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Startups suffer as angel funds plunge 53% over knotty tax rules: Nasscom

According to Nasscom, the mortality rate of start-ups in India is 30% to 35% every year

Press Trust of India  |  Bengaluru 

Raman Roy
Raman Roy

Complicated rules are hindering the growth of start-ups as the angel are being muted, National Association of Software and Services (Nasscom) chairman Raman Roy said in Bengaluru on Thursday.

He was speaking to reporters at the launch of the 2017 edition of the report on the 'Indian Ecosystem - Traversing the maturity cycle', released on the sidelines of the annual flagship Na Product Conclave 2017.

According to Nasscom, the mortality rate of start-ups in India is 30 per cent to 35 per cent every year. In the last five years, 5,000 start-ups were launched, including an addition of 1,000 such ventures this year.

Roy said, "Angel issues are the primary issues in what we are picking up. As an angel investor, I have 60-plus investments in the world. (In) Some of my investee companies, the guys coming back and saying that this is not an investment and this has to be taxed as your in your (account) head..."

"... And the founders of those start-ups are running up and down tax office rather than doing their work."

He said the early stage funding is up by 83 per cent and the growth stage (funding) is up by 23 per cent. It is the only angel stage funding that is down by 53 per cent, Roy said.

president R Chandrashekhar emphasised that this issue is critical because the start-ups are the seeds of future.

"If we don't have those seeds then the future is jeopardised. This is the reason we believed that this is an important issue we need to flag. It was an urgent issue, which has now become critical," said Chandrashekhar.

authorities believe that India provides the third largest ecosystem across the globe and Delhi, Mumbai and Bengaluru have emerged as one of the most preferred places for start-up

Another interesting aspect, according to Chandrashekhar was the resurgence of contract manufacturing, which is helping in curtailing the production cost.

"The contract manufacturers are getting global. They are not only doing contract manufacturing for start-ups in India, but also for global start-ups," said the president.

First Published: Thu, November 02 2017. 19:24 IST