Letter to FM: Introduce FDI and make the process less time consuming & inexpensive

Dear Mr Finance Minister,

Our startup Cashkaro.com is into the cash-back and coupon business, where there is no licensing required. However, should any business raise funds from international investors, the actual process is extremely time consuming and potentially expensive. I feel that at a time when the government really needs FDI coming into India, SMEs and startups should not have to struggle so much.

Ease the process

Pouring Pounds (which is a UK-based technology and marketing company specializing in cash-back, coupons and loyalty programmes) had raised funds from a few UK-based investors for its India business in September 2013. Since our business qualifies under the automatic FDI route, we felt that bringing in money should be simple. However, understanding the enormous paper works involving lawyers and bankers proved to be a major challenge for us. There is limited information available on government websites, and there is no one to call and clarify questions. It took us six long months, and numerous calls with our bank, and multiple consulting with lawyers to get the process completed.

FDI and GST to drive economy

However, looking at the pro-business sentiments of the Modi government, we would expect 100 per cent FDI in e-commerce in the Union Budget 2014-15. This will be a welcome move, as a stronger online retail sector will drive manufacturing and add to economic recovery. It will also spur competition, and global brands like Walmart, Macy's, Tesco and Amazon can start selling in India instead of setting up a marketplace model.

This means better prices and larger impetus to attract more first-time shoppers. In the long run, it will also boost global investor confidence; perhaps attract investment in more verticals leading to further industry innovation.

Also, I would think the introduction of Goods and Services Tax (GST) will be a good move for the Indian online retail industry. It will remove the roadblocks, bring in more efficiency, ease troubles related to setting up of logistics infrastructure, and help business grow to multiple locations & save costs.

Incentivise early-stage investors

It seems that the new government is very serious about entrepreneurship. So, I would highly encourage the government to explore very successful policies like the Enterprise Investment Scheme implemented in the UK that would give startups tax incentives to investors.

Today, a major challenge that startups and young entrepreneurs are facing is access to funds and seed capital. The VC and angel communities are still small and highly risk averse. So, we would welcome some policies that support startups.

Our policies need to encourage external capital investments that have ripple effects in the economy. Cases like the government's tax dispute with Vodafone severely hamper investor confidence, which India cannot afford to lose.

And finally, India has enormous growth potential and our massive population should be cultivated to our biggest strength. So, deploying taxes towards infrastructure and education is critical. It should not be restricted just to top Tier cities, and should go much deeper and include large parts of rural India that has seen little change in the last several years.

(Rohan Bhargava is the co-founder of Cashkaro.com. As told to Techcircle.in's Nikita Peer)