Indian start-ups get back to basics

India’s start-ups have a new catchphrase – back to basics. Traditionally, these businesses have focused on fundamentals -invest to grow while ensuring one doesn’t burn money in chasing eyeballs that do not translate into revenue and profit.

The year 2015 was an aberration, with soaring valuations and nearly Rs 36,000 crore or $5 billion in venture capital and private equity money pumped into start-ups. Now, with a global reset by investors to tighten their belts and relook at how businesses are run, India has also been hit.

TREADING CAUTIOUSLY
  • Investors pumped $5 bn in start-ups in 2015
  • As global investors tighten belts, Indian start-ups are impacted
  • Investors seek to look at business value than valuation of business
  • Morgan Stanley writes down investment value in Flipkart by 27 per cent
  • Now, investors are focusing on business fundamentals
  • Start-ups shed jobs, cut down on high spends and focus on building sustainable business

Several entities that followed the burn-cash model have been forced to shed jobs and improve their business models. Among the more known names, Zomato, Housing and TinyOwl have shed jobs. Flipkart, the largest e-commerce company and the most highly valued start-up, saw investor Morgan Stanley mark down the value of its (minority) stake by 27 per cent. While factors such as growing competition and not meeting the growth targets could have influenced this, the message for the rest of the start-up system was clear – pull up your socks.

“One thing which certainly happened was that the valuations of B2C (business to consumer) companies weren’t justified. What you’re seeing is more in terms of right-sizing or to be fairly valued,” said Sanjay Nath, managing partner at Blume Ventures. “I wouldn’t use the term ‘bubble’, as that would signify India’s fundamentals are not strong. That’s definitely not the case.”

The fundamentals of India as a market are very strong, he adds. There’s a huge growth in smartphone sales, the uptake of third-generation (3G) technology data connectivity is growing and 4G services are coming in. Growth in tier-II and tier-III cities is very high, and as these are highly underpenetrated, the opportunities are immense.

“Recession is when good companies are built. I’m not saying there’s one, so these are good times,” says Shashank N D, co-founder and chief executive officer of Practo, a health care technology entity.

To grow fast and outdo the competition, several start-ups in the B2C space, especially the segments of foodtech and hyperlocal, began to offer discounts and cash-backs, despite making a loss on each such transaction. This unsustainable model of business is on the way out. Investors now are pressurizing companies in their portfolio to focus on operational efficiency, improve productivity, keep costs low and move to profitability.

“Suddenly, a view to profitability is coming in and the view of discounting and cash-backs is being rolled away slowly. It’s being done very subtly, which is why nobody is noticing it, but it’s happening,” said Ash Lilani, managing partner and co-founder at Saama Capital. “A lot of good investors are making sure their good companies are financed for the next 18-24 months. But, it’s rationalisation, it’s (about) coming back to earth.”

Start-ups have begun looking at ways to conserve cash, with the slump in funding the market is currently going through. Despite this, there’s a lot of optimism that the market will recover and investors will open their purse strings, though it is presumed the pace of investments would substantially reduce.

“The overall investment in the latter part of 2016 should catch up, as you can’t just not make investments and sit because the money is there. Unnecessary funding or crazy funding which was happening will slow down a bit but good companies will raise much more money this year,” said Shekhar Kirani, managing partner at Accel Partners India.

Rajan Anandan, managing director of Google India and prolific backer of start-ups as an angel investor, says the best is yet to come out of India. “If you think of this evolution as a series of (cricket) test matches, let’s say it’s a five-test series and we’re at the first test in the third day. We have to finish the first test, go to the second, then the third. It’s very early. There are going to be periods of ups and downs; it’s a bump in the road,” was the way he put it.

Source: http://www.business-standard.com/article/companies/indian-start-ups-get-back-to-basics-116030700027_1.htm

Budget 2016-17: Key Highlights

INTRODUCTION

  • Growth of Economy accelerated to 7.6% in 2015-16.
  • India hailed as a ‘bright spot’ amidst a slowing global economy by IMF.
  • Robust growth achieved despite very unfavourable global conditions and two consecutive years shortfall in monsoon by 13%
  • Foreign exchange reserves touched highest ever level of about 350 billion US dollars.

