July 2014
...An Entrepreneurial Insight
Vol. XIV Iss. 1
IMT Hyderabad
Contents 1. Prarambh Speaks
1
2. Impact of Budget on Industrial Entrepreneurship
2
3. Budget 2014—Highlights
4
4. Impact of Budget on Indian Entrepreneurs
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5. Budget 2014—Accentuating Entrepreneurship
8
6. Add Ons
10
7. Team Prarambh
11
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Prarambh Speaks Union Budget has always been important for entrepreneurs, it helps forecast and analyse future prospects and invariably brings hope and confidence to the whole business community. There was a significant focus on startups in this year’s budget, with the finance minister Arun Jaitley proposing several measures to promote entrepreneurship in the country. One of the many talked about measures was the proposal to establish a ₹10,000 crore fund to attract private capital by providing equity, quasi equity, soft loans and other risk capital for startups. This year’s budget has really created a buzz. In this edition of Empressario we bring you articles about effects of this year’s Union Budget on entrepreneurs of our country. Their concerns, hopes from this budget will enlighten us with the possibilities this budget holds for entrepreneurs.
Happy Reading!!
Team Prarambh
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Impact of Budget on Industrial Entrepreneurship Entrepreneurship was given much priority in the recent Union Budget 2014-15 by the NDA government. The booming startup and entrepreneurial culture in India got a big boost when a whole new section of the budget was discussed about it. Some of the notable features in it were: 1. Rs.10,000 crore SME and startup fund: The government allocated this fund for the startups and SME’s that often lack capital and thus struggle hard to survive. This move is a motivational push for the budding entrepreneurs. It is, however, not clear as to how this fund would be utilized. 2. Technology Center Framework: The budget has proposed Rs.200 crore for establishing technology centers for pushing innovation, entrepreneurship and agro based industries. 3. Start-Up Village Entrepreneurship Program: The Government plans to setup a “Start Up Village Entrepreneurship Program” that will encourage rural youth to become entrepreneurs. This program will be a part of Ajeevika, the National Rural aims to
eliminate rural
Livelihood Mission (NRLM), which
poverty through sustainable livelihood
options. 4. Digital India: Government of India proposed to allocate Rs.500 crore for software startups that would ensure broadband connectivity in the rural areas and access to IT services. 5. District level Incubation and Accelerator Program: To incubate new ideas and to provide necessary support to accelerate entrepreneurship in India, the budget proposed
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to setup nationwide “District level Incubation and Accelerator Program”. Along with this, entrepreneur friendly legal bankruptcy framework is proposed to be developed for SMEs to enable easy exit. 6. E-Governance Benefits to Startups & SMEs: India is one of the unappealing countries when it comes to “starting a business” not due to the lack of opportunities, but, because of numerous procedures that should be followed in order to start a business. The time taken to open a business in India is far too high compared to most countries in the world. With Digital India and numerous E-Governance initiatives, it will be far easier for an entrepreneur to start a business, as many procedures will be done online and in a transparent manner. The budget indeed shows a fair picture for the emerging and booming startup community in India. This, however, would depend on the execution of the laws. India should take a strong decision for this sector as it has got a great potential to contribute to the country’s GDP, else it is feared that we might lose this talent to the Silicon Valleys of the world.
Written By: Prakhar Maheshwari (IMT Hyderabad, Batch 2013-15)
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Budget 2014-Highlights The big idea of budget 2014 depicts that the government clearly believes that innovation and entrepreneurship are the drivers of economic growth. Most entrepreneurs detest budgeting, but if you are running a sole enterprise it is necessary to force yourself to develop a budget to hold yourself accountable. There can be few reasons for the same:
It will help you to become a better manager.
It will help you raise money.
It will help you avoid running out of money.
Below mentioned are some of the highlights of the key changes for 2014/2015 which will impact entrepreneurial activities: Corporation tax rates: Corporation tax rate will reduce to 21% from April 2014 and 20% from April 2015. The small profits rate of corporation tax will remain at 20%. Annual investment allowance (AIA): The increase in AIA will offer further incentives for businesses to invest in plant and machinery to obtain accelerated tax relief. On the other hand, this gives only a short window opportunity for businesses to take advantage of these increased levels. Seed Enterprise Investment Scheme (SEIS): The government announced that the taxadvantaged SEIS which are designed to be used by early stage companies to raise equity finance will now be permanent. So this announcement will continue to be attractive at least from a tax point of view.
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Social investment tax relief: The aim of this relief is to encourage investment in charities, community interest companies, community benefit societies etc. There is a benefit for the eligible organisation in receiving financial support and also for the donor in terms of tax saving. Research & development: Improvements to the R&D will welcome to start-up and other companies undertaking R&D and incurring tax losses. These are some of the plans and allocation to entrepreneurial activities in budget 2014. It thus becomes important for the entrepreneurs to plan their activities by going through the budget analysis. It is so because failing to plan financially might mean that you are knowingly planning to fail.
