19 entrepreneurs tell Techstory what they want from budget 2016.
Mr. K. Balakrishnan, MD & CEO, Servion Global Solutions
“In this past year, the government has driven several new initiatives such as Start-up India and Make-In-India. The IT and Electronics industry can play a key role in the success of these initiatives and the government should continue to focus on them by providing the necessary incentives, legal/tax framework and infrastructure support. This can provide a boost to the investment towards innovations, thereby creating a vibrant start-up community and new manufacturing investments. The government should also increase investments in improving broadband connectivity as this could have multiplier effect on the overall economy. With further emphasis on Digital India and e-governance, we also look forward to a more digitally rich interaction between the government and consumers, with improved IT infrastructure and increased technology adoption in the country.”
Saurabh Arora, Founder & CEO, Lybrate
“With Startup India, the Government has set the expectation high for the startup community. The announcements made then are worth the appreciation, but there are certain measures need to be revisited and some to be introduced to help entrepreneurial ventures grow and get successful. The government should increase the tax holiday period from three years to at least five years as hardly any startup becomes profitable in three of inception to actually pay tax. Also, profitable startups be charged less corporate tax, for instance 20% against the normal 30%, as they are solving some real issues facing the country. This would leave them with more cash in hand to reinvest in their businesses. Further, the benefit of tax rebate on healthcare expense should be allowed to encompass the entire tax payer class and not be restricted to salaried class. This very rebate should be increased to Rs 5000 a month, which is presently bracketed to Rs 1250, and this should be allowed on online healthcare services as well. This would make more people spend on healthcare, give an impetus to the health-tech start-up sector and result in more revenue generation for the Government. These are some steps government must mull at in its budgetary exercise.”
Aloke Bajpai, CEO & Co-Founder, ixigo
“India is on a high growth path and with the tourism friendly policies of the new government, we hope to see more and more developments. I strongly think that the government should focus more on infrastructure and develop airports and provide better connectivity to smaller towns leading to even faster growth in the travel sector. As against to over 4300 operating railway stations, India has only about 130 operating airports — in comparison to 200+ airports of China, which is spending Rs.78,000 crores this year on civil aviation infrastructure. In order to improve facilities available to tourists, the government should also come up with SOPs for infrastructure investments in travel, tourism and hospitality sectors.
The current government’s focus in the Indian startup ecosystem is very positive and the union budget 2016 must encourage investment in the Indian startup space. We also need a better definition for online aggregators and their taxation norms in every vertical as India houses over 1000 online aggregators across various verticals. The government had initiated the idea of defining online marketplace recently but not much progress has been seen here till now.”
Prof. Sobhan Babu, Professor, IIT Hyderabad and founder of Plianto Technologies
“Giving tax exemption to startups is a good move. But this will not solve the major issue facing by startups, which are building products. Most tenders require bidders to have turnover of few crores in last two to there years. Due to this clause, most startups are unable to compete with established players in bidding process. I am expecting some support from government in this direction.”
Ankur Bhatia, Executive Director, Bird Group and Member, CII National Committee on Civil Aviation
“The Indian aviation industry is on a high growth trajectory and is poised to become the third largest travel market by 2026. The draft aviation policy as well as airport development in tier-I and Tier-II cities is a welcome move in identifying certain relevant aspects affecting the aviation sector. Yet there are several challenges related to complex policies, aggressive price cuts, multi-tiered tax system and infrastructure deterring the true potential of the Indian aviation industry. I look forward these challenges to be addressed in the upcoming union budget. There is an immense growth potential for Indian civil aviation and with the right infrastructure and policies will serve as a key enabler for economic growth, employment creation and tax revenues. It is imperative that success of civil aviation is seen as a national priority, a goal shared by different ministries, government agencies and the industry.”
Rohan Bhargava, Co-founder, CashKaro.com
“India action plan laid by the government has pinned a lot of expectations on what should be done and should not – but now it is time to ensure it walks the talk this budget. Aspects like the fund-of-funds, tax benefits which are great on paper, needs to get implemented. I would like the budget to set out clear and measurable timelines with minimal bureaucratic intervention and not keep it as vague as it is now. Being an affiliate site we hope the government will present a tax policy that will address the complications of the current tax structure faced by ecommerce sites. We also hope that the GST roadmap will be shared in the budget for FY 2016-17.
Finally, we look forward to building an ecosystem which paves the ground for Innovation & Entrepreneurship in India.”
Manish Kumar, CEO & Co-founder, GREX Alternative Investments Pvt Ltd.(GREX).