 

CHALLENGES IN 2016-17

  • Risks of further global slowdown and turbulence.
  • Additional fiscal burden due to 7th Central Pay Commission recommendations and an additional burden due to One Rank One Pension OROP.

ROADMAP & PRIORITIES

  • Focus on enhancing expenditure in priority areas of – farm and rural sector, social sector, infrastructure sector employment generation and recapitalization of the banks.
  • Government to focus on:
  • ensuring macro-economic stability & prudent fiscal management.
  • boosting on domestic demand
  • continuing with the pace of economic reforms and policy initiatives to change the lives of our people for the better.
  • ‘Transform India’ to have a significant impact on economy and lives of people.
  • Focus on Vulnerable sections through:
    • Pradhan Mantri Fasal Bima Yojana
    • New health insurance scheme to protect against hospitalisation expenditure
    • facility of cooking gas connection for BPL families
  • Continue with the ongoing reform programme and ensure passage of the Goods and Service Tax bill and Insolvency and Bankruptcy law
  • Undertake important reforms by:
    • giving a statutory backing to AADHAR platform to ensure benefits reach the deserving.
    • freeing the transport sector from constraints and restrictions
    • incentivizing gas discovery and exploration by providing calibrated marketing freedom
    • enactment of a comprehensive law to deal with resolution of financial firms
    • provide legal framework for dispute resolution and
    • re-negotiations in PPP projects and public utility contracts
    • undertake important banking sector reforms and public listing of general insurance companies undertake significant changes in FDI policy.

AGRICULTURE AND FARMERS’ WELFARE

  • Allocation for Agriculture and Farmers’ welfare is 35,984 crore
  • ‘Pradhan Mantri Krishi Sinchai Yojana’ to be implemented in mission 28.5 lakh hectares will be brought under irrigation.
  • Implementation of 89 irrigation projects under AIBP, which are languishing for a long time, will be fast tracked
  • A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about 20,000 crore
  • Programme for sustainable management of ground water resources with an estimated cost of 6,000 crore will be implemented through multilateral funding.

MULTILATERAL FUNDING

  • 5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up under MGNREGA
  • Soil Health Card scheme will cover all 14 crore farm holdings by March
  • 2,000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities during the next three years
  • Promote organic farming through ‘Parmparagat Krishi Vikas Yojana’ and ‘Organic Value Chain Development in North East Region’.
  • Unified Agricultural Marketing ePlatform to provide a common e-market platform for wholesale markets
  • Allocation under Pradhan Mantri Gram Sadak Yojana increased to 19,000 crore. Will connect remaining 65,000 eligible habitations
  • To reduce the burden of loan repayment on farmers, a provision of 15,000 crore has been made in the BE 2016-17 towards interest subvention
  • Allocation under Prime Minister Fasal Bima Yojana 5,500 crore.
  • 850 crore for four dairying projects – ‘Pashudhan Sanjivani’, ‘Nakul Swasthya Patra’, ‘E-Pashudhan Haat’ and National Genomic Centre for indigenous breeds

RURAL SECTOR

  • Allocation for rural sector – 87,765 crore.
  • 87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities as per the recommendations of the 14th Finance Commission
  • Every block under drought and rural distress will be taken up as an intensive Block under the Deen Dayal Antyodaya Mission
  • A sum of 38,500 crore allocated for MGNREGS.
  • 300 Rurban Clusters will be developed under the Shyama Prasad Mukerjee Ruban Mission.

Mukherjee Rurban Mission

  • 100% village electrification by 1st May, 2018.
  • District Level Committees under Chairmanship of senior most Lok Sabha MP from the district for monitoring and implementation of designated Central Sector and Centrally Sponsored Schemes.
  • Priority allocation from Centrally Sponsored Schemes to be made to reward villages that have become free from open defecation.
  • A new Digital Literacy Mission Scheme for rural India to cover around 6 crore additional household within the next 3 years.
  • National Land Record Modernisation Programme has been revamped.
  • New scheme Rashtriya Gram Swaraj Abhiyan proposed with allocation of 655 crore.

