The Reserve Bank of India announced its sixth bi-monthly monetary policy review on Tuesday and kept its policy rate on hold at 6.75 per cent, as widely expected.
Keeping up with the Narendra Modi Government’s Start-up India initiative, RBI Governor Raghuram Rajan also said that the central bank will take steps to ease doing business and contribute to an ecosystem that is conducive for growth of start-ups.
“In keeping with the Government’s Start-up India initiative, the Reserve Bank will take steps to ease doing business and contribute to an ecosystem that is conducive for growth of start-ups,” RBI monetary policy statement said.
He also said the central bank will create a special ecosystem for startup funding.
Modi government is keen about creating a best ecosystem for start-ups and is likely to come up with more incentives for budding entrepreneurs in the upcoming Budget.
“These measures will create an enabling framework for receiving foreign venture capital, differing contractual structures embedded in investment instruments, deferring receipt of considerations for transfer of ownership, facilities for escrow arrangements and simplification of documentation and reporting procedures. A detailed statement is being issued separately, ” Raghuram Rajan said.
In the recently announced action plan for start-ups, the government has announced exemption of capital gains tax. But the exemption comes with a rider that such entities would have to invest capital gains in the Fund of Funds recognised by the government.
“Startup India is about Indian Entrepreneur and foreign investor. To ensure that substantial portion of the wealth created through Startup India benefits India, Indian Institutional investors must participate in it. The Indian entrepreneur and management can be suitably rewarded only if the ESOP/Sweat Equity is practical to implement. ESOP /Sweat Equity shares should be taxed when they actually sell the shares and realize profits, not when they are allotted the shares, which is only paper money and not real money yet, ” Srikanth Reddy, founder/chairman Palred Technologies & LatestOne.com on said on Budget expectation.