11 Indian Startup News Stories You Don’t Want To Miss This Week [4-9 Feb]

We bring to you the latest edition of News Roundup: Indian Startup Stories Of The Week!

This week one of the biggest developments for the Indian startup ecosystem was the exemption of angel tax for the startups with a blanket exemption from section 56(2)(viib) providing they submit the self-certified declaration. The Department for Promotion of Industry and Internal Trade (DPIIT) has accepted most of the Working Group demands pertaining to the angel tax exemption.

Here’s a look at the other important developments for the week.

Important Indian Startup News Stories Of The Week

Angel Tax: One Week Of Final Discussions And More

• A survey by IVCA and LocalCircles found that 70% of Indian startups that raised capital have received one or more notices from the Income-Tax (I-T) department.
• DPIIT and CBDT decided to collaborate on angel tax issues by forming a working group which will work together to help get startups exempted upto INR 25 Cr capital, instead of INR 10 Cr.
• After a meeting of Working Group on Friday (February 8), the recommendations accepted by the DPIIT include increasing Startups’ defined age from the existing 7 years to 10 years, likely to define credit investing, similar to angel funding etc.

FDI Ecommerce Policy: The Impact And More

• With the new ecommerce rules in place from February 1, Amazon and Walmart’s have together lost $50 Bn in market capitalisation within four days.
• The Indian Private Equity and Venture Capital Association (IVCA) demanded a rollback of Press Note 2 (issued in 2016) and Press Note 3 (issued on December 26, 2018). As claimed by the IVCA, the guidelines prescribed in PN 2 and PN 3 do not apply to ecommerce ventures started by Indian houses that don’t need to raise external capital or have access to local debt.
• Ecommerce companies such as Flipkart, Amazon, Paytm Mall and Snapdeal are yet to display names, addresses and other contact details of its sellers of the product listed on their platforms as a part of the new ecommerce guidelines.
• Flipkart cofounder Binny Bansal has criticised the changes in the foreign direct investment (FDI) policies in the Indian ecommerce sector saying that these regulations will have an adverse effect on small startups and early stage companies.
• As the marketplaces look for legal loopholes, a few brands such as Bosch, Puma, Dyson, Siemens, BPL and Bagrry’s etc are looking to ensure their products are listed on these websites either directly or through an authorised seller.

Amazon: Saving $5 Bn Indian Ecommerce Investments And More

• Amazon sellers have reportedly cited that they are unable to manage logistics and order deliveries on their own, and some have even reportedly called it quits. This is because Amazon’s FBA (fulfilment by Amazon) sellers, such as Cloudtail and Appario, which helped the sellers in fulfilling orders have now stopped operations due to restrictions, and moreover, there have been no directions on the issue from Amazon.
• Amazon Pantry was offering select food products, such as cookies and tea, in New Delhi and Mumbai. Even though some users could place the orders, others were seen complaining on Twitter for not being able to do so. According to the Reuters report, Amazon was using government permission to sell some Pantry grocery products via an affiliate.
• Amazon India has announced that it does not own any equity in the seller companies. However, NR Narayana Murthy’s Catamaran Ventures has increased its stake in Cloudtail’s parent company Prione Business Services to 76% from 51%, reducing Amazon Asia’s stake to 24% from 49%. Similarly, Appario Retail is expected to make a comeback through the same restructuring route. Appario is a joint venture company in which the Patni Group holds a 51% stake and Amazon Asia Pacific Holdings holds 48%.

Flipkart-Walmart: Is Exit Possible After Change In FDI Ecommerce And More

• Morgan Stanley has indicated that retail giant Walmart may exit Flipkart amid the tough changes the Indian government has brought in with the ecommerce Foreign Direct Investment (FDI) rules. It said that “an exit is likely, not completely out of the question, with the Indian ecommerce market becoming more complicated”.
• However, Flipkart CEO Kalyan Krishnamurthy reiterated the commitment of Walmart to lead the ecommerce sector. By partnering with Flipkart, Walmart has taken a long-term view of the opportunities and hence is unfazed with any short-term hurdles, he said in a letter to Flipkart employees.
• Flipkart-owned fashion ecommerce company, Myntra, has reportedly clarified that it does not own any equity stake in sellers on its platform, as it continues to sell brands through third-party merchants. Myntra has been bringing several new sellers on board. It is learnt that brand such as Chemistry is now sold on Myntra by Wiztech Corp, AKS and Anouk through FashionTech, Mango is sold by WandWagon.