SOCIAL SECTOR INCLUDING HEALTH CARE

  • Allocation for social sector including education and health care – 1,51,581 crore.
  • 2,000 crore allocated for initial cost of providing LPG connections to BPL families.
  • New health protection scheme will provide health cover up to One lakh per family. For senior citizens an additional top-up package up to 30,000 will be provided.
  • 3,000 Stores under Prime Minister’s Jan Aushadhi Yojana will be opened during 2016-17.
  • National Dialysis Services Programme’ to be started under National Health Mission through PPP mode
  • Stand Up India Scheme” to facilitate at least two projects per bank This will benefit at least 2.5 lakh entrepreneurs.
  • National Scheduled Caste and Scheduled Tribe Hub to be set up in partnership with industry associations
  • Allocation of 100 crore each for celebrating the Birth Centenary of Pandit Deen Dayal Upadhyay and the 350th Birth Anniversary of Guru Gobind Singh.

EDUCATION, SKILLS AND JOB CREATION

  • 62 new Navodaya Vidyalayas will be opened
  • Sarva Shiksha Abhiyan to increasing focus on quality of education
  • Regulatory architecture to be provided to ten public and ten private institutions to emerge as world-class Teaching and Research Institutions
  • Higher Education Financing Agency to be set-up with initial capital base of 1000 Crores
  • Digital Depository for School Leaving Certificates, College Degrees, Academic Awards and Mark sheets to be set-up.

SKILL DEVELOPMENT

  • Allocation for skill development – 1804. crore.
  • 1500 Multi Skill Training Institutes to be set-up.
  • National Board for Skill Development Certification to be setup in partnership with the industry and academia
  • Entrepreneurship Education and Training through Massive Open Online Courses

JOB CREATION

  • GoI will pay contribution of 8.33% for of all new employees enrolling in EPFO for the first three years of their employment. Budget provision of 1000 crore for this scheme.
  • Deduction under Section 80JJAA of the Income Tax Act will be available to all assesses who are subject to statutory audit under the Act
  • 100 Model Career Centres to operational by the end of 2016-17 under National Career Service.
  • Model Shops and Establishments Bill to be circulated to States.

INFRASTRUCTURE AND INVESTMENT

  • Total investment in the road sector, including PMGSY allocation, would be 97,000 crore during 2016-17.
  • India’s highest ever kilometres of new highways were awarded in 2015. To approve nearly 10,000 kms of National Highways in 2016-17.
  • Allocation of 55,000 corer in the Budget for Roads. Additional
    15,000 crore to be raised by NHAI through bonds.
  • Total outlay for infrastructure – 2,21,246 crore.
  • Amendments to be made in Motor Vehicles Act to open up the road transport sector in the passenger segment
  • Action plan for revival of unserved and underserved airports to be drawn up in partnership with State Governments.
  • To provide calibrated marketing freedom in order to incentivise gas production from deep-water, ultra deep-water and high pressure-high temperature areas
  • Comprehensive plan, spanning next 15 to 20 years, to augment the investment in nuclear power generation to be drawn up.
  • Steps to re-vitalise PPPs:
    • Public Utility (Resolution of Disputes) Bill will be introduced during 2016-17
    • Guidelines for renegotiation of PPP Concession Agreements will be issued
    • New credit rating system for infrastructure projects to be introduced
  • Reforms in FDI policy in the areas of Insurance and Pension, Asset Reconstruction Companies, Stock Exchanges.
  • 100% FDI to be allowed through FIPB route in marketing of food products produced and manufactured in India.
  • A new policy for management of Government investment in Public Sector Enterprises, including disinvestment and strategic sale, approved.

FINANCIAL SECTOR REFORMS

  • Statutory basis for a Monetary Policy framework and a Monetary Policy Committee through the Finance Bill 2016.
  • A Financial Data Management Centre to be set up.
  • RBI to facilitate retail participation in Government securities.
  • New derivative products will be developed by SEBI in the Commodity Derivatives market.
  • Amendments in the SARFAESI Act 2002 to enable the sponsor of an ARC to hold up to 100% stake in the ARC and permit non institutional investors to invest in Securitization Receipts.
  • Comprehensive Central Legislation to be bought to deal with the menace of illicit deposit taking schemes.
  • Increasing members and benches of the Securities Appellate Tribunal.
  • Allocation of 25,000 crore towards recapitalisation of Public Sector
  • Target of amount sanctioned under Pradhan Mantri Mudra Yojana increased to 1,80,000 crore.
  • General Insurance Companies owned by the Government to be listed in the stock exchanges.

