Despite the achievement of several Indians in leading tech-giants across the globe, India still has one of the lowest entrepreneurship rates. Discuss the reasons behind it and enumerate the measures taken by government to increase the pace of entrepreneurship in India.

Several Indian origin persons are now CEOs of global technology giants like Sundar Pichai, Satya Nadella, Parag Agarwal, etc.

However, India lags in entrepreneurship rates due to several reasons like:

  • Low literacy, e.g. in eastern India, where new firm creation rate is also lowest.
  • Lack of ease of doing business, e.g. registering a firm, enforcing contracts.
  • Overregulation – it requires four licences to start a restaurant in Singapore against 20 in India.
  • Start-ups are questioned over funding provided by the Angel Investors. Angel tax was also imposed earlier.
  • Lack of good transport connectivity increases the cost of logistics, which further increase the input cost and makes Indian products less competitive compared to their counterparts. The cost of logistics is around 14% of GDP in India, which is far higher than in developed countries

Policy measures taken to correct the issues:

  • Start up India scheme offering numerous benefits, e.g. 100% exemption from income tax and corporation tax for the first 10 years a firm is operational.
  • Revised definition of a start up to one with turnover below Rs. 100 crore and incorporated for less than 10 years.
  • Easier exit – start-ups can be wound up in 90 days.
  • Augmenting incubator network by introducing Atal Innovation Mission.
  • Technical relaxations to start-ups regarding Angel Tax and use of ESOPs to attract employees.

The Start-ups are the growth engines of economy. They help youth become job givers and thus government’s efforts to help them are much needed.


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