#StartupIndia – Here’s What India Inc Has To Say About Modi’s Startup Action Plan

The Prime Minister, Narendra Modi, today launched the Startup India initiative in New Delhi. The launch by the Prime Minister this evening, was preceded by a day-long workshop on various aspects of entrepreneurship. Modi during his speech said that successful startups are usually created by those who are driven by an idea, or an urge to solve a problem that people face. He said making money is not the primary objective, but is often a by-product. He announced number of policies for the startup community which have already received overwhelming response from the startup community.

Key Highlights

We caught up with a number of people from the startup ecosystem – investors, startups, ecosystem enablers etc., here is a review of what they have to say about Modi’s Startup Action Plan.

Reactions From The Investors

Entrepreneurship evangelist and startup mentor Prajakt Raut  stated , “ The startup plan was very sensibly thought of and measures on tax breaks are welcome. I think that the move to ease procurement norms for startups was a very smart one.  However, I was disappointed that there were no measures to boost the angel investing ecosystem in India. While a lot was being talked about how to make individuals invest in startups, but there were no measures introduced in that regard  in the plan.”

Tarun Davda, Managing Partner at Matrix Venture Partners tweeted his approval terming it as a watershed moment.

Anil Joshi, Managing Partner, Unicorn India Ventures lauded the plan for being the most comprehensive policy announcement from the Government. Anil said, “A big USP of the policy is that in order to foster more startups in India, government has announced initiatives not only to support entrepreneurs but the entire ecosystem which consists of other stakeholders like investors, legal support for startups. I believe there is no stopping the startup boom in the country. There have been specific announcements made which will incentivize domestic investors to invest in startups as a asset class which hasn’t happened till now. The fact that businesses which fail to take off, can close in 90 days is a big relief for the entrepreneurs and even the investors whose money gets stuck in such a scenario. Exemptions in Capital Gains tax and tax on profit, will ensure that during the early days, a startup will focus on innovation more and will be able to invest from the revenue generated from the business.”

Reaction From The Ecosystem Enablers

“It was an unprecedented event! There was a focus on arresting the exodus of Indian startups by resolving the issues set out in the Stay-in-India Checklist. The Stay-in-India Checklist is essentially a compilation of thirty four key regulatory irritants that, in our view, need to be urgently addressed to ensure that the startup ecosystem in India is made congenial for entrepreneurs to stay and build in India. We have been interacting with the government on the Stay-in-India Checklist success October. Our analysis of today’s announcements shows that there is a commitment to resolve 11/12 issues, and assurance to address about 10/12 more in due course. There is no clarity on the remaining issues as yet. Overall, this is certainly a positive start. We hope the announcements are implemented swiftly, and the assurances are converted into official announcements soon. While this is a step in the right direction, a lot still needs to be done,” Sharad Sharma of iSPIRT Said.

Ravi Narayan – Director Microsoft Ventures was pleased with the announcement that exit procedures for startups will be made simpler and faster. Stated Ravi, “This development will allow entrepreneurs to focus on innovation and building their solutions rather than be burdened by the worry of failing and the complex process of shutting down. The exemption from income tax and self-regulation for three years is significant for entrepreneurs focussed on building a company and taking it to the next level. In addition, the tax exemption from capital gains tax is also a good thing which will allow startups to invest more in their business. While the government’s announcement on making patent filing simpler and less expensive is an encouraging step, more needs to be done to make the Indian patents to be recognized internationally. We need to be at par with the international patents (e.g. Singapore or US Patent) for it to be really meaningful for a startup to derive true gain from its IP.”

Ravi also welcomed the government’s efforts in proposing to put together a network of incubators and the Startup India Hub. He also lauded the PM’s statement that the Government wants to be a facilitator and let the ecosystem mentor and grow on its own.

Reaction From The Startup Founders

The slew of reforms announced by the PM has bolstered the spirit of startup founders. The plan normally received favourable reaction from the community. Here is what some of the founders had to say about the policy.

Prafulla Mathur, Founder and CEO, WudStay welcoming the Startup India Initiative stated, “The initiative launched by PM Modi today will surely set an enabling and conducive environment for startups in India. We are overwhelmed to have such support from the Government which will certainly make a big boom in the Indian startup ecosystem to fuel the economy and create new age jobs. The policies announced today at the program, open doors for massive opportunities, boost further investments and innovations. We look forward to implementation of tax framework for startups and how regulations are reduced to help smoother operations.”

Reacting favourably to the 80% rebate on patents and the startup corpus, Sandeep Aggarwal – Founder and CEO, Droom, stated, “PM has inspired the nation today with the launch of the Startup India Standup India mission. His Vision and roadmap synergises with the economic necessities. His keywords business impact, affordable Excellence, innovation, self certification compliance and job creation assure us of sustainable nation building . A new major move is the startup exit policy. An 80%rebate on patent filing and a whopping fund of 10,000 Cr to startups is highly motivating. India needs same magnitude of efforts that created industrial revolution in 1740 and today’s announcement paves way for that.”

Harishankar Karunadhi, Co-founder HackerRank stated, “This is a major step for India in encouraging the huge pool of young and talented entrepreneurs. Its fantastic to see that the government is doing all it can to enable the startup ecosystem. I think the action plan that’s being laid out is very solid and would further foster entrepreneurship in India. I wouldn’t be surprised to see the number of startups grow by as much as 10X over the next few years. I also firmly believe that we are headed towards a more tech-oriented India, and this action plan can be a massive enabler in ensuring this happens.

