[Budget 2013] Demands of the Indian Entrepreneur


As the noise around Union Budget 2013 increases, everyone is getting their wishlist out. The finance minister of India will be the most sought after person for the next few days. Most thought leaders and industry bigwigs want the budget to rein in inflation, provide for tax regimes and put the economy back on a growth trajectory. The small but growing army of entrepreneurs in our country may still not have strong lobbies to influence the North Block, but they surely have concerns and hopes that they want the Union Budget to address this year. We spoke to a group of entrepreneurs from two of the most vibrant startup cities in India – Bangalore and Mumbai and here is their list of demands from the Union Budget.

T P Pratap, co-founder, QwikCilver.com, Bangalore

T P Pratap, QwikCilver

On IP protection: There should be incentives given to first -gen startup companies focused on unique product IP developments as compared to trading or reselling focused startup entities. Startups with new IP Product concepts don't always have large toplines and profits for the first 5 years. Waiver of corporate taxes is hence not relevant to this sector. Waivers of service taxes on rents paid, lower charges on expenses for electricity, power would help reduce costs of operations and sustain the business longer.

On attracting talent into the sector: Zero income tax upto Rs 10 lakh salary and lower subsequent IT slabs for employees of startups would help startups attract talent with lower cash burns and payouts.

On FDI in eCommerce: FDI in segments that are focused on eCommerce will enable the use and permit single brand as well as multibrand sales.

On incentivizing startups: Indian tech product startups that have potential in global markets should be given additional Incentives. Just as Indian IT services sector has been encouraged over the last two decades. There are various bottlenecks in opening branches in other cities, this should be simplified to encourage tech product startups.

Vineet Devaiah, founder & CEO, Teliportme.com, Bangalore

I wish something can be done about the immigration laws in our country. It is not easy to hire people from the US to work for us. There are many restrictions if you want to hire a foreign national.

V Narayan Raman, CEO, Tyto Software, Bangalore

The taxes that we pay as entrepreneurs don’t make any sense. There are too many taxes with no clarity on what is compulsory and what is not. A lot of startups just end up paying double taxes to avoid any backlash. The finance minister must work on making things clearer for startups.

Gaurav Mendiratta, CEO, Socio Square, Mumbai

Gaurav Mendiratta, Socio Square

On service tax: The current service tax stands at 12.36 % is now passed on to the client, if this is reduced the client would rather spend more on the services we provide. As experts have suggested this might never happen, but having different slabs for different kind of services or slab based service taxes( i.e lower percentage tax on higher spends) based on spends could work well for everyone.

On making debt-raising easier for startups: Debt-raising is always against a collateral, which makes life difficult for an entrepreneur. Today there are investors who would invest mere Rs 5 lakhs and take 5-7.5% equity in a startup. The entrepreneurs may not have a choice as they need this money to bridge the gap between their current state and a larger VC/angel investment. If debt raising was made easier for legitimate start-ups they would not have to sell their own stake so cheap!

Hitesh Mehta, co-founder, Singchana.com, Mumbai

Hitesh Mehta, Singchana.com

On support from banks: Encourage banks to give debt funding at low interest rates /easy-flexible payments balanced with some retro-active compensation etc. Setup minimum limit of collateral free debt for startups bringing innovation and with a potential to reach unexplored markets like rural India as well as international markets. Banks should recognize intangible IP(with or without proof of concept) as a collateral for giving funds to startups.

On policy changes: Government should bring initiatives and frame appropriate policies on the lines of MDA-Singapore to foster entrepreneurship. Encouraging standardisation in Media & Entertainment laws across all mediums will help boost startups like us operating in the space.


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