Six things the government must do to boost entrepreneurship

An early-stage investor who has backed over half a dozen companies including mobile services venture ZipDial and business software maker Hotelogix, Sunil K Goyal now helms, Your-Nest Angel Fund, which invests in early stage companies. In conversation with ET, Goyal, who earlier led the direct-tohome services at Bharti AirtelBSE -1.82 %, lists out six things the government must do to boost entrepreneurship. 

Single window to startup: In an index that measures the ease of 
starting a business in a country, India ranks 173rd. It can inch up the index by ensuring that a single application covers all aspects required to first register a company. With a similar process followed subsequently to obtain mandatory certification for employee benefits including provident fund, gratuity and professional tax. 

Simple norms to shut down: Given the high risk of failure for startups, the procedures for winding-up a small and medium business must also be simplified. Startups must be encouraged to adopt a formal corporate entity rather than the current way of sole proprietorship or partnership firm as the former is more transparent and accountable. 

Startup tax sops: Small enterprises require time to grow into healthy businesses; therefore there is need for concessions in the early days. They should be allowed the benefit of self-regulation and self-compliance with stringent penalties for prevention of potential misuse. Steps in these directions can save valuable time and make them competitive globally. 

Offer incentives for investors: All 
savings of high-net worth individuals goes intogovernment securities, gold, fixed income securities and real estate instead of risk capital. They should be allowed to re-invest their capital gains in domestic venture capital funds in addition to RBI Bonds. Currently, the capital gains from one residential property can be reinvested in another and tax can be saved under Section 54 of the Income Tax Act. Startups require a similar provision. 

Allow 
pension funds to invest in startups: Indian venture funds attract capital from global pension and provident funds and insurance companies. Strangely, Indian Institutions are not allowed to invest even a small portion of their corpus in funds that back entrepreneurial startups. 

Simplify fund inflow from NRIs: It takes months to convince a non-resident Indian to invest in local venture funds. Setting up base here is more efficient and viable for local funds that focus on early-stage startups.