Written by: Team Finecea The Finance Club of IMT Hyderabad
(Photo Source: www.google.com)
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Impact of Budget on the Indian Entrepreneurs Introduction of Budget 2014 in the August house by finance minister Arun Jaitley has come up as a boost for the start up ecosystems in India. The start up fund allocated for the year is an eye pleasing amount of rupees 10000 crores. In addition to these, rupees 200 crores have been assigned to scheduled caste entrepreneurs. The micro, small and medium enterprises (MSME’) which contribute nearly 8% to the country’s GDP , 45% to country’s manufacturing output and 40% to the exports have been given special impetus by redefining the higher capital ceiling that make up the parameters of the MSME’S. The program has been designed to magnify the start ups which are expected to make major contribution in the year to follow. Further, to foster the young minds towards realising their ideas, a nationwide “District Level Incubation and Accelerator Programme” has been drafted for providing the necessary support. An Entrepreneur friendly legal bankruptcy framework will be developed for the small and medium enterprises in order to facilitate easy exit routes. Stimulation comes from the government in the field of biotechnology which will be fortified on a large scale. The organic farming industry too has not been left unnoticed, and an amount equal to 100 crores have been reserved for them. The employment centres are ready for conversion into career centres with an allocation of 100 crore rupees. The budget also says that the manufacturing units will be allowed to sell its products through retail via Ecommerce platforms. To ice the cake a corpus of 200 crores has been set up to establish Technology Centre Network. This entire fund of funds designated for the Indian Entrepreneurs have been done solely to revamp the economy and to save the uprising sector from imperil it might receive from the lack of funds. To have a swift summary the
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following is what the industry leaders have to comment about the budget’s fund allocation to the sector. Kiran Mazumdar Shaw, Chairman and Managing Director, Biocon Limited; Advisor, NEN: The FM deserves to be commended for addressing the funding needs of small entrepreneurs. The Rs. 10,000 crore venture capital funds for start-ups, incubators and accelerators is a robust beginning. I also see promise in his announcement of a committee to examine the financial architecture of small and medium-sized enterprises whom he has rightly referred to as the backbone of the economy.
Kanwaljit Singh, Co-Founder and Senior Managing Director, Helion Ventures; Advisor, NEN: I believe the Government has taken some very proactive steps to encourage entrepreneurship. We eagerly wait to see how the implementation of some of these initiatives is planned, especially the start up fund corpus plan.
SWATI GOEL 13A2HP066 PGDM - FINANCE
(Photo Source: www.google.com)
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Budget 2014 Accentuating Entrepreneurship All business fixed their eyes onto the budget in agog as it was put forth by the Finance Minister Mr. Arun Jaitley. The budget brought cheers on the faces of the budding startups and entrepreneurs as it contained a lot for them. It is for the first time that the government has realized the vitality of home grown entrepreneurial businesses and has offered an environment conducive to their magnification. The chief reason why most of the startups choke to death in their premature stage is the absence of support or incubation from the state. The entrepreneurial sector requires a coherent strategy from the government wherein they expect the government to support the startups through robust business framework by enacting fiscal policies and R&D. The Budget 2014 reflects that the government has realized this aspect of entrepreneurial sector as it has indicated its interest in nurturing the small businesses to grow by setting up venture fund solely for the startups. In an unprecedented move the government has decided to encourage the entrepreneurs by announcing Rs 10000 crore funds to support the budding startups. It is one of the largest venture funds which will place India right after Silicon Valley and ahead of China in terms of venture capital fund. This year in terms of funding Rs 3630 crore were invested in startups which was 40% more as compared to that of the last year but out of this 90% came from the foreign venture capital fund. Now setting up Rs1000 crore pools will bring in the focus back to India and will be a huge motivator and will expedite the startup businesses. Indians enjoy a reputation among the gamut of e-entrepreneurs with companies like flipkart.com, myntra.com, yebhi.com etc doing well in this business domain and the
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investment of Rs 500 crore in setting up National Rural Internet and Technology centers will not only deepen the reach of internet but will also help the e commerce businesses to strengthen their presence in the rural market. The budget also brought in the much awaited FDI in the e-commerce business domain and it will further nurture the web based business startups by creating foreign capital inflows. “The budget has kept the hopes of the entrepreneur high by giving them the platform to grow and leap-frog as never before”, said Mr. Ashish alumni of XLRI Jamshedpur and founder of online food mart website jsrbazaar.com. He further emphasized on the importance of propitious state policies in the growth of the entrepreneurial sector. “India has been a country of entrepreneurs and it seems that we have embarked upon a journey to reclaim that title” said Mr. Ashish in his concluding remarks.
Raj Kiran Saraswat XLRI, Jamshedpur
(Photo Source: www.123rf.com)
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Add-Ons Readers’ Corner Got any comments? Would you like to contribute to the newsletter? Get back to us at: ecellprarambh@gmail.com. Your comments/views and articles would be published from the next issue. A few things to be kept in mind:
Articles/comments should not be demeaning / damaging in nature.
Articles should be to the point and of around 500 words.
The decision of selecting the articles to be featured and the number of such articles rests with the faculty mentor and editor of the newsletter.
So put on your thinking caps and show us your intellect side.
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Team Prarambh Editors Faculty Mentor Dr.M.Sivagnanasundaram Core Members
Shreya Dasgupta Sarang Pious Neeli Sravya
Manish Agrawal Prakash Jeswani Suhas Vaitla Sahiba Pahwa Saketa Pingali
Technical and Design Pushkar Ghatole Deeptanshu Pande Technical and Design Support Ayush Agarwal Prakash Thakur
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Vol. XIV Iss. 1 | Empressario | July 2014 | Prarambh | IMT Hyderabad