Startups may find it difficult to launch operations

The dream of minimum governance cited by Prime Minister Narendra Modi seems to be defied by the fine print of the action plan on startups unveiled on Saturday.

The dream of minimum governance cited by Prime Minister Narendra Modi seems to be defied by the fine print of the action plan on startups unveiled on Saturday.

Prime Minister Narendra Modi poses for a selfie with the delegates during the launch of "Startup India" action plan at Vigyan Bhawan(PTI)

Experts say entrepreneurs will have to go through numerous rounds in and out of bureaucratic corridors in order to be eligible for tax and other benefits.

“A start-up shall be eligible for tax benefits only after it has obtained certification from the inter-ministerial board, set up for such purposes,” says one of the guidelines in the action plan document. “In order for a startup to be considered eligible, the startup should be supported by a recommendation, in a format specified by the DIPP, from an incubator established in a post-graduate college in India.”

“Though the government should be lauded for the initiative, but will life be simpler for an entrepreneur, the answer is no,” said Sudhir Singh, partner, PWC. “Given the diversity, with lack of clarity, power and internet connectivity, an entrepreneur who stays far away from the post graduate colleges like IITs and IIMs, and has no idea of how to obtain an inter-ministerial board approval will have to take a lot of hardship to take the key benefits. In simpler terms, it will be a lot of hard work for a genuine entrepreneur rising from the grassroots.”

Some of the government officials told HT that normally such boards meet either once a month, or once in two months, which means more rounds in the bureaucratic corridors.

“Given that innovation comes from the youth and common people in remote areas, it will not be easy for them to comply with the minimum government requirements mentioned in the fine print,” said another analyst who requested anonymity. “Availing tax benefits itself has a lot of clauses. It will definitely not be as easy as it was cited on Saturday. Not just this, proving innovation itself to the government will not be an easy task.”