Make in India: DIPP looks to include micro, small and medium industries in startup definition

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A clear definition is imperative for the government to decide which companies can draw the benefits of any scheme for startups.

The government is considering a proposal to include micro, small and medium enterprises (MSMEs) in its definition of startups to help boost the Make in India campaign. Various government departments have held a series of brainstorming sessions to discuss the definition so that the policy can be formalised. A clear definition is imperative for the government to decide which companies can draw the benefits of any scheme for startups.

The Department of Industrial Policy and Promotion (DIPP) is spearheading the exercise of formulating the startup policy, along with ministries such as finance, skill development and MSME among others. The Start-Up India initiative is scheduled to be announced by Prime Minister Narendra Modi in January 2016 and the policy needs to be finalised by then. Progress on the initiative is being monitored directly by the Prime Minister’s Office. India wants to create an ecosystem that encourages entrepreneurship and is collecting suggestions from the startup community for steps that need to be taken to ensure that the Start-Up India initiative is a success.

Including MSMEs, collectively one of the biggest employers of people in India, is seen as positive for manufacturing and therefore employment generation, key aims of the Make in India programme. Officials are also discussing specific criteria that would make an MSME eligible to be called a startup. This would determine eligibility for incentives such as fewer compliance conditions, cheaper credit and tax benefits.

“Defining (startups) is the most complex issue. It involves technology companies MSMEs and so many other sectors. We should be able to finalise something soon,” a senior government official said.

To qualify as a startup, an entity would also have to meet certain financial standards besides having a level of innovation in its product or service. “It is better to have a broader definition of startups, so MSMEs and tech-based startups can both take advantage. The moment one leaves things for interpretation, corruption will seep in,” said Gaurav Kachru, founder, 5ideas Startup Superfuel. Startups are expected to create 250,000 jobs in India by 2020, up from 80,000 now, according to a Nasscom report. The Start-Up India initiative announced by Modi in his Independence Day speech assumes significance given the thrust by the government toward employment generation.

Economic Times View: Start Up On the Ease of Doing Business Front

A wider definition of startups should broad-base attention across industries. In tandem, we need to boost knowledge-creation, innovation and entrepreneurship to better coagulate resources for startups. Otherwise, we will fail to develop a thriving ecosystem, complete with conducive state policy support. In parallel, we need suitable tax treatment and attendant rules so that startups do not see the need to go abroad to do business here in India. We need ease of doing business with the startup economy in mind

 

Source:http://economictimes.indiatimes.com/articleshow/50179566.cms

 

Modi government to provide launchpad for disruptive ideas: Startup Act in works

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The Narendra Modi government wants to provide a powerful launchpad for startups by drastically simplifying the rules and ensuring that innovators are able to take advantage of such an enabling environment, thus unleashing entrepreneurial energiesBSE 1.29 % and creating jobs.

At the heart of the initiative is distilling the cumbersome process of compliances under 22 different laws into a two-page Startup Act, a senior government official told ET. The Department of Industrial Policy and Promotion (DIPP) is looking to turn India into a startup haven.

It plans to cut through the thicket of regulations that holds back creativity and stunts the rapid evolutionary cycle that’s a feature of the sector.
“Compliances are a big issue for aspiring startups,” said the official. “We are trying to see whether we can bypass the multiple laws and draft a separate legislation instead.”

Already home to the fourth largest startup community in the world, India wants to create a robust ecosystem in which entrepreneurship can flourish as envisaged by the Startup India, Stand Up India initiative of Prime Minister Modi announced in this year’s Independence Day address. Jobs created by Indian startups are expected to rise to 2,50,000 by 2020 from 80,000, according to a Nasscom report.
The government plans to unveil a detailed Startup India plan next month. The DIPP is drawing up a clear definition for startups to ensure that the regime is available only to companies that practice innovation. This is necessary because the government is also considering tax incentives for startups, which it doesn’t want other companies to take advantage of.
Companies that qualify for the tag are likely to be less than five years old, providing an innovative product or service. They will also need to conform to financial norms to ensure that the incentives are not spread too thin.
The new policy will address delays in incorporation, employee stock options, lack of initial funding, cumbersome Foreign Exchange Management Act (Fema) documentation and access to external commercial borrowings.
“It will be a colossal help if the government can do something about this,” said Rohan Malhotra, founder of Investopad, a startup incubator and financing company.

“In the US, you can incorporate a company in a few hours. In India, it is a nightmare to do even basic administration work.” Entrepreneurs feel their energies are sapped by the need to negotiate their way through the bureaucratic maze.

“Most startups have a backlog on compliances and simply get a professional to handle these matters when they want to raise funds,” said Gaurav Kachru, founder, 5ideas Startup Superfuel. “Some of it is a waste of time.”

