IN WONDERLAND OF START-UPS

NDA government will hold a one day meeting on 23 July , to review the progress made by various States on encouraging Start Ups and to exchange notes on best practices being followed

This comes on the heels of an interview given by Shri Kris Gopalkrishnan ( ex - Infosys ) , where he gave out following statistics on the Start Up scenario , world-wide :

*  Successful in achieving some kind of scale :    10 %

*  Likely to survive ( struggling to exist )       :    20 %

*  Likely to fail and wind up                          :    70 %

Read this in the background of the following news appearing in DNA ( 21 July , 2016 ) :

#  For availing 3 year tax benefits , no of Start Ups which applied to DIPP till July 18, 2016............  728

#  Out of these, applicants who furnished the required documents and got recognized as Start Up.... 180

#  Out of these, number which met the condition of being incorporated after 01 April 2016...............    16

#  Out of these 16 , no of applicants who furnished all the required documents for tax exemption........     3

#  Out of these three , NEW business found eligible for tax exemption...............................................     1

No surprise here , if you read the above in the background of my 6 month old following blog :

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Wednesday, 20 January 2016

START UP RE-DEFINED

No doubt , you have read the definition of a Start Up in the Start Up Action Plan document

I have tried to envisage below, how that might look on that Mobile App for Registration :

*   Is yours a Private Ltd Co / LLP / Partnership  ?...........................................  Yes  /  No

*   Is your Company more than 5 years old ?....................................................Yes  /  No

*   Is your Start Up formed by splitting an existing business ?............................ Yes  /  No

*   In last 5 yrs, has your turnover exceeded Rs 25 Crores ?.............................  Yes  /  No

*   Is your product / service " DIFFERENTIATED "  ?.......................................... Yes  /  No

*   Is your product / service " COMMERCIAL "  ?............................................... Yes  /  No

*  Is your product / service " INNOVATIVE "  ?................................................  Yes  /  No

*  Is your product / service driven by ,

    " TECHNOLOGY  / INTELLECTUAL PROPERTY "  ? ............................................Yes /  No

*  Is your product/service ,

   " NEW / SIGNIFICANTLY IMPROVED "  version "  ?.................... ...................... Yes / No

  

*  Does your product / service add " VALUE " to customers  ?................................ Yes / No

*  Does your product / service add " VALUE " to " WORKFLOW " ?.........................   Yes / No

*  Have you got  CERTIFICATION   from Inter-Ministerial Board ?............................ Yes /  No

*  Have you got  RECOMMENDATION  from Incubator in Post Grad Indian College ?.......Yes / No

MY  TAKE :

#  Each year 12 million persons join India's work force

#  Of these , 3.5 million are Graduates

#  Rest ( 8.5 million ) are 10th / 12th Standard pass or less

#  No more than 1,000 persons will fulfill above mentioned " Eligibility Criteria " for Start Up

#  There will be endless debates on the correct meaning of words in CAPITAL letters above !

WHY  SUCH  STRINGENT  " ELIGIBILITY  CRITERIA "  ?

#  At Rs 2.5 cr loan per Start Up, Govt Fund of Rs 2500 Cr can help only 1,000 Start Ups !

#  Any relaxation in " eligibility criteria " , may result in MILLIONs of persons queue-up !

WHAT  IS  THE  IMPLICATION  ?

#  Funds are just insufficient to help 12 million persons to become " Self Employed "

MY  SUGGESTION :

In India , we are talking of getting " Unemployed " to launch " Start Ups "

Anywhere between 100 million to 400 million " Unemployed " for whom neither Public Sector nor Private Sector , is in any position to create jobs

We want them to become " Self Employed " - what Shri Narendra Modi described in USA , as our " PERSONAL  SECTOR "

They are unlikely to launch technology driven , Web-based businesses , even if their businesses require them to have a Smart phone , on which , their customers can reach them

They aspire to become ( list can run into 200 trades ! ) :

*  Street-side Vendors ( Vegetables / Shoes / Purses / Fruits / Trinkets )

*  Craftsmen ( Plumber / Electrician / Carpenter / Repairer  )

*  Dhobi / Barber / Pan Beedi shop-owner / Tailor / Mochi

*  Doodh-wala / Ruddi Paper-wala / Gajra-wala / Delivery Boy

*  Cook / Maid / Courier / Tuition Teacher / Beautician / Taxi Driver

*  Home-cooked Tiffin Service /  Car wash  /  Gardening ......

How can we help millions of  JOBLESS  to set up such  MICRO - BUSINESSES  ?

By Government ( Central / State / Municipal ) getting out of their way !

HOW  ?

*  No licenses / permits / approvals / conditions / criteria

*  Simple online registration on proposed Web site of DIPP for Start Ups

*  No personal Income tax for individuals

*  No Corporate Income tax for Start Ups for 10 years ( no chance of profit in first 3 years )

*  Amnesty Scheme for enabling Rs 10 million*crores of BLACK MONEY to flow into such

    Self Employment

It is still not too late for our  Policy Makers will think " Out of Box " and implement :

www.hemenparekh.in > Blogs > A New Economic Order - Start Up Act - 2015

Anything less just won't make much of a difference !

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Incidentally , during April-June 2016, some 108 Start Ups got $ 401 million from VC funds( excluding 3 big deals )

( ave of $ 3.7 milion = Approx Rs 25 Crore  = Rs 2500 lakhs , each )

Consider this in light of the fact that none of the " Self Employed " I mentioned above , would need more than Rs 1 Lakh each , to get into " Self Employment " on a footpath near you ! ( Fixed Capital + Working Capital )

That means , money given by VC to just ONE start up could have created 2500 " Self Employed " jobs !

But here is the real eye-opener , as far as these Self Employed is concerned !

*  Successful in achieving some kind of scale          :     0  %

*  Likely to survive (and feeding a family of 4 )       :   100 %

*  Likely to fail and wind up                                   :      0 %

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22  July  2016

www.hemenparekh.in / blogs