The technology start-up industry, faced with several roadblocks due to regulations that predate its existence, had a reason to cheer on Saturday: Finance Minister Arun Jaitley “showed a positive intent” of providing support for the ecosystem.
Even as the sector’s several wishes were not met, the government proposed to set up an innovation fund, Self-Employment and Talent Utilisation (Setu), as a techno-financial incubation and facilitation programme to support all aspects of start-up business. The Budget for 2015-16 allocated an initial amount of Rs 1,000 crore for the fund, which will operate under the National Institution for Transforming India (NITI) Aayog.
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Additionally, the government proposed Rs 150 crore for the Atal Innovation Mission, for Grand Challenges in India.
While details are still awaited, there’s anxiety in the industry over disbursement of and future road map for the fund. The fine prints of the fund are particularly awaited.
Some experts, however, point out that the Setu fund is different from the ‘fund of funds’ set up last year, and say they are hopeful of faster execution of this “more realistic” fund.
The Budget also proposed to ease norms for fund managers to relocate to India, as Jaitley said the government would modify Permanent Establishment (PE) norm to encourage fund managers to relocate to the country. The software product industry think-tank, iSpirt, believes this measure might help “plug the technology start-up exodus from India”.
The Budget also proposed a cut in the rate on income tax on royalty and fees for technical services to 10 per cent from 25 per cent, which Jaitley said was to ensure “young entrepreneur running business ventures or wanting to start new ones” get access to “latest technology”.
"The measure around royalty may not help everybody, but then any move to reduce the burden on younger companies is positive," said Ravi Gururaj, chairman on industry body Nasscom's product conclave.