GOVERNANCE AND EASE OF DOING BUSINESS

  • A Task Force has been constituted for rationalisation of human resources in various Ministries.
  • Comprehensive review and rationalisation of Autonomous Bodies.
  • Bill for Targeted Delivery of Financial and Other Subsidies, Benefits and Services by using the Aadhar framework to be introduced.
  • Introduce DBT on pilot basis for fertilizer.
  • Automation facilities will be provided in 3 lakh fair price shops by March 2017.
  • Amendments in Companies Act to improve enabling environment for start-ups.
  • Price Stabilisation Fund with a corpus of 900 crore to help maintain stable prices of Pulses.
  • Ek Bharat Shreshtha Bharat” programme will be launched to link States and Districts in an annual programme that connects people through exchanges in areas of language, trade, culture, travel and tourism.

FISCAL DISCIPLINE

  • Fiscal deficit in RE 2015-16 and BE 2016-17 retained at 3.9% and 3.5%.
  • Revenue Deficit target from 2.8% to 2.5% in RE 2015-16
  • Total expenditure projected at 19.78 lakh crore
  • Plan expenditure pegged at 5.50 lakh crore under Plan, increase of 3%
  • Non-Plan expenditure kept at 14.28 lakh crores
  • Special emphasis to sectors such as agriculture, irrigation, social sector including health, women and child development, welfare of Scheduled Castes and Scheduled Tribes, minorities, infrastructure.
  • Mobilisation of additional finances to the extent of 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority by raising Bonds.
  • Plan / Non-Plan classification to be done away with from 2017-18.
  • Every new scheme sanctioned will have a sunset date and outcome review.
  • Rationalised and restructured more than 1500 Central Plan Schemes
    into about 300 Central Sector and 30 Centrally Sponsored Schemes.
  • Committee to review the implementation of the FRBM Act.

RELIEF TO SMALL TAX PAYERS

  • Raise the ceiling of tax rebate under section 87A from 2000 to 5000 to lessen tax burden on individuals with income upto 5 laks.
  • Increase the limit of deduction of rent paid under section 80GG from 24000 per annum to 60000, to provide relief to those who live in rented houses.

BOOST EMPLOYMENT AND GROWTH

  • Increase the turnover limit under Presumptive taxation scheme under section 44AD of the Income Tax Act to 2 crores to bring big relief to a large number of assessees in the MSME category.
  • Extend the presumptive taxation scheme with profit deemed to be 50%, to professionals with gross receipts up to 50 lakh.
  • Phasing out deduction under Income Tax:
    • Accelerated depreciation wherever provided in IT Act will be limited to maximum 40% from 1.4.2017
    • Benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020
    • Benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020.
    • The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020
  • Corporate Tax rate proposals:
    • New manufacturing companies incorporated on or after 1.3.2016 to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.
    • Lower the corporate tax rate for the next financial year for relatively small enterprises i.e companies with turnover not exceeding 5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess.
  • 100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019. MAT will apply in such cases.
  • 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident.
  • Complete pass through of income-tax to securitization trusts including trusts of ARCs. Securitisation trusts required to deduct tax at source.
  • Period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years.
  • Non-banking financial companies shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful
  • Determination of residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by one year.
  • Commitment to implement General Anti Avoidance Rules (GAAR) from 4.2017.
  • Exemption of service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship.
  • Exemption of Service tax on general insurance services provided under ‘Niramaya’ Health Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability.
  • Basic custom and excise duty on refrigerated containers reduced to 5% and 6%.

MAKE IN INDIA

  • Changes in customs and excise duty rates on certain inputs to reduce costs and improve competitiveness of domestic industry in sectors like Information technology hardware, capital goods, defence production, textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard & newsprint, Maintenance repair and overhauling [MRO] of aircrafts and ship repair.