New Draft Ecommerce Policy May Come Soon

The Confederation of All India Traders (CAIT), a traders’ organisation, has said that senior officials from the Ministry of Commerce have said that the new draft ecommerce policy is almost ready and will be announced shortly. The government is examining if it needs to set up a regulatory authority for ecommerce. The Centre will first assess the environment after the ecommerce policy is applied and then take the decision of setting up a regulator, CAIT added.

Video Streaming Platforms Do Not Require Licences From Govt

“The online platforms are not required to obtain any license from this ministry and the content on the online platform is not being regulated by this Ministry,” the Centre told a Delhi High Court bench of Chief Justice Rajendra Menon and Justice V Kameswar Rao. The court also dismissed the plea which has sought removal of vulgar and sexually explicit content from online platforms like Netflix, Amazon Prime Video and others.

Indian Govt Seeks To Keep Tabs On Popular Chinese Social Media Apps

A media report has said that the ministry of electronics and IT has proposed rules for “intermediary” apps, those that rely on users to create their content. The rules also mandate that these companies need to have a senior executive in India who can be reached for any legal issues. The new rules also reportedly call for apps to deploy “automated tools . . . for proactively identifying and removing or disabling public access to unlawful information or content.”

No Dearth Of Funds Says DPIIT’s Ramesh Abhishek

The Union Budget 2019-20 has reduced the funds allocated to government’s ambitious Startup India programme by INR 3 Cr ($418.4K). According to the budget documents, the government, in this year’s budget, reduced the allocated amount to INR 25 Cr ($3.4 Mn) from the revised estimate of INR 28 Cr ($3.9 Mn) in FY19. On Twitter, the DPIIT secretary Ramesh Abhishek tweeted “There has never been nor will be any dearth of funds for startups or any other program. MoF has always been supportive. So no need to worry!”

Delhi HC Upset With Centre For Delay In Draft Epharmacy Rules

In a hearing on Wednesday (February 6), the Delhi High Court was upset with the Centre “on playing delaying tactics” with draft epharmacy rules. The Delhi HC has asked the Central government to submit a status report on the epharmacy rules, at the earliest. It has also asked epharmacy companies to submit their counter-affidavit within the next four weeks.

World’s Largest Insurance Scheme Ayushman Bharat Launches Mobile App

Created by the National Health Authority (NHA), the app was launched on Tuesday (February 6) by PM-JAY’s CEO Indu Bhushan and has already recorded over 10K installations in two days. The app offers users easy access to information on the scheme, besides allowing them to check eligibility, find hospitals nearby, and receive help.

Ola And Uber Added 2.2 Mn Jobs: NITI Aayog CEO Kant

NITI Aayog is of the opinion that a good number of jobs are being created with over 14.62 Mn jobs been created between 2014-18. According to Kant, NITI Aayog is preparing the report in a quarter-by-quarter manner. Between 2017 and 18, close to 7.9 Mn jobs have been created in all age groups, he added.

Other Indian Startup News Stories Of The Week

PCI Recommends Independent Payment Expert To Nilekani Committee

Some of the key recommendations include transactional parity, seamless access to payments infrastructure and KYC bureau, ‘on tap licensing’ and risk-based regulations. Vishwas Patel, chairman, PCI on behalf of the council suggested considering a KYC bureau for the entire payments system owing to technological challenges in the central KYC registry system (cKYC).

Tough Times For WhatsApp, Threatens Exit

• Union Minister of State for Home Affairs Hansraj Ahir conveyed to the Lok Sabha that WhatsApp has taken a number of steps to address the issue of fake news propagated using the platform. MeitY has issued notices to WhatsApp conveying that they need to come out with effective solutions that can bring in accountability and facilitate enforcement of the law in addition to labelling forwards and weeding out fake news, he said.
• WhatsApp communication head Carl Woog  said some of the proposed government regulations for social media companies operating in India are threatening the very existence of WhatsApp in its current form.  According to Woog, proposed changes are not consistent with strong privacy protections that people around the world are seeking.

UPI Transactions Grow To 675 Mn In January 2019

The total transaction volumes for the month of January 2019 over the government-backed Unified Payment Interface (UPI) saw a hike of 8.47%, to 672.75 Mn in January 2019 as compared to 620.17 Mn in December 2018. However, the number of registered banks on UPI remained constant at 129.