Co-founder of BoringBrands and Wizikey, Aakriti Bhargava, welcomed the easing of compliance measures. She said, “ Ease of policy in starting up is a great move that puts India on the map for startups to be in India to build for India.  Tax exemptions are the cherry on the cake. We hope to see ease of investments as the next step to build this momentum further.”

Nidhi Agarwal, CEO & Founder, KAARYAH.com said, “Startup India has been a very motivating event that has brought to the fore the power of India’s startup ecosystem. It has also highlighted the ability of Indians to innovate and solve the unique problems that we face in our country. It is heartening to see the government’s resolve to empower and grow the ecosystem. The need of the hour is to put in motion the schemes laid down by the PM. I am confident that today’s event will give more courage to the thousands who have been sitting on the fence to start up and make a difference.”

Rohan Bhargava, Co-founder, CashKaro.com said the initiative is a very encouraging start. said Rohan, “The direction of the plan shows that the Government understands the challenges of a startup. This is shown in the fact that they have addressed taxation, recognised the need for mentorship through the Startup India hub and created mechanisms for providing funding. Increased access to funding was a key expectation from this Plan and the Rs 10,000 Fund of Funds corpus is likely to be a huge support for startups.”

Manish Kumar, Co-founder & CEO GREX  lauded the change in the principle approach of the government towards the economy – that the government wants to stay away from deciding and directing on what needs to be done. Said Manish, “Instead, the Government looks at a policy of arm’s length enablement. This stand is a bold new change in the government policy and disruptive in its own right.”

However he was not happy that venture debt was miserably missing in the ecosystem. But he welcomed the addressal of concerns around notional valuation gains to investors over and above the fair market value and was looking forward to  more details on this front.

Adhil Shetty, CEO of Bankbazaar.com termed it as a landmark stating, “Interestingly, but perhaps unsurprisingly, the mood and expectations of policy measures to be announced at the launch event matched the scale of the event itself. While the need for faster patent processes and startup-friendly tax laws were a common refrain, there was also a palpable anticipation of the enablement of paperless financial services, which could truly democratize the access and consumption of such services. The Action Plan unveiled by the Honourable Prime Minister of India covered a swathe of issues that had bogged down entrepreneurial activity of India. The proposed policy measures ranged from handholding initiatives like the Startup India Hub, fast tracking of patent applications, and setting up of sector-specific incubators and Tinkering Labs, to startup-friendly tax regimes, setting up of research parks, and funding support through a Fund of Funds.”

Radhika Aggarwal, Co-founder & CBO, Shopclues stated her approval by stating that the government has acted like a disruptive startup. Said Radhika, “The policies around cleaning the license raj will be a huge booster for Startup community while both setting up and dissolving a company. Other initiatives such as tax benefits, easy IPR regulations, and government academia will go a long way in making India’s startup ecosystem super successful.”

Ritesh Agarwal, founder OYO rooms, expressed his approval stating, “ The PM announced some forward-looking policies today which will accelerate the momentum in India’s startup ecosystem. It is a watershed moment for entrepreneurs in India. The government’s commitment will help put our start-ups on the global stage.  The array of policies announced today are definitely in the right direction. We have seen initiatives on policies, patents and promotions — all of which will facilitate the ease of starting up. I personally think the initiative to introduce counselling and mentoring at the school-level across the country will have a tremendous impact on nurturing creativity and fostering innovation. We are ready to send our made in India disrupters to the world.”

Shaifali Agarwal Holani,Founder & CEO, EasyFix stated, “ This initiative will give a platform to many enthusiastic but under confident talents to come out of their ordeal. Encouraging privatisation will speed the pace at which India is -developing and we will become a developed country soon.”

Saurabh Arora, CEO, Lybrate, termed the plan as very encouraging, dynamic and invigorating. Said Saurabh, “Measures like single point contact, patent protection, creation of funds of funds and on top of all tax incentives will provide a huge boost to the entire startup ecosystem and propel startups to the next level. The government is very supportive and believes in the tremendous potential of entrepreneurial ventures and how immensely they can contribute to the socio-economic growth of the country. The steps announced will further spur entrepreneurial mindset in India.”

Nitin Gupta, CEO and Co-founder at PayU India expressed, “This marks the commencement of a new and bright future where a new idea is nurtured and supported from all ends. The fact that the PM has emphasised on applying patents showcases his belief in Indian talent and entrepreneurs.”

Sumit Chhazed, Co-Founder, CredR termed the move as a promising and a wonderful one stating, “The start up plan is quite a promising one and we are happy with few initiatives proposed by the government such as tax exemption for 3 years, no inspection for compliance under labour law and starting start- up in 1 day via mobile app. Also the government acknowledges failures to be part of building great startups and promises 90 days exit plan, which is well received by the startup community. Efforts to seed entrepreneurial culture and supporting it through incubation setups in universities should really propel product innovation. Government is looking to accentuate the Make in India and Make for India efforts. Plans to create 1000 Cr fund over next 4 yrs with incentive for tax capital gains to investors would really boost startup risk appetite in the whole ecosystem.”

Krispian Lawrence, Co-Founder & CEO, Ducere Technologies stated, “The government’s initiative to fast track startups patent applications is a very beneficial move to encourage startups. In addition, 80% rebate on patent filing and prosecution deals will allow startups to file and create intellectual properties which in the long run will end up being additional sources of revenue. This will spur product innovations in the country and allow Indian product companies to compete globally.”

Let’s hope these policies will come out for the startup ecosystem!!

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.