MOVING TOWARDS A PENSIONED SOCIETY

  • Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of National Pension Scheme (NPS). Annuity fund which goes to legal heir will not be taxable.
  • In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made on or from 4.2016.
  • Limit for contribution of employer in recognized Provident and Superannuation Fund of 1.5 lakh per annum for taking tax benefit. Exemption from service tax for Annuity services provided by NPS and Services provided by EPFO to employees.
  • Reduce service tax on Single premium Annuity (Insurance) Policies from 5% to 1.4% of the premium paid in certain cases.

PROMOTING AFFORDABLE HOUSING

  • 100% deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 and completed in three years. MAT to apply.
  • Deduction for additional interest of 50,000 per annum for loans up to 35 lakh sanctioned in 2016-17 for first time home buyers, where house cost does not exceed 50 lakh.
  • Distribution made out of income of SPV to the RE ITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax, in respect of dividend distributed after the specified date.
  • Exemption from service tax on construction of affordable houses up to 60 square metres under any scheme of the Central or State Government including PPP Schemes.
  • Extend excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work to Ready Mix Concrete.

RESOURCE MOBILIZATION FOR AGRICULTURE, RURAL ECONOMY AND CLEAN ENVIRONMENT

  • Additional tax at the rate of 10% of gross amount of dividend will be payable by the recipients receiving dividend in excess of 10 lakh per annum.
  • Surcharge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above 1 crore.
  • Tax to be deducted at source at the rate of 1 % on purchase of luxury cars exceeding value of ten lakh and purchase of goods and services in cash exceeding two lakh.
  • Securities Transaction tax in case of ‘Options’ is proposed to be increased from .017% to .05%.
  • Equalization levy of 6% of gross amount for payment made to non­residents exceeding 1 lakh a year in case of B2B transactions.
  • Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016. Proceeds would be exclusively used for financing initiatives for improvement of agriculture and welfare of farmers. Input tax credit of this cess will be available for payment of this cess.
  • Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles 12 and SUVs. No credit of this cess will be available nor credit of any other tax or duty be utilized for paying this cess.
  • Excise duty of ‘1% without input tax credit or 12.5% with input tax credit’ on articles of jewellery [excluding silver jewellery, other than studded with diamonds and some other precious stones], with a higher exemption and eligibility limits of 6 crores and 12 crores
  • Excise on readymade garments with retail price of 1000 or more raised to 2% without input tax credit or 12.5% with input tax credit.
  • ‘Clean Energy Cess’ levied on coal, lignite and peat renamed to ‘Clean Environment Cess’ and rate increased from 200 per tonne to 400 per tonne.
  • Excise duties on various tobacco products other than beedi raised by about 10 to 15%.
  • Assignment of right to use the spectrum and its transfers has been deducted as a service leviable to service tax and not sale of intangible goods.

PROVIDING CERTAINTY IN TAXATION

  • Committed to providing a stable and predictable taxation regime and reduce black money.
  • Domestic taxpayers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have immunity from prosecution.
  • Surcharge levied at 7.5% of undisclosed income will be called Krishi Kalyan surcharge to be used for agriculture and rural economy.
  • New Dispute Resolution Scheme to be introduced. No penalty in respect of cases with disputed tax up to 10 lakh. Cases with disputed tax exceeding 10 lakh to be subjected to 25% of the minimum of the imposable penalty. Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty and tax interest on quantum addition.
  • High Level Committee chaired by Revenue Secretary to oversee fresh cases where assessing officer applies the retrospective amendment.
  • One-time scheme of Dispute Resolution for ongoing cases under retrospective amendment.
  • Penalty rates to be 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts.
  • Disallowance will be limited to 1% of the average monthly value of investments yielding exempt income, but not exceeding the actual expenditure claimed under rule 8D of Section 14A of Income Tax Act.
  • Time limit of one year for disposing petitions of the tax payers seeking waiver of interest and penalty.
  • Mandatory for the assessing officer to grant stay of demand once the assesse pays 15% of the disputed demand, while the appeal is pending before Commissioner of Income-tax (Appeals).
  • Monetary limit for deciding an appeal by a single member Bench of ITAT enhanced from 15 lakhs to 50 lakhs.
  • 11 new benches of Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

SIMPLIFICATION AND RATIONALIZATION OF TAXES

  • 13 cesses, levied by various Ministries in which revenue collection is less than 50 crore in a year to be abolished.
  • For non-residents providing alternative documents to PAN card, higher TDS not to apply.
  • Revision of return extended to Central Excise assesses.
  • Additional options to banking companies and financial institutions, including NBFCs, for reversal of input tax credits with respect to non­taxable services.
  • Customs Act to provide for deferred payment of customs duties for 14 importers and exporters with proven track record.
  • Customs Single Window Project to be implemented at major ports and airports starting from beginning of next financial year.
  • Increase in free baggage allowance for international passengers. Filing of baggage only for those carrying dutiable goods.

