Government Says Working on Plans for Major Thrust to Start-Ups

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In a bid to encourage start-ups, the government is taking steps that will exempt them from various rules and regulations till they achieve a particular turnover, a top official said on Thursday.

Lots of start-ups are coming up in the country and there is a need to provide them a conducive environment for their growth, Secretary in the Department of Industrial Policy and Promotion (DIPP) Amitabh Kant said.

“I think the challenge really is that how do we ensure that they (start-ups) do not have to go through any of the government procedures and regulations.”

“We are pushing for that for a particular number of years or till they achieve a particular turnover. These start-ups do not have to go to the very complicated process of company registration or labour registration or going through income tax processes and they keep away from the government and that is something which we are trying to evolve,” he said.

Mr Kant also said India is seeing a huge energy, vibrancy and dynamism in start-ups.

“We have to encourage lot of people to get into manufacturing.”

“Start-ups have to be given a major thrust,” he said, adding, “Our aim is that we should be able to create an ecosystem where manufacturing and young start-ups flourish.”

After ‘Make in India’ drive, Prime Minister Narendra Modi in his Independence Day speech had announced a new campaign – Start Up India, Stand Up India – to promote entrepreneurship.

As per estimates, there are about 3,200 tech-led start-ups in India, with 800 coming on board every year.

Talking about ease of doing business, Mr Kant said the government has taken several steps to improve India’s ranking.

India is currently ranked 142nd among 189 nations in the World Bank’s Ease of Doing Business 2015 study.

With the exception of two parameters (getting credit and protecting minority investors), India does not feature in the top 100 in the remaining parameters.

In ‘dealing with construction permits’ and ‘enforcing contracts’ parameters, India ranks among the bottom 10 economies as per the ranking.

On the report he said, “The World Bank study was based on only Mumbai and Delhi. Now Mumbai and Delhi are not business centres any more, they are commercial areas. Industries have moved out of Delhi and Mumbai to areas (such as) Haryana, Pune, Nashik and Aurangabad.”

“So I think the World Bank study in some way is flawed because of its representative charter being only Mumbai and Delhi,” he added.

Mr Kant expressed hope that, this year India’s ranking would improve in the report. The efforts aim at bringing India into the top 50 ranks in the ease of doing business.

Mr Kant said, “This year, we have listed out 336 points which we have circulated to the states. Last year, it was only 98 points. We are really pushing for competition (among states) this year, so the states start dismantling things (like rules and regulations, procedures and paper work).”

He was speaking at an event organised by industry body PHDCCI.

Underlying that it is a big challenge for India to become an easy place to do business, he said there is a need to improve enforcement of contracts and soon bring out bankruptcy laws in the country.

Bankruptcy law is a needed for easy entry and exit of the companies. “Easy entry and easy exit holds the key,” he said.

As for enforcement of contracts, he said India ranks 186th in the World Bank report out of 189 countries.

He said only Papua New Guinea, Tahiti and Bangladesh are behind India on this.

“42 per cent of contract money is eaten away by lawyers in India. Therefore you need a sound arbitration system and a sound enforcement of contracts. You cannot improve your ranking till you have a good bankruptcy laws and a good enforcement of contracts,” he added.

Speaking at the occasion, Jonathan Kessler, North India Coordinator, Embassy of the US, said the ease of doing business would encourage American companies particularly MSMs to explore business opportunities in India.

Sunil Mathur, CEO and MD, Siemens India Ltd, said that ease of doing business has to be done both by the government and the industry.

“I believe, we are probably not spending enough time on the role of industry in making business easier in the country,” he said.

On enforcement of contracts, Mr Mathur said, “While there is a lot of litigation, frankly a lot of contracts are not getting enforced because people with in the industrial sector are not wanting to take to the contract terms themselves. It is nothing to do with the government.”

In a report on ease of doing business, PHDCCI suggested 473 steps on issues like starting a business, getting power and paying taxes to improve the business environment of the country.

It recommended use of online technology to facilitate clearances and approvals; single window clearance for construction permits; reducing time to get electricity connection; enabling land acquisition for MSMEs at competitive rates and prescribing defined time limit to sanction working capital credit limit and term loan.

On the Companies Act, it suggested removal of provision of imprisonment wherever company defaults in complying with requirements of Companies Act.

“GST to be implemented by April 1, 2016; removal of concept of retrospectively, simple and unambiguous transfer price policy to avoid tax legislation,” it said.

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