Is Providing Incentives to Indian SMBs and Startups a Good Enough Solution?

When we incentivize smaller industries we are also dis-incentivizing them from becoming big -Vivek Anand – Assistant Commissioner CBEC – Dept of Revenue, Ministry of Finance

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SMBs and startups have often seen struggling to comply with the changing government rules and regulations. Something as big as GST, liquor ban, demonetization and VAT can completely shake-up small-business owners due to their complexity and lack of approachability to government authorities.


 Speaking to Entrepreneur, Vivek Anand – Assistant Commissioner CBEC – Dept of Revenue, Ministry of Finance, weighed the merits and demerits of the fluctuating government policies and its grave impact on small-business owners.

Anand said that these policy changes are crucial industry challenges, especially for the SMBs. “If startups or SMBs are failing to adapt to these policy changes I would say it’s more of a fault at the government’s part not on the startups part. However, now the focus has changed and we want to ease the process for business owners,” he added.

Vivek said that small companies don’t have the required amount of money to facilitate government policies, lack the know-how’s of compliances. “India is not a one-market. The logistics decisions are not taken on pure logic.. sometimes they are taken based on which state has lower tax, VAT and other things. But now GST will treat India as one market,” he adds.

Vivek was previously an entrepreneur before taking up his current role with the government.

How do policy changes work?

Vivek said that he was fully in favour of supporting smaller-businesses with easy policy-making as a bulk of India’s GDP comes from this domain. “I would say our policies are still not up to the mark, however they have been incentivized to an extent, which again is important. Somehow when we incentivise smaller industries we are also dis-incentivizing them from becoming big,” Vivek said

We definitely need to encourage smaller business but we need to re-think how we go about doing this. The current regime is working in parts, but it’s still not up to the mark, he adds.

Talking about government-backed funds, Vivek said that the accessibility to these funds depends on how these bodies are managed and governed.

Vivek was speaking on the pros and cons of the GST bill at the Franchise India Conference at Hyderabad.