When Telecom and Information Technology (IT) Minister Ravi Shankar Prasad met techies in Bangalore last week, instead of seeking incentives for IT services companies, industry representatives unanimously sought policy measures to push the budding entrepreneurship ecosystem in India. It was probably this sentiment that reflected when Finance Minister Arun Jaitley announced a Rs 10,000-crore venture capital fund for start-ups.
Jaitley mentioned “start-ups” at least six times in his nearly two-hour speech and said the fund would act as a catalyst to attract private capital by way of providing equity, quasi-equity, soft loans and other risk capital for start-up companies.
Saurabh Srivastava of Indian Angel Network said the initiatives were “good news for the creation of conducive entrepreneurial ecosystem in the country”. Jaitley also announced plans to devise “an entrepreneur-friendly legal bankruptcy framework” to enable start-up to shut shop if an idea fails to work out.
A National Rural Internet and Technology Mission with a corpus of Rs 500 crore has also been launched, which will enable broadband connectivity at village level, transparency in government processes and indigenous production of IT hardware and software. “There is an need to further bridge the divide between digital haves and have-nots,” Jaitley said.
N Chandrasekaran, CEO and MD of TCS, said for the IT sector, the Budget has provided clarity on some long-pending issues in transfer pricing. “This is a positive start to a long-term process.” Several technology multinationals have millions of dollars stuck in tax litigation and the clarity on transfer pricing should help resolving some of those disputes.
Jaitley has also acknowledged the long-pending demand of the electronics industry to incentivise domestic production. A basic customs duty of 10 per cent has been imposed on telecommunication products, which are outside the purview of the Information Technology Agreement. All components used in the manufacture of personal computers have been exempted from 4 per cent special additional duty, while education cess has been imposed on imported electronic products “to provide parity between domestically produced goods and imported goods”.
BD Park, president and CEO, Samsung India, said outlays for improving infrastructure in ports, roads, airports, “smart cities” as well as education-related initiatives, and the funding model “resonate well with the country’s growth plans”.
A “Start-up Village Entrepreneurship Programme”, with an investment of Rs 100 crore, will also be set up for young entrepreneurs.
R Chandrashekhar, president, Nasscom, said the focus on digital India is “gratifying”. But he added there were some dampners such as CSR spending not being exempt from income tax, no mention of abolishment of minimum alternate tax in special economic zones and the unclear intent on GAAR among a few others.
- Rs 500 crore for rural internet and technology, IT skills training, e-Kranti
- Rs 100 crore for ‘Startup Village Entrepreneurship Programme’
- Tax incentives to boost domestic production of electronics
- To introduce friendly legal bankruptcy framework