Union Budget 2015: Technology and Innovation

Union budget 2015 is progressive and future-oriented, critics may have their different opinions about this but Mr. Arun Jaitley has already given a good reply by saying “Don’t create an environment where infrastructure and industry become bad words”.

The Economic Survey 2014-15 stated that the year witnessed hyper-growth in the technology start-up and software product landscape with India ranking as the fourth largest start-up hub in the world with over 3,100 start-ups in the country. The Software products and services revenue for 2015-16 is projected to grow at 12-14 %. The survey also added that IT and ITES makes up the single largest contributor to India’s Services exports. It said that IT and ITES sector including Business Process Management (BPM) continues to be one of the largest employers in the country, directly employing nearly 35 lakh people. NASSCOM estimates the revenue of the IT-BPM industry at US$119 billion grew by 12 per cent in 2014-15 with export market alone making up almost $100 billion.

The Startup Village, India’s first PPP model business incubator completed 1,000 days on January 2015, producing a total of 533 startups and creating 2,889 jobs by 2014 end. On average, Startup Village has created one new entrepreneur each day, with the total valuation of the startups pegged at 292 crore.

At least 100 technology start-ups from Kerala could be given a chance to travel this year to the Silicon Valley in the US to learn about the nuances of building a billion dollar tech company further entrepreneurs from Silicon Valley may also visit the Startup Village. On the month of Feb’ 2015 Mayor of Menlo Park Ms. Catherine Carlton visited Kerala and toured the Start-up Village incubator and interacted with the officials and young entrepreneurs after this visit she said “We are extremely impressed by the talent of the youngsters here as well as by the kind of support that the government is extending. We will be very pleased to welcome selected start-ups, possibly 100 companies this year, to Silicon Valley and provide them an opportunity to expand and grow their business there”.

Visakhapatnam will be developed on the model of Goa plus Bangalore to make it a leading startup hub. Visakhapatnam will be the first city to be taken up for development as a ‘smart city’ by Cisco Systems.

Indian startups are emerging as the most productive incubators for entrepreneurs. The intense experience at these firms is giving their employees the confidence and motivation to start ventures of their own. At least 200 new ventures have been founded by employees of Indian startups as of this month, estimates research firm Tracxn. That study finds that mobile ad network InMobi has spawned the largest number of startups (27) followed by e-commerce leader Flipkart (24), fashion retailer Myntra (17), internet domain name registrar Directi (15), and real estate portal Housing.com (14). The phenomenon is similar to that in Silicon Valley; where the term PayPal Mafia was coined to describe the large group of PayPal employees who went on to found other ventures.

Year 2014 saw the largest ever venture capital infused into the Indian startup ecosystem. Both the size and the number of deals were assuring enough for a healthy future for entrepreneurs. E-commerce, consumer web and payments have dominated the funding landscape in the country.

India is ranked among countries with large ground of budding fresh startups though still U.S. and China maintaining its position on the top. India is racing fast towards achieving greater success in the start-ups sector that are of high value to the consumers. Four Indian companies have entered a list of the 73 most-valued billion dollar club of start-ups across the world, based on a survey by The Wall Street Journal and Dow Jones Venture Source. The list includes Flipkart, Snapdeal, Ola Cabs and InMobi. City-based Snapdeal is ranked 30th, with a valuation of $2 billion while InMobi is valued at $2.5 billion, making it the fifth most valued Asian start-up as reported by Business Insider.

Our natural competitor China’s encouragement for mass entrepreneurship and innovation has driven the growth of startups as well as angel investments. Surong360.com, a P2P (peer-to-peer) lending platform for college students and alumni, said it obtained an investment of tens of millions of Yuan in the first week of Feb’2015. It is among a wave of new companies benefitting from angel investment in China.

Although China’s broader economy is slowing, its young entrepreneurs are driving a wave of startups that have become a bright spot for the economic landscape and an important engine for future growth.

Our Union Budget has allocated an initial amount of Rs 1,000 crore to provide support to IT and Tech startups. Mr. Arun Jaitley in his budget session speech has said that “concerns such as a more liberal system of raising global capital, incubation facilities in our centre’s of excellence, funding for seed capital and growth, and ease of doing business etc. need to be addressed to create lakhs of jobs and hundreds of billion dollars in value”, for this he proposed to set up an innovation fund called Self-Employment and Talent Utilization (SETU) as a techno-financial incubation and facilitation program to support all aspects of start-up business. Additionally, the government proposed Rs 150 crore for Atal Innovation Mission for research and development in India.

The budget also proposed to ease norms for fund managers to relocate to India, as Jaitley said the government would modify Permanent Establishment (PE) norm to encourage fund managers to relocate to the country.

Jaitley also said that India has a well regarded and world-class IT industry with revenues of about USD 150 billion, over USD 100 billion of exports, employing nearly 40 lakh people directly. He further said a lot of young entrepreneurs running business ventures or wanting to start new ones require latest technology. To facilitate technology inflow to small businesses at low costs, he proposed to reduce the rate of income tax on royalty and fees for technical services from 25 percent to 10 percent.

With the Indian budget focusing more on growth, ease of doing businesses and encouragement towards youth to work more positively upon their entrepreneurial skills; India is seen rising on business front.

To conclude I would like to quote the tweet of our Prime Minister Mr. Narendra Modi “Atal Innovation Mission & SETU underline our commitment to enable innovation, entrepreneurship & start-ups to grow & shine in India.”