While the Union Budget 2014 was generally hailed to be a cautious policy document, it has been hailed by the media and entrepreneurs alike as a budget that clearly encourages and spurs on the growth of startups. Making significant strides to make doing business in India easier, more stream-lined and conducive, analysts are hailing the “Big Idea” of the budget to be Startups.
Let’s take a look at the key facets of that Union Budget that every Small Business owner and budding entrepreneur should know:
• Rs.10,000 crore was allocated for the promotion of start-ups whose primary clientele are other small and medium-sized businesses. This was a very specific allocation as it addressed the challenges in funding that these small business face in attracting interest from Venture Capitalists • Rs.100 crore was set aside for an scheme to encourage entrepreneurship in the rural sector
• Small Businesses in the agriculture sector are to receive aid in the form of Rs.200 crore that will fund the establishment of a network of technology centres that promote entreprenueship and innovation
• A further Rs.200 crore funds were also allocated to promote the emergence of young entrepreneurs from underprivileged backgrounds. It was proposed that a committee whose members comprise of representatives from Finance Ministry, Ministry of MSME and RBI will be formed to formulate concrete solutions on how these funds can be spent to encourage this new breed of entrepreneurs.
• Union Finance Minister Arun Jaitely commenting on the nascent entrepreneurship and capital in his budget speech said “Promotion of entrepreneurship and start-up companies remains a challenge. While there have been some efforts to encourage, one principal limitation has been the availability of start-up capital by way of equity to be brought in by the promoters”
• The E-commerce industry received a special mention. The budget promised to tackle several issues faced by e-commerce businesses. The most important being the initiative to create a generalized Goods and Services Tax by year end. This will work to solve issues of taxation and billing faced by both ecommerce websites and consumers in India.
• We have all heard the adage that 8 out of 10 small businesses fail, to address a much awaited demand of startups, the Finance Minister proposed that an entrepreneur friendly legal bankruptcy framework will be set up. This will enable an easier exit strategy for business owners whose companies are not led to complete fruition.
• Other mentions in the 2014 Union Budget included a “District level Incubation and Accelerator Programme” specifically designed to encourage creative and innovative ideas and provide the means to accelerate entrepreneurship.
While hailed a largely favorable budget for Small and Medium Businesses, several entrepreneurs hope that there will soon be a simplification in the processes to set up a new venture and that the government would take a more proactive role in the formation of Small Businesses.