By Rameesh Kailasam & Dhiraj Gyani,
India is witnessing a surge in technology adoption with momentous changes in the financial and digital landscape of the country including the rise of consumer internet, and tech-based start-ups ably backed by the government’s digital public infrastructure (DPI). Referred to as India’s techade, the rise of numerous successful start-ups, advancements in DPI, and rising investments are hard to miss.
The first 100 days of a new government are always critical for setting the wheels in motion for the next five years as it lays a strong foundation for growth, stability, and policy predictability. With ease of doing business being a central tenet, bridging critical gaps in the regulatory ecosystem becomes crucial to foster innovation and support the growth of emerging sectors. To meet the $1-trillion digital economy target for 2026, several key focus areas have to be addressed on priority.
Start-ups have become the undisputed pillars of India’s techade, having created wealth in and for the country by generating employment and work opportunities, besides ease of access to products and services for consumers. A large number of such start-ups have their holding companies abroad to leverage access to venture capital, beneficial tax structures, market expansion, and international branding. The time is now ripe for India to enable the listing of such holding companies back to India. Dubbed ghar wapsi, the process of reverse-flipping of such unicorns should be incentivised to ensure further wealth creation in India.
The rise of consumer internet start-ups led to an unprecedented growth in the creation of work opportunities for a category called gig workers. While the gig economy offers flexibility and new avenues, there is a need for providing formal social security, implementing the Code on Social Security, 2020, and notifying its rules, taking into account some industry recommendations. Extending social protection and medical benefits to gig and platform workers under existing schemes via e-Shram’s Universal Account Number as the basis for single-identity registration nationwide will help broaden the reach of social security.
GST has been integral to the shift towards one nation, one tax. However, sectors like e-commerce and online travel have had to continuously deal with ambiguities within the regulatory framework, resulting in compliance and procedural burden. The requirement of multiple GST registrations across states, lack of input credits, filing hundreds of returns, and even applicability of GST on non-AC bus tickets bought online need immediate attention. It is time for the government to review them through a GST 2.0 to ensure ease of conducting business besides their simplification.
Talking of ease, electric mobility start-ups in India have ushered in an era of ease of mobility besides providing livelihoods. Aside from climate objectives, accessible, affordable, and safe transportation are essential elements for employment and commerce. Projections indicate a surge in demand for electric vehicles, with annual sales anticipated to cross 16 million units by 2030. An extension of the Electric Mobility Promotion Scheme and the Faster Adoption and Manufacturing (of Hybrid and) Electric Vehicles is necessary for incentivising usage of greener and cleaner energy. This should be accompanied by expansion and diversification of charging infrastructure.
The other aspect of mobility is ease of owning and disposing vehicles. IndiaTech.org’s whitepaper, titled “One Bharat One Road Tax” and submitted to the government, has the potential to reduce cumbersome compliances and open avenues for businesses to efficiently trade and lease vehicles for emerging start-ups in the pre-owned vehicle space. Similarly, start-ups in the pre-owned gadgets and mobile space, which are bringing an informal economy into the formal structure, must be encouraged and supported under PM’s Mission LiFe.
Friendly laws, re-evaluation of regulatory obstacles, and establishing a favourable ecosystem for the growth of start-ups is increasingly necessary. Emerging sectors such as online gaming, AVGC-XR (animation, visual effects, gaming and comics, and extended reality), and VDAs (virtual digital assets) can benefit from such a transformation in India’s regulatory and legal environment.
Everything above is part of Digital India and the quest for a more innovative and inclusive digital Bharat will propel the country to fulfill its $1-trillion digital economy goal.
The government had also proposed the Development of Enterprise and Services Hubs, covered in the finance minister’s 2022 Budget speech; under this the Special Economic Zones Act was to be replaced with a new legislation enabling states to become partners. This is welcome, as it will lead to the removal of several operational restrictions and allow domestic market sales under a proportional duty payment structure. The government needs to include this on its 100-day priority list to ensure broader growth of manufacturing sectors, so as to help replace imports with high-quality, domestically produced goods.
India stands on the cusp of a transformative era, and the first 100 days of the new government can give direction to and empower innovators and entrepreneurs, who will drive economic growth with a forward-looking policy framework.
Authors Rameesh Kailasam and Dhiraj Gyani, are respectively, CEO and senior director (policy & operations) at IndiaTech.org
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