TECHNOLOGY FOR ACCOUNTABILITY

  • Expansion in the scope of e-assessments to all assessees in 7 mega cities in the coming years.
  • Interest at the rate of 9% p.a against normal rate of 6% p.a for delay in giving effect to Appellate order beyond ninety days.
  • ‘e-Sahyog’ to be expanded to reduce compliance cost, especially for small taxpayers.

Rs 15-lakh cr investment promises at Make in India

The six-day business expo Make in India Week has generated investment commitments worth Rs 15.2 lakh crore for the country, the department of industrial policy and promotion (DIPP) said on Thursday at the event’s closing ceremony. Around 30% of these are foreign investment commitments.

Maharashtra generated more than half the total tally, inking MoUs worth nearly Rs 8 lakh crore, expected to generate 30 lakh jobs. Within the state, the Konkan division, which includes the Mumbai Metropolitan Region, cornered the largest share of MoUs, worth over Rs 3.25 lakh crore. The deprived regions of Vidarbha and Marathwada generated MoUs worth Rs 1.5 lakh crore. Deals for Western Maharashtra and Khandesh totalled Rs 50,000 crore and Rs 25,000 crore.

The big question is how many of these commitments will translate into actual projects. “We expect the conversion rate to be over 80% in the next three years. These are investment commitments, which means pre-clearance work has been done,” said DIPP secretary Amitabh Kant. Besides manufacturing, it had also focussed on innovation and start-ups and created a platform where corporates, policymakers and political leaders could converge, he said.
Considered the largest multi-sector business fair in Asia, Make In India Week was aimed at showcasing India’s manufacturing sector. It generated 8.9 lakh visitors across 102 countries, the DIPP said. It played host to 20 foreign dignitaries, including two prime ministers. Over 9,000 Indian companies and over 2,000 foreign companies participated.

Source: http://timesofindia.indiatimes.com/business/india-business/Rs-15-2L-crore-for-India-8-for-Maharashtra-and-3-3-for-Konkan-promised-at-business-expo/articleshow/51043676.cms?

StartUp India and Viacom18 join hands

Viacom18, the television media house that owns and runs channels Colors and MTV, has signed an agreement with the Union government’s department of industrial policy and promotion’s Start-Up India project.

It will launch a year-long ‘outreach programme’ for entrepreneurs, called MTV Kickstart. The initiative will include activities on-ground, digital communication and a TV reality show.

While the Viacom18 brand attached to the programme is MTV, the network’s youth brand, all entities under the former’s umbrella will be mobilised.

The multi-platform initiative is to reach out to young and aspiring entrepreneurs through multiple touch-points across 300 colleges. Around 10 Start-Up Festivals, two-day events in tier-1 & 2 cities, will be organised, allowing youth to interact with top entrepreneurs and investors.

Amitabh Kant, secretary of the government’s department, said: “This will help us engage with dynamic youth and inspire a new generation to follow their dreams and become successful entrepreneurs.”

“The programme will look at a variety of start-ups — in tech and engineering, in the social space, in art and culture and, could be, in the media, too. We are working on the amount of seed money. It will come from a combination of entities across sponsors and VC (venture capital entities). One of the things we want to do is provide mentorship. It becomes critical in making the ideas commercially viable,” says Sudhanshu Vats, group chief executive of Viacom18.

The reality show will go on air in the third quarter of this calendar year. The format would mostly be developed in-house by the network and include a competition, where shortlisted start-ups or entrepreneurs from various on-ground activities under the programme are to compete before a jury for home seed funding.

