What the tech startup ecosystem is looking forward to in the budget

With the Union Budget for 2013-14 just round the corner, Techcircle.in caught up with key players in the nascent Indian startup industry to get their expectations from it. These entrepreneurs and investors share with their thoughts on what needs to be done by the Government to further grow the ecosystem. Excerpts:

Prashanth Prakash, partner, Accel India

Participation of a lot more global funds is essential to build an entrepreneurial ecosystem that can sustain the current startup activity. Positive measures from the government for the e-commerce industry can help bridge the gap between metros and middle India, and create a similar leapfrog opportunity like the mobile revolution.

Sachin Bansal, co-founder and CEO, Flipkart

The implementation of a uniform Goods and Services Tax (GST) will will enable companies to set up the required infrastructure (warehouses, logistics systems, etc.) in strategic locations, resulting in cost savings that can be passed on to the end-user. Investing in infrastructure and enabling more efficient connectivity will provide support to the existing e-commerce industries. The focus also needs to be on business-friendly taxation policies that allow these industries to scale up and expand faster. SEZs for data centre operations would reduce the cost of running these centres, providing relief to smaller companies who are currently forced to run their operations from international centres due to the cost considerations.

Mukesh Bansal, co-founder and CEO, Myntra

The Indian ecommerce industry has already shown tremendous potential over the last 12 months by providing a platform for Indian consumers to access the best products at fair prices while creating employment opportunities across the country. We expect the budget to introduce business-friendly tax measures and implement GST, which will provide strong opportunities for growth across sectors. We also expect the budget to be more progressive, boost infrastructure, especially in Tier 2 and Tier 3 cities and make India a more attractive destination for large foreign investment.

Karthik Reddy, managing Partner, Blume Ventures

We would like Alternative Investment Funds (AIF) Category I and Domestic Venture Capital Funds (DVCF) LPs to be exempt from capital gains taxes. This will give seed/angel/venture capital fund investing a big boost and a level playing field with public markets. Angel investments (if somehow accredited) should also be exempted from long-term capital gains taxes.

The retail industry as a whole (e-com or otherwise) needs to push for FDI norms to be extended to e-com since it is only a delivery mechanism. Large investments can come in beefing up logistics, supply chain as well as payments.

Budgets for innovation led startups should be encouraged in areas like robotics, life sciences, agri-tech, renewable energy and should be released from ministries to more funds that are approved by Securities and Exchange Board of India (SEBI) and can get 75 per cent or more of their capital from private sources.

CSN Murthy, founder, Ozonetel Systems, a cloud telephony startup

We are expecting a collateral-free credit-lending programme, along the lines of Credit Guarantee Fund Trust (CGFT) from banks guaranteed by the government to meet the needs of product startups in India. This will enable entrepreneurs to have access to capital and create innovative ventures, which will then drive employment.

Sanjay Vijayakumar, co-founder and CEO, MobMe Wireless Solutions

We are expecting tax breaks and easier norms for startup investments.

Prashant Kumar, founder, PromptCloud

The current limit of 'no book-keeping' of up to Rs 60 lakh or so for sole proprietorship firms in some sectors should be widened to include small companies from all sectors. Also, there should be tax concession in the money invested by angels in order to encourage the fund inflow in the ecosystem. The government needs to come up with some liberal funding policies to small companies in emerging areas.

Shashank ND, co-founder and CEO, Practo.com

In India, the majority of economic activity takes place in the informal sector. The complexity of opaque taxation policies makes day-to-day operations difficult and creates major hurdles for growth. Therefore, it becomes imperative to enable this resolution that the fiscal policies associated with daily transactions are simplified drastically.

Alok Kejriwal, co-founder and CEO, Games2win

I just hope they make the rules and regulations much simpler for startups. The number of signatures I have to make just to send a cheque to my US employee is ridiculous. Also, startups that have up to Rs 1 crore of turnover should be given a tax holiday. What this means is that there shouldn't be any income taxes or service taxes for the startup, and the employees as well. This will actually attract talent towards the startups, which in turn will improve the quality of the team.

Lakshmanan Narayan, co-founder and CEO, Unmetric Inc, a social media benchmarking firm

We would love to see some tax sops for tech product startups to encourage growth, similar to what was available for IT services companies a decade ago. Global product companies out of India can be the next wave, especially if nurtured well. Investment-friendly policies for tech startups would encourage VCs to invest in high-growth startups.

Kailash Katkar, founder, Quick Heal Technologies

The budget should focus on encouraging software products segment in the country by protecting it from foreign competition in the domestic market. The government should promote Indian software products to develop more intellectual property for India.  Lack of a strong framework in protecting software intellectual property is damaging the overall reputation of the Indian IT industry across the globe. Currently, there is a lack of stringent policies and the government perhaps is overlooking the connection between software exports and Indian software products. A lot can be done to develop an ecosystem in providing strong Indian software products and intellectual property protection. This will not only fortify the Indian software industry, but will also create more patents, trademark, intellectual property and copyrights and increase tax revenues.

Sachin Rastogi, CFO, HomeShop18

The need of the hour is to have further advancements in sectors like logistics and distribution and telecom (3G and 4G bandwidth) which directly impact the performance of e-commerce. Companies should be provided with fiscal sops for setting up logistics and warehousing facilities to enable faster and safer movement of goods and reduce wastage. A uniform GST across states is also awaited to facilitate the movement of goods and hence ensuring faster deliveries. This is very important for players having a pan-India presence.

(Edited by Prem Udayabhanu)