The government has been a messiah for the current start-up ecosystem.
The growth of the Indian economy must be harnessed to the fullest as it is necessary to secure and cement its presence in the fourth industrial revolution.
Some of the recent developments for the upliftment of start-ups in India has been showing an upward trend. The initiatives and policies have ensured to put an end to the recurring problem of scarcity of funding.
The Initial Prejudice
Things were never easy, and acceptable by the country’s entrepreneurs and venture capitalists as they felt displeased with the prime minister’s excited Start-up India initiative.
The fiasco reached its peak when the government began slapping tax notices on start-ups and freezing their bank accounts. The most unexpected of these included the unexplainable withdrawal of companies’ funds by tax authorities. Majority of the entrepreneurs cried foul that these actions were intentional and in-line with the angel tax which was attracting over 30% tax, but the government denied any such motive.
Entrepreneurs were a tad disappointed with the proceedings and to make things worse, the hefty penalties for late payment of angel tax were rubbing salt in the wound. Moreover, the penalty in a few cases was exceeding the total amount raised by the firm.
The government amid all these happenings refused to accept any wrong-doing.
There was no respite as the income tax department got into the act of withdrawing money from the bank account of start-ups. The Central Board of Direct Taxes was too quick to dismiss the recoveries due to unexplained cash credit. The affected companies refuted the claims stating irreparable loss incurred by this peculiar act of the government. Nevertheless, it was a dent to entrepreneurship and triggered a series of debate in the form of posts in social media expressing shock and accusing the government of foul play.
The government sensed the urgency in silencing the critics and maintaining their dignity. To instil hope and credibility, the government for the first time raised the cap of exemption from paid-up share capital of up to Rs 10 crore to Rs 25 crore. This decision was a significant foundation to up the ante in the start-up space.
Ever since there has been no looking back as the government was committed to maximising the entrepreneurs in the country.
A steady platform
An ambitious move needs an equally profound effect.
Today, efforts taken by the Modi-led government towards this direction has been overwhelming and widely accepted among the start-up setting. One such initiative, approved by the cabinet, that will favour the cause is the Atal Innovation Mission, a 1000 crore funding to aid start-ups for testing their ideas, get market access and acceptability.
As part of the programme, the government in the process of establishing 100 incubators called ‘Atal Incubation Centres’ would support and assist 5,000 to 6,000 start-ups. Also, besides exploiting the talent pool inherent with innovations is imperative, ranging from school level, college and industry levels. They have also set up the Atal Community Innovation Centres, Atal Tinkering Labs, and Atal New India Challenges to harbour the ideas at the grass root level.
Well, it’s a smart and practical move as it will prove highly remunerative and tackle the unemployment crisis in a broader sense.
In a nutshell, these effective measures will eventually act as a spur to tap the potential from traditional family-run businesses to innovators and entrepreneurs.
An arbitrary decision
‘Too many cooks spoil the broth.’
So far, word of mouth from entrepreneurs has been positive, and that’s a good sign considering the ordeal they had to undergo at the beginning.
The facilitation by the government for start-ups would have unfavourable repercussions. Situations can get murkier as businesses rely heavily on their acceptance and performance. The present companies are cashing in on the technological bandwagon, but it ends there as innovations must be out of the box. Revenue generation rates the longevity of the business, and this ultimately depends on the economy and market. Moreover, not all start-ups can score with their ideas, and the investment will prove futile.
On the contrary, the dual purpose of generating employment can backfire as job security can be at stake. Creating job opportunities is a short-term goal, but sustaining it needs better clarity and vision.
Hope the government is paying heed.