Partners Column

Dear friends Last couple of months the Central Government has been focusing on clearing pending legislative agenda by taking few actions on ease of doing business and issuing number of circulars to remove difficulties in compliance of Companies Act, 2013. Effective 1 May, 2015 with a single filing, Incorporation can be completed (obtaining Director Identification Number, name availability,  Incorporation, obtaining Permanent Account Number with the income tax department) and is expected to reduce time frame to few days from the current timeline of 25-30 days.  Cabinet has also approved:

• the dispensation from filing of Commencement of business.
• rationalizing the procedure for laying draft notifications and granting exemptions to various classes of companies or modifying provisions of the Act in Parliament, in order to ensure speedier issue of final notifications.

Once these amendments are carried out, it would be quick for the government to bring in needed amendments. Goods & Services Tax (GST) – Government is moving constitutional amendment for bringing in GST and is confident of rolling it out from 1 April 2016.  Everybody’s hope is that this will simplify things and add 1% or 2% to GDP growth rate. The major concern based on the current discussions is that  the rate proposed is 27% as against an original proposal  of 12%. Also the final form in which its going to come is likely to be significantly different from  original discussion paper, hence government should release draft framework document for brining in awareness and preparedness. Startup Listing Platform – SEBI issued a discussion paper to create separate platform to list startups in India with lot of relaxations and intends to attract lot of companies getting listed outside India. This is a great and timely move by SEBI where Indian entrepreneur ecosystem is at its peak drawing private capital and investors across globe.  Am not sure as to how far SEBI would be successful in attracting startups. The reasons for lot of startups getting listed / formed outside India include:

• Risk appetite of investors in India for the IPOs  is far less.
• Valuation – Indian markets cannot give the valuation that can fetch them in developed markets.
• The product and services that are being offered are to the global community hence waned to list globally recognized markets.
• Ease of doing business including transparent tax mechanism.
• Solid IPR protection.
• Incentives to startups like in Singapore, UK etc.,

Lets hope in few years India as a country will overcome some of the challenges and become an attractive destination for startups listing. Startup ecosystem - The one thing, which is going great for the India today is the startup entrepreneur ecosystem, which is at its peak while old economy, manufacturing is yet to pick up. We have few new economy billion dollar companies such as flipkart, snapdeal, paytm, olacabs, zomato etc., This would be a game changer for India  given our demographics, age profile, English speaking and can address problems at the bottom of the pyramid ( poverty, healthcare, education)  disparity in incomes, wealth creation and distribution etc., As this has no barriers in terms of wealth, experience, caste, religion, support of government etc., its bound to flourish   and its foundation is built on knowledge, meritocracy, passion etc., With best regards Raghu Babu G Partner raghu@rna-cs.com 4 May 2015