India works on friendlier start-up ecosystem

Making good on Prime Minister Narendra Modi's Independence Day promise of turning India into a start-up haven, the government is expected to unveil a new law to dramatically simplify the procedures governing start-ups and the eco-system under which they operate.India already has the world's fourth largest start-up community but the sector is hobbled by layers of regulations and laws crafted for another era that are completely unsuitable for the companies that are at the cutting edge of innovation.Laws governing setting up of companies, raising funds, getting approvals for foreign exchange payments, taxes, etc, have forced many Indian start-ups to register themselves in tax-friendly centres such as Singapore and Dubai.The new plan to ease the way for start-ups is expected before the end of the year. The Department of Industrial Policy & Promotion will draw up a clear definition of a start-up. These companies will come under the purview of the new law that will make incorporation easier and also ease rules relating to stock options, funding, foreign exchange regulation and foreign loans.Currently, start-ups have to comply with as many as 22 different central, state and local laws, making compliance a nightmare for entrepreneurs. Compare this with the US, where a new company can be incorporated in just a few hours.A senior government official declined to provide any details of the plan being drawn up. “Just watch. Indian regulations in this regard will be comparable to the most progressive anywhere in the world,” he said when asked if the government had any plans of encouraging start-ups to register themselves in India instead of abroad.He, however, added that apart from ease of incorporation and running a business, the new policy would focus on creating jobs. IT industry body Nasscom estimates that start-ups will create 250,000 jobs by 2020, up more than three times from the current level.