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Letter to BS: Start-up movement gains traction with much-needed reliefs

The government has shown positive intent in building a favourable ecosystem for start-ups

Business Standard 

tech firms, technology, startups
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This refers to the editorial “Boost for start-ups” (August 19). Though technology start-ups have grown in number in recent years, there is enough scope of the segment to grow manifold, if a proper ecosystem is put in place. Amendments in the Shares and Debentures Rules of the Companies Act, 2013, enhancing the limit for the issue of shares with differential voting rights (DVR) is a welcome step. Another positive aspect of the amendments is that start-ups no longer have to demonstrate three years of distributable profits before issuing DVR shares or launching an initial public offer (IPO). This is a much needed relief for the start-ups that can now manage their funding plans better without bothering about profit figures in the initial years or losing operational control of the enterprise.

By bringing out these amendments and having earlier addressed the issues arising out of angel tax, the government has shown positive intent in building a favourable ecosystem for start-ups. Hopefully, the start-up movement will become big in India, producing many more unicorns.

Sanjeev Kumar Singh, Jabalpur

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First Published: Tue, August 20 2019. 21:10 IST