- Fund of Funds
“During Startup India policy announcement, government announced that it would create a Fund of Funds (FoF) that would invest in private venture capital funds which in turn will invest in startups. We believe it will be good for the FoF to invest directly in the start-up an amount equal to the amount raised by any start-up as it will protect the entrepreneurs from the clutches of VC. This is now possible as they have also defined what is a Startup for the Government recognition sake, thereby, eliminating any large scale misuse of this facility.
Also, the proposed FoF of $1.5 billion will be deployed in tranches over a period of four years viz $400 million year. As per the industry data, last year alone, venture capital investments in India stood at about $1.8 billion. Hence a larger allocation is required to bring about any visible impact on the ground.”
“During Startup India policy announcement, government had proposed of creating the fund of funds’ of about $1.5 billion corpus which will be deployed in tranches over a period of four years. This will definitely provide some boost but we expect a detailed roadmap for its implementation with minimal bureaucratic intervention in the upcoming Union Budget.
Besides equity as a mode of capital, which till date the startups have been used to, government should also explore alternate ways of raising funds like Venture debt. Removal of “angel tax” may be crucial to foster the start-up eco-system in India at a time when banks and venture capital funds are pulling away from providing financial aid to such companies.”
“A startup friendly tax regime is a need of an hour for our budding industry. The government’s announcement during the Startup Policy to exempt startups for three years was a welcome move. Saying that, any disruptive company will not be able to take advantage of these as it takes more than three years for such companies to start generating decent cash. Hence we believe that there should be some threshold limit, once the company crosses the same than they may be made eligible to be taxed.
Also, further tax breaks, both direct and indirect will further pave way for the new age entrepreneurs.
Removal of “angel tax” along with further relaxation on capital gain tax will motivate individual investors to invest in startups, which are considered as the riskier bet, and thus help startups explore funding from individuals other than usual PEs and VCs. This would also enable startups for raising funds as per their needs, bringing down the overall cost of capital for small companies in early days when the government support schemes will mean the most.
We also expect some clarity on contributions to Provident Funds and ESI for both employees and employers.”
- Long Term Capital Gains
“In our view, there exists an anomaly between listed and unlisted space in treatment of long terms capital gains tax. In case of equity shares transacted on stock exchanges, investors are exempted from paying long term capital gain tax after 1 year while in the case of unlisted companies, they have to pay long term capital gains tax even after 1 year which is only exempted after 3 years. This creates a disincentive to invest in riskier assets. Finance Minister should try to bring the earlier exemption benefit to unlisted companies transactions in the interest of investors looking to invest in start-ups. Besides there should be some clarification on whether it will be applicable on investments in an approved startups or any unlisted company exits.”
“Investing in Startups is gaining momentum but there is no organized mechanism for such investors to get an exit at their connivance. To promote risk investing the government should come out with a framework where exit can be provided for such investors. There are several online platforms but broad guidelines for running the platforms will ease the exit process as well as investing in start-ups. This will help create better primary as well as secondary market in start-ups companies along with encourage investors to invest in start-ups who understand the risk of investing in early stage ventures.”
Ms. Geetha Kannan, Managing Director, The Anita Borg Institute (ABI) India
“Over the past year many of the government’s policies and initiatives have been focused on digitization, technology, entrepreneurship, education, skills-development, sanitation and so on. The government has been riding high on drivers that are imperative to the economic and social growth of the country. We are yet to see deliverables on many fronts, but there is no denying that these steps are positive. In 2016 we expect the government to continue this growth orientation.
With more and more women joining the workforce and increasing their contribution to India’s economic status, we would like to propose ‘gender mainstreaming’ for Budget 2016. It is time we integrate the gender perspective to all relevant policies and initiatives, to promote equality between women and men. For example, the government had recently announced a Rs 10,000 crore fund for entrepreneurs during the release of the action plan for the Startup India campaign. Can the government consider allocating 20% of this fund only for women entrepreneurs? This would definitely help in encouraging and growing the number of women entrepreneurs in our country.
The ‘100 Smart City’ is another much talked about initiative and there are many expectations of increased funds for this project. We would like to see a specific focus on women-friendly facilities and infrastructure in the detailed roadmap of this project. There should also be budget allocations and incentives for creating women-safety mechanisms and devices, to ensure safety of our women in these smart cities at all times.
The Digital India initiative needs to have specific plans that will aim to digitally empower more women and girls right from the grass root levels. Year after year our budgets have always included women empowerment and support for the girl child. Our union budget has to get more aggressive on women–specific policies and measures that are lucrative and impactful in encouraging the full-participation of women in all spheres of life.”