Last week, DIPP held discussions with leaders of the startup community including SoftBank president Nikesh Arora, Snapdeal CEO Kunal Bahl, Oyo Rooms founder Ritesh Agarwal and former Infosys director Mohandas Pai to draw up a list of action points.

SEBI cuts IPO paperwork drastically

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From December 1, companies filing for a public issue of securities (IPO/FPO and the like) have to come out with abridged prospectus containing all material and appropriate information on the issue to enable informed decision-making by investors.

Amending its public issue regulations, equities and commodities market regulator SEBI said the abridged prospectus should consist of five sheets of paper printed on both sides in A4 size booklet form.

SEBI has mandated that information given in tabular format should not be repeated in text format in the abridged prospectus. The abridged prospectus would also contain the application form in a manner by which tearing off the application form would not mutilate the prospectus, SEBI said.

Generic information not specific to the issuer shall be brought out in the form of a General Information Document, said SEBI.

Start-up investments in India to see three-fold rise to $6.5 bn in 2015: Nasscom

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NASSCOM President R Chandrashekar (C), Chairman NASSCOM Product Council Ravi Gururaj (R) and Vice President NASSCOM 10K Strart-up Rajat Tandon releasing the second edition of the start-up report

India will witness about $6.5-billion (Rs 42,300 crore) funding in start-ups this year, as global investors look at investing in firms that build products and solutions for the local market, while using them for emerging markets in Asia, Africa and Latin America. India is the world’s third largest start-up hub.

Global private equity (PE) and venture capital (VC) firms spent $2.2 billion (Rs 14,300 crore) in 179 Indian start-ups in 2014. Till October, these firms doubled their investments to $4.9 billion (Rs 31,900 crore) and expect to increase them to $6.5 billion by the end of the year, according to industry body National Association of Software and Services Companies (Nasscom). Indian start-ups that received funding doubled to 400 in 2015, said a Nasscom report, released during the product conclave that began Tuesday. The report added investors had reaped returns in 2015, with exits touching $700 million.

India sees four start-ups emerge every day. Those who get funded get an average valuation of $2.7 million and nearly two thirds of them are concentrated in Bengaluru, Mumbai and the National Capital Region.

The number of start-ups in India is set to cross 4,200 by the end of 2015. About 1,200 technology start-ups were incepted in India this year, of which more than 50 per cent were in the e-commerce, consumer service and aggregator space. Unlike in the West, a majority of the Indian start-ups were focused on solving community problems using technology solutions in health care, education, social platforms, hyper local services and analytics. “Apart from positively impacting the lifestyles of citizens involved, start-ups are creating innovative technology solutions that are addressing the key social problems that India is facing and creating significant growth opportunities for stakeholders,” said R Chandrashekhar, president of Nasscom.  There are about 292 active angels and 156 active VC and PE players in the country.

The number of active investors has more than doubled from 220 in 2014 to 490 this year. Eight of the top-10 investing PE, VCs in India is foreign.

The number of accelerators and incubators has grown by 40 per cent over 2014 to touch 110. India has also emerged as the youngest start-up country with the average age of start-up founders at 28 years.

The second edition of 10,000 Start-ups Report has also accommodated a 10-point agenda for the government to cultivate the start-up culture of India,including definition of start-ups, taxing rules, regulations in terms of funding, online payments and branding.

Source: http://www.business-standard.com/article/companies/start-up-investments-in-india-to-see-three-fold-rise-to-6-5-bn-in-2015-nasscom-115101300983_1.html

STPI to sponsor over 100 start-ups for CeBIT show

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To promote domestic start-up companies, state-run Software Technology Parks of India (STPI) will sponsor over 100 such new age IT firms during the three-day CeBit India exhibition, which is scheduled to begin from October 29 in Bengaluru.

“We are collaborating with CeBit to promote start-ups. Last year, we sponsored 127 start-up companies and looking for similar number this year as well,” STPI Director General Omkar Rai told PTI.

He said that STPI has written to states for nominating best start-up companies from their territory and they will be then shortlisted by STPI.

“Start ups are not required to pay anything. STPI will spend around Rs 50 lakh… Around 10 start-ups were able to make to the show in Hannover where Prime Minister Narendra Modi had also visited,” Rai said.

Hannover Milano Fairs organised CeBit show in Germany.

Around 450 firms are expected to participate in CeBit India, which included major participation from STPI, Hannover Milano Fairs India Managing Director Mehul Lanvers-Shah said.

“We are expecting 10 per growth in CeBit India participation and even we are seeing traction from foreign companies. Last year 25 countries participated in the show. This year we have 27 with participation increasing from Taiwan, China, Germany and Canada,” Shah said.