Aspects like exemption from inspectors, one day registration process, and income tax exemption for a period of three years can be very helpful for the startup ecosystem.
Given the government’s recent push for startups, Make in India, Digital India and Skilling India, the budget has its plate full in terms of issues to be addressed.
Here are six measures that Finance Minister, Arun Jaitley can explore:
Quick implementation of PM, Narendra Modi’s promises during Startup India programme: Aspects like exemption from inspectors, one day registration process, and income tax exemption for a period of three years can be very helpful for the startup ecosystem. The budget can be a very good opportunity to convert such proposals
into actual policies.
Clarification around the 10K fund: The Rs 10,000 crore fund-of-funds is a welcome step, which incidentally found mention in last year’s budget. The fund is expected to spur the domestic investing community and help develop a home-grown venture funds in the investing efforts.
Regulatory clarity for P2P (Peer to Peer) lending platforms: More people are getting comfortable lending and borrowing on P2P platforms. Alternative lending and borrowing have great prospects with millions unbanked or outside the formal financial structure. However, sectors like P2P and crowdfunding are not regulated and there is no formal policy to govern the area. This leaves the sector vulnerable to unscrupulous operators looking to make a quick buck. The Finance ministry along with RBI should proactively come up with best practices for P2P regulations and the first step could be coming out with some form of policy framework for the sector.
A greater role for P2P – P2P can go beyond just individual borrowing and lending and can be a great source of funds for business. The government should start funding SMEs through P2P lending platforms as in being done in UK.
Tax breaks for P2P lenders: To ensure greater interest in lending, the government should consider giving tax breaks for lenders who invest in SMEs. Success of small businesses can, in turn, lead to greater corporate tax collection, which has the potential to make up for the tax break provided.
DIPP should be a single window coordinator: Department of Industrial Policy & Promotion (DIPP) should morph into a facilitator for startups. Formulation of the Startup India action plan shows DIPP has the wherewithal and the Budget should now formalise it.
(The author is founder & CEO of Faircent.com)
Views expressed here are personal