Ms. Ankita Tandon, Chief Operating Officer, CouponDunia
“The current government has placed immense faith and hope in Indian startups and digital ventures. The announcement of a $1.5 billion start-up fund during ‘Startup India 2016’ is definitely a boost, though we would like to see how these funds are channelized towards us, and would want a clear and quick way to access them, with minimal government or bureaucratic intervention.
A sure way to help early-stage startups pick up growth would be to increase existing tax exemptions – currently a service tax exemption exists for commissions earned up to 10 lakh a year, this exemption should be extended to commissions earned up to 25 lakh.
Advancement in communication technology and penetration of the internet into Tier 2 and Tier 3 cities will bring in the next wave of digital consumers, and possibly, entrepreneurs, so we would be on the lookout for the budget to concentrate on these infrastructural roadblocks.
As the government is pinning its hopes on the new wave of startups and digital companies to boost employment, a good initiative would be to introduce tax incentives for startup employees, to further encourage the Indian youth to join startups.”
Mr. Srikanth Reddy, Founder/ Chairman, Palred Technologies & LatestOne.com
“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 & mgmt. 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 !”
Mr. Deepit Purkayastha, Co-Founder & Chief Strategy Officer, Inshorts
“To build India a Startup nation and to make India a conducive environment for the development of world-class products and services, we don’t just need entrepreneurs but also need a talent pool of employable and skilled workforce. While it is encouraging to see the movement under the Startup India program, to me it would yield results only when the Skill India program starts working in tandem with it.
To support this, the government needs to make investments towards imparting contemporary skills in Colleges and Universities via Professional Certifications both in technical and non-technical streams. The government also needs to demonstrate some out-of-the-box thinking and involve the participation of private players and trade associations like NASSCOM and IAMAI in executing this.
The other significant area that urgently needs government’s attention is the overhaul of University Incubators. While it is encouraging to see University Incubators being set up across the country in Engineering and Management Institutions, there needs to be more focus on improving the quality of mentoring and the Industry Interface of these incubators in terms of interaction with Successful Entrepreneurs, Enterprise Customers, Investors and Angels Funds. Besides, norms should be eased for Student Entrepreneurs to raise at least seed capital from these Incubators.
The startup community also looks forward to government’s effort on exempting tax on Angel Investments and ESOPs and making way for a relaxed regime for Startups to go public and launch IPOs.”
Mr. Pushpinder Singh, CEO & Co-founder, Travelkhana
“Being an online platform to book meals especially while travelling by train, in this year’s budget, we expect the government to include only the transportation cost in the ticket. Other facilities like food, blankets, bedsheets, etc, should be kept as optional charges while booking tickets online or offline, even for the premium trains. There should be preferences to upgrade tickets based on the availability on paying an additional cost. Also, there needs to be a system to utilize the terabytes of data generated by the Railways everyday for upgrading functions like fuel & energy costs, sources of delay in timings etc. For those who intend to create new startups, the Government must ensure that data is available to them and a separate railway startup policy should be announced as well.”
Mr. Sanjay Sethi, CEO & Co-founder, Shopclues
“The Government’s blueprint for ‘Start Up India, Stand Up India’ has been a true shot in the arm for new ventures in the country. While the taxation angle and the issue regarding ease of doing business in India was addressed in the PM’s speech, the entrepreneurial community as a whole expects GST to become a reality in this Budget session. Additionally, tax incentives for employees who work with start-ups may be a good step forward. Policy support for start-ups that are trying to list themselves with an IPO is another major expectation of companies that have done well and are now looking at further cementing their market standing.”
Mr. Mohit Dubey, Co founder & CEO, Carwale
“The budget is one of the most important tools available to the government to address the current debate on vehicular pollution. In this week’s Auto Expo, car manufacturers have put their best foot
forward in terms of offering hybrids and advanced technology to dramatically increase fuel efficiency. Now it is for the government to do their bit by making these cars highly attractive by offering incentives and rebates. We are also hoping that they will address fuel policy – by moving us to global quality standards as soon as possible and using pricing to encourage lesser polluting fuels, rather than a partial ban on diesel-engined vehicles as is currently imposed.”
