill that is currently in Parliament.
Government procurement norms are also proposed to be relaxed to ensure that start-ups are able to participate and compete with other established businesses. The requirements for minimum turnovers and minimum operating years would be brought down to benefit the start-ups. Modi, however, said that there would not be any compromise with quality. “The zero-effect, zero-defect formula will still apply,” he said.
New policies to help women entrepreneurs, a credit guarantee scheme, sector-specific incubators, and the establishment of bio-clusters for the biotech sector are some of the other highlights of the action plan.
The Prime Minister said that in line with the exemption available to venture capital funds to invest in start-ups above the fair market value (FMV), investments by incubators above the FMV should also be exempted. He said the Centre would provide 40 per cent funding support, up to Rs 10 crore, for setting up new incubators, while states and the private sector would provide 40 per cent and 20 per cent respectively.