“Through a process of auditions, we will shortlist the contestants, who will then be participants in the televised reality show. We’ll end the process with an awards show, also televised. The idea is not to make it too formal and intimidating. The MTV brand will help with this. While it’s not frivolous, it will help ease the contestants. It can be quite intimidating for anyone with an idea who does not know much about setting up a business (to present the idea). So, we are looking at people who don’t yet have a start-up but have ideas that can be turned into businesses,” says Ferzad Palia, head of youth and English entertainment at Viacom18.

The network is in talks with brands which want to market to youth and will soon announce the commercial partners. These brands will get visibility on all platforms the outreach programme is present on and across the Viacom18 network.

In December 2015, Zee Bangla, in association with the West Bengal government, launched Egiye Bangla, a start-up reality show. The format was similar to Shark Tank, a reality show for start-ups on the ABC television network in America. Each round had five contestants and each pitched his idea to investors. The latter included Anjan Chatterjee of Speciality Restaurants; Chandra Shekhar Ghosh, managing director of Bandhan Bank, and Ashok Banerjee, a professor at IIM-Calcutta. The show was aired in the 6–7 pm slot on Sundays and launched with 744,000 impressions on television viewers on December 6, 2015, and clocked 441,000 average impressions or TV viewership through the season, according to data from the Broadcast Audience Research Council of India.

CBDT lays down norms for e-assessments

 

CBDTThe Central Board of Direct Taxes (CBDT) has laid down operational guidelines for e-assessments of select non-corporate taxpayers to be undertaken as a pilot in five metros.

 

It has now specified the format and standards for ensuring secured transmission of electronic communication between the taxpayer and the Income-Tax Department.

 

The move comes three months after the CBDT announced its intent use ‘electronic mail’-based communication for assessment.

 

It had then announced that a pilot project would be launched in five “non-corporate charges” at Delhi, Mumbai, Bengaluru, Ahmedabad and Chennai.

 

Non-corporate charges

 

Non-corporate charges are those dealing with assessments of individuals, Hindu Undivided Families and partnerships.

 

Initially, 100 cases would be identified for e-hearing in each of these five regions and a major part of the assessment would be done electronically, the CBDT had then decided. Only cases taken up for scrutiny were to be covered under the pilot.

 

Commenting on the move, Aseem Chawla, Partner, MPC Legal, a law firm, said: “If this IT-enabled exercise does succeed, it would usher in a new era in taxpayers’ interaction with tax department in making the process, simpler, economical and hassle-free.”

 

Amit Maheshwari, Partner, Ashok Maheshwary & Associates, a CA firm, said, “The guidelines allay various concerns of the taxpayers on the scheme and once it’s successful would enable quick percolation across the entire tax department and make it a standard practice. One good move is that the communication status would be displayed to the taxpayer in their online account.

 

“This would prevent missed dates, miscommunications and effective follow-ups.”

 

Vikas Vasal, Partner –Tax, KPMG in India, said the Centre has clarified the procedural aspects of usage of electronic communication regarding paperless assessment proceedings.

 

Saving time

 

“Gradually, the aim is to move most of the communication to the electronic format.

 

“Once done, it would save time and effort both for the tax payers and the tax department.

 

“Also, it would bring in more transparency and consistency in tax positions” .

 

A number of tax simplification measures have been announced by the government recently and more are expected in the forthcoming Union Budget, he added.

 

“If this IT-enabled exercise does succeed, it would usher in a new era in taxpayers’ interaction with the department in making the process, simpler, economical and hassle free”.

 

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/cbdt-lays-down-norms-for-eassessments/article8200085.ece

RBI proposes easier access to foreign capital for start-ups

The Reserve Bank of India (RBI), in its sixth bi-monthly monetary policy statement, has proposed steps to improve ease of doing business for start-ups through easier access to foreign capital and by enabling smoother transfer of ownership. RBI Governor Raghuram Rajan said the central bank wants to simplify the process and will create an enabling framework for attracting foreign venture capital (VC).

“We are supporting the start-up process by making it easier to raise (capital), often from abroad, but also simplify the compliance with regulations, including putting forms online,” Rajan said during the post-policy press conference on Tuesday.

For easing cross-border transactions, RBI has proposed (in consultation with the government of India) that in case of transfer of ownership of a start-up, permitting receipt of the consideration amount on a deferred basis could be done. It has also proposed to enable escrow arrangement or indemnity arrangement up to a period of 18 months.