Mr. Vipin Pathak, Co Founder & CEO, Care24
“Budget 2016 is highly awaited where everyone is expecting policy level changes to promote growth. At the juncture where global growth is not so promising, everyone is eying on Indian Growth story and we have to leverage this situation. Government has started great initiatives like “Make in India”, “Startup India Initiative”, the budget has to support at monitory, infrastructure and policy level to realise these dreams. Some of the expectation we have is further easy FDI investment norms, licensing and startup support (tax, documentation, licensing, legal). Entrepreneurs should feel protected and supported on ground level to make actual difference.”
Mr. Manu Agarwal, Founder & CEO, Naaptol
“This budget should have some favorable reforms for the emerging industries like e-commerce. There is still a lot of ambiguity with respect to the taxation laws for marketplace companies like ours. I expect this budget to give some clarity on it. Additionally there should be more plans of development of infrastructure. Our industry rely heavily on imports and having good infrastructure and logistic muscle like larger ports and transit systems will help us to get goods faster for our customers.”
Mr. Hitesh Doshi, CMD, Waaree Energies
“Given the rising demand and the fluctuating supply of coal and petroleum products,the Government of India has underlined the vital role it expects the solar industry to play in the country’s continued growth. Boosted by this vote of confidence, the industry expects a clear business opportunity of at least $70 billion in the next five years through sale of solar equipment. Keeping this in mind, there are certain expectations from the upcoming budget that can help the Indian solar industry realize this huge potential.
On the manufacturing front, there must be a push for producing a major portion of the industry’s material requirements within the country.Currently, a major chunk of the Indian solar industry’s requirements is being fulfilled by China owing to the difference in pricing, manufacturing capabilities and insurances.The Government must make similar incentives available to the indigenous manufacturers or implement anti-dumping policies along the lines of USA and Europe. If these measures are put into effect, we envisage a target of at least 60% material production taking place within India, which amounts close to $42 million.This ties in well with the Prime Minister’s ambitious ‘Make in India’ project and will serve to drive the national economy and GDP. Moreover, by decreasing the dependence on imported goods, it will serve to improve the country’s balance of trade quotient.Insurance companies need to step up to the plate and deliver viable schemes for insuring solar panels, while there must also be a dedicated effort made to position India as the global R&D hub for solar power.To achieve this, at least 3 percent of the potential investment made into the solar industry will need to be funneled through for R&D and technology. These measures will revitalize the manufacturing sector, and will encourage it to meet the equipment demands made by the developers.
The development segment, on the other hand, is also in need of an urgent revamp. This can be achieved by policy reforms that are aimed at reinvigorating the sector. One such policy reform that comes to mind is that of depreciation benefits. Currently, most of the projects and tenders relating to the solar industry see no differentiation between the developers who avail the depreciation benefit and those that do not.Making depreciation trad able can address this gap and will lead to more players playing an active role in the solar development sector. This measure will directly result in better competition and improved service delivery”.
Amit Mishra, CEO and Co-founder, Quifers.
“Having recently launched the ‘Start Up India, Stand Up India’ initiative, the upcoming Union Budget is a very good platform for the government to come good on all the promises made to the entrepreneurial community. We are expecting clear and transparent implementation of measures that were outlined during the ‘Start Up India, Stand Up India’ speech in order to give the country’s start-up landscape a big boost.
With tax on capital deducted at source, start-ups often face a lot of issues with capital locking as well as collecting tax certificates. This, in my opinion, needs to be streamlined in order to facilitate a faster growth for early-stage start-ups. One possible way of doing it is to give first year start-ups the benefit of tax exemption at source. Moreover, decreasing the Service Tax by a certain percentage in the first year of their operations will also be extremely beneficial for ventures, as will increasing the service tax applicability ceiling. This will help them in offering better value services and will trigger a much faster growth for start-ups.
Indian start-ups also often face a lot of hurdles in securing investment, particularly during the early phases of their growth. This can be remedied by giving out tax benefits and incentives for early stage investors. This will help establish a much larger, holistic seed and early stage investment ecosystem within the country and will enable Indian start-ups in achieving scale and success.”
Chirag Haria, CEO of Aarogyam Energy Jewellery
“The e-commerce sector in India is moving at a superlative speed today so there should be proper utilization of India Post Rural Network with incentives on Cash on Delivery (COD) orders in Rural India, this will help increasing rural spending. There should also be fund allocation for speedy technology improvement and skill development of India Post for proper encash of e-commerce boom. The upcoming budget should also announce Income tax Benefits for individuals / trust investing in Gold Monetization Scheme to bring down Gold Imports. The upcoming budget should also increase Excise Duty exemptions from 1.5 crore to 5 crore which will encourage small scale manufacturing and prevent black marketing. ”
(Image Credits; freepik)