How Fixing These Government Policies Could Benefit Startups

Have initiatives like Startup India attended to these woes of startups?

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The government has overwhelmingly acknowledged and supported the mushrooming startup ecosystem in India. However, industry experts still believe that there continues to be nuts and bolts that need to be fixed in the ecosystem in order to carry out business at a faster pace.


Initiatives like Startup India being flagged off by the government of India in 2016, has provided enough meat of encouragement to young entrepreneurs to come on board. However, industry experts believe that apart from such encouragement, amendments in policies is also a key requisite to make things simpler for entrepreneurs and investors.

Siva Ramakrishnan, Finance Director at Venture Factory, believes that the need of the hour is to break the dependence of startups on foreign funds. “The government, with support from regulatory bodies, should focus on allowing banks, insurance companies and pension funds to invest a bigger percentage of their corpus in domestic VC funds and incubators. Instead of setting up funds the smarter thing for the government to do would be allow startups access the existing pools of funds in private sector. More tax sops could be provided to these investors to further sweeten the deal,” he said.

In our previous budget, Minister of Finance had sanctioned a tax exemption for startups in the first three years of its inception.

Preference to Indian Product companies

Mohan Kumar, partner at Norwest Venture Partners said, “One is procurement policy for Govt tenders especially software, should give preference to software product startups ( or more broadly Indian product companies ) . This can be done using extra Bonus points in the technical score. Today many of those bids are won by multinational product companies like Oracle, Microsoft or SAP partnering with Indian IT majors like TCS, WIPRO.  Since the multinational product companies have global SI relationship with Indian IT majors, the Indian IT majors are either arm twisted or do not promote an Indian software product company in Govt bids.  We want to be a software product nation in next 10 years, we have to learn from Chinese and not only remove the handicap but actively encourage local companies. Government or Quasi Government departments will be the biggest spender of IT in next 5-10 years.”

Zaheer Adenwala, Co-Founder & CTO at Ketto said, “I think the payments system in India is still extremely flawed. As a crowdfunding platform, our aim is to help as many individuals as possible who are in dire needs of funds. Most of this goes towards medical bills which saves lives. People from all over the world should have the flexibility to help causes close to their heart. However, due to many vague SEBI/RBI guidelines, accepting and disbursement of money collected from outside the country becomes very difficult thus resulting in high transfer charges and poor customer experience”

Apart from these specific terms, experts have also pointed towards tax incentives for foreign investors and lengthy documentation work as other things that are often seen as hurdles by ecosystem.