Ramesh Abhishek, secretary, Department of Industrial Policy and Promotion (DIPP), talks to BW|Businessworld’s Brij Pahwa about the government’s Startup India Initiative.
Edited Excerpts:
The startup industry today is facing code correction, where investors have become more conscious of their investments. How are the DIPP and Startup India Initiative working to ensure that good ideas and talent meet funds?
One of the major steps that the DIPP has taken in the Startup India plan is to create a corpus of Rs 10,000 crore, including a credit guarantee fund of Rs 2,000 crore. It is being implemented by Small Industries Development Bank of India (SIDBI), which is investing in selected venture funds after rigorous scrutiny. These venture funds will then take equity in the startups so that due diligence for selecting a startup can be done.
What are the specific incentives that you are providing to the budding startups, which come under the DIPP platform?
Three specific tax incentives have been announced in the startup plan. First is the income tax exemption for three out of five years. Second, investment above fair market value is also exempted from tax, while the third benefit is if you invest your capital gains in a specified venture fund then that is also exempted to some extent from the capital gains tax. An additional benefit is that whenever the government makes a procurement, there will be no need for any prior experience or turnover for the startups.
Indian corporates do not spend enough funds in the startup industry compared to corporates in the West. How are you ensuring a reversal of this trend?
As the secretary of DIPP, I have personally written to about 50 top corporates, who are doing a lot of CSR initiatives. We have received a positive response from a large number of corporates.
Getting patents is a huge problem in India, especially for startups. How is DIPP ensuring the ease of doing business for startups?
True. One of our problems has been that the examination and granting of patents, which takes very long. Right now it takes more than five years to do the first examination of a patent application and we are trying to bring it down to 18 months for the startups (a global benchmark) by March 2018.
Tell us about the exit plan you have in place for startups.
One of the problems in the Indian corporate sector is that the exit of companies has been difficult. It takes about three years. To solve this, a new bankruptcy, insolvency law has come into place, which provides for exit to a startup in just 90 days.
Do you see the Indian startup ecosystem on a par with Silicon Valley’s?
We have this vision. As far as talent is concerned, we are not less than anyone. The Centre is giving us support. With all these, we can be on a par with Silicon Valley.
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