ENTREPRENEURSHIP IN INDIA
Entrepreneurship is nothing but being ones own boss.
With the growing monotony and pangs of a regular 9 to 5 job, Entrepreneurship has gained momentum. Entrepreneurship is setting up ones own business by investing ones own savings and wealth. Unlike regular employment, entrepreneurship gives more flexible schedule and higher chances of personal growth to an individual. It has its roots in the era of royal regimes when wealthy families had huge businesses and they were referred as VYAPAARIS. Another branch of entrepreneurship is Start-up, which is a relatively new concept, and a little offset from entrepreneurship. The commonality between the two is that both involve having ones own work/venture. However, unlike entrepreneurship, start-ups usually get funding from outside. For instance, X comes up with an innovative idea to develop or enhance a product or service, he has to pitch his idea to the various investors and if these investors (like Softback, Alibaba) get convinced, they invest hefty amount (in billions) into the Start-up. Thus, for having a start-up business, one need not own the requisite capital. Start-ups can even borrow money from friends and family with a condition of payback or ownership of stake. Few of the earliest start-ups of India are Flipkart and Paytm.
Start-ups, once considered as a bizarre concept, it is now found in every corner of the country. Thanks to MODI government, which is thoroughly advocating it so as to bridge the gap between large scale and small scale companies. For e.g. Zomato and other food delivery apps help out small restaurants to reach out to a larger customer base and thus increase their business. Also, to reduce dependence on foreign establishments and to promote Make In India campaign, thus augmenting manufacturing in India. No business is a one man show. So there is a direct relation between employment generation and burgeoning start-ups. According to Economic Survey 2020, 55 percent of start-ups are incorporated in tier 1 cities and the rest 45 percent in tier 2 cities.
In order to boost this concept in India, the Modi Government introduced the STARTUP INDIA campaign on 15th August 2015. This initiative was brought in to ease out the problems faced by start up like funding and licensing. Under this, PRADHAN MANTRA MUDRA Yojana was launched to provide micro finance and low interest rate loans to budding entrepreneurs from weak economic and social backgrounds. Further, capital gains tax was done away with for first 3 years and mystifying compliance formalities were softened out. Apart from this it also set up Atal Tinkering Labs in various schools across India to stimulate ideas among the young generation.
Many Indian start-ups, largely app-based start-ups (like Ola cabs and Oyo rooms etc.) have been able to get funding support and have become the top notch tech based companies with investors all around eyeing to hold majority stake in them, just how Walmart was eager to take up Flipkart (to compete with Amazon).
India has climbed to the 74th position in the Ease Of Doing Business Index in the past 3 years. Whereas before that, India was no where close to even 100. Discontinuing with restrictions and license Raj, India has seen huge influx of foreign direct investments, being a cherry on the cake for start-ups. In its bid to further aid start-ups, Government came up with schemes like 59 minute loans (Loans were extended to mostly all the emerging business without proper collateral and later, many businesses failed. Thus, unable to repay the loans and poor banks had no security to recover the money advanced. This situation is also a key factor to the ongoing NPA problem of banks). Further government has formed a 10,000 crore reserve to fund start-ups and they are even exempt from income tax for 3 years. Angel investors (those who invest in start-ups during their struggling phase) will also have to pay a reduced tax at 30 percent which will incentivize investors to invest in start-ups. All this will ease out financing for upcoming start-ups.
Continuing in its attempt to propel start-ups, Budget 2020 also has something in store. Finance Minister Nirmila Sitharaman announced the following incentives for start-ups.
— ESOPS in start-ups will be taxable in the hands of employees after 5 years or when they leave the company or when they sell their shares, whichever is earliest. This will make it easy for start-ups to get employees.
— Any start up which is 7 year old with a turnover of 100 crore as against 25 crore earlier can claim 100 percent tax exemption on profits. With this start-ups at middle stage will benefit.
Though, these provisions of budget 2020 are not very striking. Still hoping that many start-ups will do well out of this.