In a nation where unemployment has been brewing for years and everyone aspires to be an entrepreneur, political parties have tried to hit the right note with voters by promising to support the start-up ecosystem if they win. Both the BJP and the Congress have promised a wide range of initiatives, but startups say the effectiveness will depend on how, and how soon, they are delivered.
In its manifesto, the BJP has promised a seed startup fund of `20,000 crore to back early-stage companies and a scheme to provide collateral-free credit of up to `50 lakh for entrepreneurs, with 50 per cent guaranteed for women entrepreneurs. Besides this, it also promises to help setting up at least 50,000 new startups and 500 new incubators and accelerators by 2024, besides the creation of 100 innovation zones. On the other hand, the Congress plans to create an Enterprise Support Agency and remove angel tax.
Welcoming the announcements, Bhavin Patel, co-founder of LenDenClub, says “over the past few years, the government has been showing interest in fostering startups... The establishment of 500 new incubators and accelerators across 100 innovation zones would help startups with adequate resources, while allocation of funds will also aid companies with risk capital, which is lacking in India right now.”
However, abolition of angel tax is an important ask from the community. “We have had great plans on paper but implementations have been lousy. Angel tax is one which the community still grapples with. We have enough plans, but what is required is a holistic implementation of these plans.”
Founder of startup accelerator The Startup Centre, Vijay Anand, says that they still not got the funds from the StartUp India mission incentives under which included a `10,000 crore fund of funds. However, only `4,100 crore had been allocated as of March 2019, according to the Startup India portal, to around 182 startups.
Start-ups’ success rates also remain a concern, at ten per cent, besides a time lag between commitments and disbursements. “These are investments not grants and take time. For instance, China took four decades to build out their startup ecosystem while India promises to build a world class ecosystem in three to four years,” Anand rues.