How start-up economy hums

“Government should make it easier to invest in such companies”

Updated - November 16, 2021 04:11 pm IST

Published - September 28, 2015 01:15 am IST - San Jose:

While Prime Minister Narendra Modi has been in the Bay Area, representatives of the venture capital community here are engaging with him on a range of proposed economic reforms that could make it vastly easier to invest in start-up firms and thus boost the level of entrepreneurship and technology innovation in India.

Speaking to The Hindu, Venktesh Shukla, president of The Indus Entrepreneurs (TiE) Silicon Valley network group, said that Mr. Modi’s trip to Silicon Valley was very significant for several reasons, including the fact that “this is the first time in independent India that a government has recognised that start-ups are the way to generate employment and jobs.”

The government cannot keep handing out jobs, he said, and big companies tend to grow too slowly to generate enough jobs, so the recognition of the role of start-up firms, and “raising this into the national consciousness as a national priority” was important.

Mr. Shukla said the tech community’s hope was that during Mr. Modi’s two-day visit to the Bay Area involving interactions with innovators, he would come away with a clear sense of how the start-up economy works in the U.S., and “what needs to be done differently in India, in terms of the laws there.”

Black money issue One example of the issues arising from the existing laws relates to black money, and the fact that it is possible to simply invest that black money abroad and then bring it back to India as a participatory note investment and also avoid capital gains in that process.

“It is in the nation’s interest not to have that hot money but to have sticky money, which is related to start-ups and the expertise that they bring.”

To this end if it were a national priority to promote start-ups then the government should endeavour to make it easier to invest in such companies, for example, by making it possible for them to issue discounted stock options to their employees.

Further, he said, all start-ups wanted the same thing, including an ecosystem where it is easy to raise money, to hire and attract employees, to not be burdened with high taxes, and in the case of a successful exit from the business the firm should be able to take the money out.

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