Entrepreneurs say these changes will help India's startups flourish and reduce the flight of promising ventures to the US
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With nearly 22,000 startups recognised by the government of India, the country is the third largest home to new tech and tech-enabled ventures in the world. With the economy projected to shrink as much as 7.7 percent in the current financial year due to the Covid-19 pandemic, expectations are high among entrepreneurs for the year that starts April 1 and from the upcoming Budget 2021.
Founders of startups and venture capitalists are looking to the central government to take strong steps to encourage new businesses, which are playing an increasingly important role in the Indian economy. They are building products and services not just for domestic consumption, but also for global customers.
“Our core expectation from the budget is the creation of a level playing field for Indian technology startups,” Vishesh Rajaram, founder and managing partner of Speciale Invest, said in an email to Forbes India. The VC firm offers seed investments to deep tech startups.
Today there is a difference between tax rates levied on capital gains arising from the sale of unlisted shares and the rates levied on the sale of listed shares. A tax parity will give startups an equal chance to attract larger amounts of institutional capital based on performance alone. This will also ensure a fair comparison between the two asset classes, Rajaram said.
In the next wave of Indian startups, many will have deep-technology elements borne out of indigenous R&D and with the potential to serve global markets, Nikhil Ramaswamy, co-founder and CEO of CynLr, said in an email to Forbes India. CynLr makes an AI-driven computer vision module with applications in industrial robotics. Pertinent policy changes to allow startups from India to evolve into multinational brands, including customs exemptions, better access to foreign early-stage capital and easier immigration of foreign nationals with specialised talent to participate in local R&D will be a huge fillip to the startup ecosystem in the country, Ramaswamy said.