In addition, RBI has also proposed (in consultation with the government) to permit start-ups access to rupee loans under the external commercial borrowings framework with relaxations of eligible lenders. It is also looking at issuing innovative foreign direct investment (FDI) instruments like convertible notes by start-ups. Further, RBI is looking into the proposal of issuing shares without cash payment through sweat equity or against any legitimate payment owed by the company, the remittance of which does not require any permission under the Foreign Exchange Management Act (Fema).

Harish H V, partner, Grant Thornton India LLP, said these measures are for helping start-ups in their operations and fundraising. “We look forward to further relaxations around convertible notes as promised. These steps, together with the start-up action plan and more initiatives expected from the ministry of corporate affairs and the Budget, should help the cause of the Stay In India and creating value in India… Every step counts,” he said.

RBI said the aim was to enable start-ups, irrespective of the sector, to receive foreign VC investment and also enable transfer of shares from foreign VC investors to other residents or non-residents.

The central bank has also proposed simplifying the process for dealing with delayed reporting of FDI-related transactions by building a penalty structure into the regulations. The notifications/circulars under Fema, wherever necessary, will be issued shortly.

The regulator said electronic reporting of investment and subsequent transactions will be made on the e-Biz platform only. Here, submission of physical forms will be discontinued with effect from February 8.

Source: http://www.business-standard.com/article/finance/rbi-proposes-easier-access-to-foreign-capital-for-start-ups-116020200565_1.html

Foreign firms rush to India’s online marketplace

India’s booming online marketplace business has attracted a new wave of merchants and sellers from countries such as China, South Korea, Japan, Singapore and the US. In fact, thousands of sellers are getting into tie-ups with Indian e-commerce players to kick-start operations in the country.

 

According to industry insiders, around 50,000 sellers from China, South Korea and Singapore are planning to enter India through online marketplace players.

 

“In business-to-business (B2B) segment, there is no online organised player in the country right now. The market is being created for the online businesses,” said Sanjay Sethi, co-founder and CEO of Shopclues. The company has brought in DHgate, the second largest player in China after Alibaba, on to its platform. It’s also getting 25,000 South Korean merchants on board. Tie-ups are also in process with Singapore Traders Association to enable them to sell on Shopclues.

 

American retail major Walmart is also exploring ways to tie up with leading e-commerce companies in India, including Flipkart, Snapdeal, ShopClues, Grofers and Bigbasket. It is learnt that German wholesale giant Metro Cash and Carry is also in talks with e-commerce marketplace players to sell its products online.

 

Meanwhile, e-commerce giant Alibaba is looking to make a big bang entry into India’s marketplace via One97 Communications-owned Paytm.

 

Alibaba is expected to be the support behind Paytm’s China product portfolio. With that in place, Paytm will aim to become the biggest Indian player insofar as the number of sellers on the platform is concerned. With eight million sellers, Alibaba has the widest seller range as well as product portfolio.

 

This is not for the first time that Paytm is planning to sell Alibaba’s product range. During Diwali last year, Paytm had the whole product catalogue sourced from Alibaba and merchants from China were directly shipping products to customers in India, saving Paytm the hassle of finding warehouses.

 

As for the second top player in China, DHgate, online B2B would be a gateway into India and an opportunity to get connected to 350,000 sellers through the Shopclues portal.

 

DHgate plans to list its products across categories, including electronics, accessories, beauty products and sports. “From China we are getting around 10,000 SKUs (stock keeping units) listed. It is not a retail business and the target audience for this business are other businesses in India,” said Sethi.

 

The foreign investment rules vary across retail platforms and companies often resort to complex structuring to bypass policy. While foreign direct investment (FDI) is capped at 51 per cent in multi-brand retail with states having the last say on whether international players would be permitted to operate or not, there’s no limit of foreign investment in single-brand and business-to-business or cash and carry.

 

In e-commerce, however, FDI is not permitted. But, e-commerce players are mostly run with foreign money by operating marketplace platforms, where rules have not been framed yet.

Source: http://www.business-standard.com/article/companies/foreign-firms-rush-to-india-s-online-marketplace-116020100015_1.html