Things That Need to Get Simpler to Ease of Doing Business in India
The last decade has witnessed India becoming more and more conducive for budding entrepreneurs.
After being moved to top 100 out of 190 countries on the World Bank’s Ease of Doing Business Index last October, India has marked a similar success on United Nation’s E-Government Index, is now ranked at 96th position from 118 in 2014. For the country, an improvement of 22 ranks in last four years and 11 ranks in last two years is really a big shot under the Narendra Modi era who has been extremely vocal about digitising India.
The last decade has witnessed India becoming more and more conducive for budding entrepreneurs. Government initiatives like “Startup India” are also encouraging young entrepreneurs venture into uncharted territories. “However, there are more bridges to cross to make doing business easy in India. Some of these include, simplifying tax forms and integrating procedures for registering PAN, TAN, ESIC & EPFO with company incorporation, greater assistance with post incorporation compliances, speedier loan sanction, relaxation of the strict eligibility criteria to register under Startup India initiative are a few things that can help startup founders greatly,” said Archit Gupta, Founder & CEO ClearTax.
For India to aspire to reach the 50th position for ease in doing business, we truly believe digitisation has a major role, and specially for the fintech startup area. “For that the main focus should be on easing the KYC norms. The solution lies in making the adoption of digital payments easier. The KYC norms, although necessary, probably need to be relaxed or made possible to complete without the hassle of visiting retailers,” added Charlie Lee, Founder, True Balance.
The role of a government in the growth of an industry cannot be over emphasised. China and the US are great examples in this respect. Their ecommerce policies, along with their large economies, have allowed them to create some of the world’s most powerful technology companies. “The Indian story is coming of age and the current discourse at WTO and other forums has precipitated an urgent need to formulate a comprehensive eCommerce policy that will become the basis for our global position on ecommerce. India’s existing eCommerce policy, as represented by the IT Act, FDI policy, etc, although reasonably clear in its intent, lacks comprehensiveness, interdepartmental coordination and enforcement muscle. We do believe that a change is on the anvil, and we hope to see an ease in doing business in the near future,” mentioned Sanjay Sethi, CEO, Shopclues.
Whereas great initiatives have been undertaken that have eased setting up of companies, and single window clearances, etc; one major cause of concern is ease of access to funds. At an early stage, startups rely on angel investors to fund their seed/ early growth stages. “The Angel Tax has been a highly contentious and controversial tax, wherein amount raised above "fair value" of a business is taxed as capital gains (30%). This is an issue because startups are often valued subjectively on the basis of discounted cash flows and is open to interpretations. This leaves startups having to justify the "fair value" to the taxman, where they may not have the wherewithal or time to do so," stated Tejas Paruleka, Founder, SafffronStays.
There is no doubt that Gov have come a long way in helping businesses thrive. However, to keep moving forward the government must consider simplifying the GST slabs; minimizing the bureaucratic processes by creating digital applications and automatic review processes; providing clarity in the current regulatory framework, for example with respect to the bankruptcy code or the foreign investment regime, to name a few, highlighted Shashank Bijapur, Founder, SpotDraft.
Sachin Jaiswal, CEO & co-founder, Niki.ai also expressed that Govt should create more mandates to accelerate developments on emerging market segments (case in point Chinese govt has mandate on electric vehicles and artificial intelligence that have national importance) - this could create more interest in all stakeholders to strengthen the ecosystem.
With recent landmark bill “GST & IBC Insolvency Act”, the government by and large is focussed on improving & streamlining the industrial ecosystem in India to facilitate a stronger yet less cumbersome process of doing business. “The next set of initiatives which will build on the current momentum should include a strong focus on small & medium scale enterprises, as they are going to be the major growth driver for our economy,” specified Pankaj Bansal, CEO & Co-founder, Peoplestrong.
Also we need to embrace failure, and promote entrepreneurship by encouraging risk taking spirit. The policy framework should make it easier for businesses to come back from failure, mentioned Karanpal Singh, Founder, Hunch Ventures.
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