Paytm Extortion Case: Roopak Jain Gets Bail

Confirming the news about Jain’s bail, his lawyer Satish Kumar told Inc42, “The bail was granted on January 31, however, they have not received a copy of the order yet.” Meanwhile, Dhawan’s bail plea will be heard on February 13 at Surjapur District and Session Court, Gautam Buddha Nagar, Kumar said.

Ola Relaunches Bike Taxis In Bengaluru

Since its inception, bike-taxis have been fighting stringent regulations in India. In 2016, Karnataka had ruled that bike-taxis as illegal and also seized a few bikes operating under Ola.  Last year in December, OLA entered into a strategic partnership with Bengaluru-based Vogo, a bike sharing network, by investing $100 Mn (INR 712 Cr) in their latest funding round.

OYO: India Growth Amid US Expansion Plans

• The Gurugram-headquartered OYO Hotels and Homes announced its India operations revenue witnessed a jump of 3.5x  to INR 416 Cr ($58.1 Mn) in FY 2017-18, from INR 120 Cr ($16.7 Mn) in FY 2016-17. The company had reported a net loss INR 360 Cr ($50.2 Mn) in FY 2017-18.
•  OYO Hotels and Homes, which has forayed across five hundred cities and eight countries, has announced 4.3x Y-o-Y (year-on-year) global sales growth, with a realised value run rate of $1.8 Bn as of December 2018, from $0.4 Bn in 2017. The SoftBank-backed company said its revenue from global operations is expected to touch INR 1,400 Cr ($197 Mn) in FY 2018-19.
• While the company maintains that it is in the early stages of rolling out its first OYO townhouses in the US, it has already launched four townhouses, 10 hotels with 200 rooms in London in the last three months. The startup will face a stiff competition into the US where the segment is largely controlled by established chains like Best Western, Super 8 and Choice Hotels.

Twitter India Head Summoned After Right Wing Group Protests Outside Twitter Office

Following the protest the Standing Committee on Information Technology summoned India’s Twitter head. The standing committee, which is headed by BJP MP Anurag Thakur is scheduled to examine the issue of ‘Safeguarding citizens’ rights on social/online news media platforms’ next week (February 11).

Spotify Not Worried About Indian Govt. Support To Domestic Tech Startups

Sweden-based music streaming service Spotify is planning to become a strong player in the Indian market, CEO Daniel Ek said during post earning conference call. According to Ek, the growing user interest in Spotify may prove to be a major factor behind this aim.

Paytm Mall Cuts Cashbacks To Strengthen Its Online to Offline Biz Model

Cashbacks have been slashed by more than 80% across its online marketplace categories such as grocery, electronics and fashion. The move is made a week after the company restructured its top management. Paytm’s share of the ecommerce market has shrunk to 3% in 2018.

Hong Kong-based Garage Society Comes To India

It has announced the launch of their first coworking space in Cybercity, Gurugram. The facility is spread over 19,000 sq. ft. with a seating capacity of nearly 300. The centre has been designed to cater to the needs of modern corporates, startups and freelancers.

Techstars’ First Accelerator In India Kicks Off In Bengaluru

The first Techstars mentorship-driven accelerator to be held in India, Techstars Bengaluru Accelerator, kicked off in Bengaluru this week. The programme will culminate on May 2, 2019 with a demo day. The companies that are part of the programme are Ambee, Dcoder, Leucine, Liquid Diamonds,Nira, oDoc, Redwing, Rephrase, and Unifize.

Ola Records 20 Mn Micro-Insurance Policies Per Month

The product was designed to cater to the needs of customers during their cab rides, specifically for city rides and outstation rides on the Ola platform. The in-trip insurance saw acceptance from all age groups with key metros like Bengaluru, Delhi, Chennai and Mumbai registering the fastest adoption growth rates.

Smartworks Sets Up Two New Centres in Delhi NCR

Coworking space Smartworks announced the leasing of two new facilities in Delhi NCR; one on Delhi-Noida Expressway and the other in Gurugram. The two new centres span more than 3 lakh sq.ft. in total with a combined seating capacity of 6500 seats, providing impetus to the company’s aggressive expansion plans. With these new spaces, Smartworks has increased its footprint in Delhi NCR to over 4 lakh sq.ft. spread across 6 centres.

Stay tuned for the next week edition of Indian Startup News Stories Of The Week!