The government is in the process of forming a dedicated committee to help promote the startup ecosystem in the country. The committee will comprise leading lights from some of the successful startups as well as venture capitalists. These include Bhavish Aggarwal, founder Ola, Byju Rajendran of Byju’s, and Nandan Nilekani and Kris Gopalakrishnan of Infosys fame, who have made investments in startups. Some of the other names being mentioned for the Startup Advisory Council include Siddharth Pai of 3noe4 Capital.
Without doubt, there will be representation from the government side on this council as well. This broad-based council is expected to hold its first meeting before the Union Budget to be presented to the Parliament on February 1. It will have investors, entrepreneurs and thought leaders, the government says.
Commenting on the background to the formation of this Startup Advisory Council, it is said the idea was mooted at the Global Venture Capital Summit held in Goa and organised by the Department for Promotion of Industry and internal Trade (DPIIT). The Goa government had also helped in organising the event.
One of the suggestions thrown on the sidelines of that event was the creation of a startup focused fund of funds which should be backed by the government. The stakeholders wanted that the domestic pension funds must allocate 1% of their overall assets to alternate investment funds.
There are other demands as well, like tax breaks for creating domestic capital pools.
One of the ideas the Startup Advisory Council will be asked to deliberate on and give its suggestions is the proposal to exempt venture capitalists from capital gains tax if they redeploy their funds into investing in startups. Similarly, they want the taxing of employee stock options, or ESOPs at the hands of the employees only when they sell them rather than when they are allotted.
DPIIT has created what is called a Startup India Vision 2024 which envisages setting up 500 incubators and accelerators. There is a proposal to create a corpus of ₹10,000 crore. DPIIT may want to rope in some of the regulatory agencies like RBI, SEBI into this ecosystem.