Indian Startups Hail Govt’s Move To Address Hurdles Pushing SaaS Platforms To List Abroad

Indian Startups Hail Govt’s Move To Address Hurdles Pushing SaaS Platforms To List Abroad

SUMMARY

Union Finance Minister Nirmala Sitharaman has said that she will look into the hurdles that push software-as-a-service (SaaS) platforms to list outside

Sijo Kuruvilla George of Alliance of Digital India Foundation (ADIF), an umbrella body representing over 350 Indian startups, said that the core issue here is linked to the ease of doing business in the country

India’s SaaS startups have the potential to gain 7-9% share of the global SaaS market and to gain $18-20 Bn in revenue by next year

Finance Minister Nirmala Sitharaman has said that she would investigate the hurdles that are pushing software-as-a-service (SaaS) companies to list outside. In a session with industry representatives from the Confederation of India (CII) and the Federation of Indian Chambers of Commerce & Industry (FICCI), the finance minister considered the requests and the feedback from various sectors. 

A report suggests that an entrepreneur based out of Tamil Nadu, touted as a hub for the SaaS sector, had urged Sitharaman to purview the issues that will act as a barrier for IT products, leading to value creation. 

Software firm Kissflow’s founder Suresh Sambandam had told Sitharaman that with a $1 Tn opportunity, the SaaS sector can play a key role in the government’s ambitions of reaching a $5 Tn economy. “Despite the changes in the business models, on the taxation front, software is still treated as a consulting service and TDS is being levied on sale of essentially a product and I requested the finance minister to look into it,” he was quoted as saying in media reports.

Reacting to the finance minister’s statement, executive director at Alliance of Digital India Foundation (ADIF), Sijo Kuruvilla George, said, “ADIF lauds the finance minister’s intent and the initiative to understand and resolve the issues forcing tech companies to register abroad. Indian founders having to register overseas has been among the major bottlenecks facing our startup ecosystem. The phenomenon results in the equivalent of a brain drain wherein we, as an ecosystem, lose out on talent, IP as well as tax revenue.”

ADIF is an umbrella organisation for progressive policies for the Indian startup ecosystem, which comprises nearly 350 startups, including Paytm, BharatMatrimony, Innov8 and others.  

George also mentioned that the issue gets further complicated as Indian investors systematically lose out on the opportunity to put their funds in such entities owing to limitations on investing in overseas unlisted companies as prescribed by the RBI guidelines and the LRS (liberalised remittance scheme).

“The core issue is linked to the ease of doing business in India. It is commendable that the Minister has chosen to address this problem and not demonise the founders who have been forced to make the decision to register abroad keeping in mind the best interest of their businesses,” George said. 

This year, several startups have opted for a public listing. Among those opting for a US listing is Girish Mathrubhootham-led Freshworks. It is reportedly targeting a valuation of $9 Bn by raising $798-$912 Mn at the proposed band price.  

According to Bain & Company, India’s SaaS startups have the potential to gain 7-9% share of the global SaaS market. Infact, it is set to gain $18-20 Bn in revenue by next year. Also, SaaS startups such as Zoho, Druva, Icertis and Freshworks have crossed the annual run rate (ARR) of $100 Mn.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
UNLOCK 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
UNLOCK 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

Indian Startups Hail Govt’s Move To Address Hurdles Pushing SaaS Platforms To List Abroad-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

Indian Startups Hail Govt’s Move To Address Hurdles Pushing SaaS Platforms To List Abroad-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

Indian Startups Hail Govt’s Move To Address Hurdles Pushing SaaS Platforms To List Abroad-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

Indian Startups Hail Govt’s Move To Address Hurdles Pushing SaaS Platforms To List Abroad-Inc42 Media
Indian Startups Hail Govt’s Move To Address Hurdles Pushing SaaS Platforms To List Abroad-Inc42 Media
You’re in Good company