A year ago, the government launched its ambitious initiative for start-ups with an action plan containing 19 measures.
However, the government’s initiative has had an impact on only a small section of start-ups.
What should be done?
Self-Certification - To facilitate ease of doing business, the government promised a compliance regime based on self-certification.
It issued an advisory to states, union territories, EPFO and Employees’ State Insurance Corporation offices not to inspect start-ups in the first year of set-up and, for the next three years, only with the approval of a senior officer.
So far, only 12 states have confirmed compliance with the advisory.
IPR - A fast-track, low-cost intellectual property regime was promised.
Now, a list of more than 400 empanelled patent and trademark registration agents is published, and the government is supposed to pay them for services to recognized start-ups.
However, there are only 1,006 such recognized start-ups that enjoy these benefits.
Innovation - All start-ups, regardless of whether they are considered innovative by the government, should be able to enjoy these benefits.
The government should not get into defining and deciding what innovation means.
Closure - A critical measure to enable start-ups which could go on to fail is the ease of closure.
The rules for voluntary liquidation are still in the works.
They should be released and notified soon permitting start-ups to wind up business within 90 days.
Government Procurement - The government is a huge buyer of goods.
So central ministries and departments should be directed to relax the turnover and experience criteria for public procurement, so as to promote purchases from start-ups.
The government instituted a Rs.10,000 crore fund-of-funds.
So far, there have been only limited disbursements compared to the nearly Rs.16,000 crore start-up funding in 2016.
Also, the details of the promised credit guarantee fund for start-ups are not out yet.
Tax – An exemption from “angel tax” was announced.
But so far only 13 start-ups have been certified for such tax benefits.
