Not just starting start-ups but their winding-up should also be much easier than now if a prolific number of such enterprises were to sprout on Indian soil and flourish, the government was told on Friday, a day before the mega-launch of an action plan on its Start-up India programme.
A veritable galaxy of Silicon Valley leaders invited by the government to inspire local start-ups have also stressed the need for larger and diversified avenues for the budding entrepreneurs to raise capital and tax treatment akin to the one for Mauritius-based entities for US- and Europe-based investors as well.
Most of the 40-odd angel investors and venture capitalists who will be attending Saturday’s event — including Venktesh Shukla, president of TiE, Kanwal Rekhi, partner of Inventus Capital, Ram Reddy, founder of Global Industry Analyst, and Vinod Dham, managing director of Indo-US Venture Partners — met President Pranab Mukherjee on Friday evening. They are scheduled to meet Prime Minister Narendra Modi on Saturday.
Some 70% of jobs are created by start-ups and small businesses in the US where 2% of the population turn entrepreneurs,they said.
So to create a large number of jobs, India needs to focus more on creating a viable ecosystem for start-ups. “Most of the start-ups fail. So if they are not allowed to wind down, not many will come forward to invest in them,” said Shukla. Ease in raising money and adequate credit availability are equally important, he added.
Rekhi said the government should offer tax relief to US investors so that they can invest directly in Indian start-ups instead of routing the funds through tax havens. Currently, most of the investments in start-ups are routed through Mauritius, he added.
Echoing similar sentiments, Saurabh Srivastava, chairman-emeritus of the TIE Delhi-NCR chapter, said in a separate function organised by Ficci, “The government could look at extending debt financing to start-ups, besides creating funds of funds. Start-ups’ access to domestic capital should be enhanced by way of regulatory changes.” He added that the Securities and Exchange Board of India should ease the norms for venture capital investment to boost entrepreneurship in the country.
For example, from 1977 until now, barring about seven years of slowdown, most of the jobs created in the US were by start-ups from Silicon Valley, said Srivastava, who also heads the Indian Venture Capital Association. The Indian government aims create at least 10 million jobs every year for its large youth population.
“Start-ups require help in scaling up, in recruiting and retaining talent and in dealing with the government as buyers of their products as well as provider of regulatory ambience,” said Yogesh Andalay co-founder, Nucleus Software and Polaris Financial Technology.
The proposed one-day brainstorming session for the Start-up India programme on Saturday will have a dedicated panel discussion on “Inspirations From Silicon Valley”, to be moderated by IDG Ventures India founder-chairman Sudhir Sethi. Apart from Rekhi and Reddy, Shalini Govil Pai, senior director of Google and YouTube, Anand Rajaraman, founding partner of Milliways Ventures, and Asha Jadeja Motwani, founder of DotEdu Ventures, will participate in the panel discussion.
As many as 14 sessions of discussions will be held throughout the day before Modi unveils the action plan in the evening. Interactive sessions with global business leaders, including SoftBank founder and chief executive Masayoshi Son, Uber founder Travis Kalanick and WeWork founder Adam Nuemann, will be a crucial part of the event.
Many leaders of Indian start-ups and businesses — including Flipkart founder Sachin Bansal, Snapdeal’s Kunal Bahl and Ola founder Bhavish Aggarwal — will also attend. The action plan is expected to include the definition of start-ups and various incentives to be offered by the government.