Government’s ‘Startup India’ initiative to impact ecommerce

While talking about the biggest barriers to ecommerce ecosystem, Grofers’ co-founder Albinder Dhindsa had shared with Indian Online Seller,

“Lack of support for early stage companies. Red-tapism that often deter companies from either getting started or give up too early. A lot of these barriers need to be eliminated by adopting technology rapidly and showing intent that new companies are welcome in this ecosystem.”

Looks like the authorities were listening to Mr. Dhindsa as the Indian Government recently launched ‘Startup India, Standup India’ program that aims to create just what he suggested- a healthy and welcoming environment for new companies.

Startup India Initiative

Last Saturday on 16th January 2016, Indian Prime Minister Narendra Modi launched the action plan of ‘Startup India, Standup India’ initiative. Several ecommerce players such as Flipkart’s Sachin Bansal, Snapdeal’s Kunal Bahl, and Uber’s Travis Kalanick attended the event.

“I urge all entrepreneurs to create companies that solve India’s problems and create jobs. Start-up does not mean a billion-dollar company where thousands of people work. It is about employing even five people, and developing India,” said Modi.

Some of the notable features of this project are:

• 100 billion rupee ($1.5 billion) fund reserved for the initiative
• Single Window Clearance even with the help of a mobile application
• 80% cut-back on patent registration fee
• Tailored Insolvency and Bankruptcy Code to ensure 90-day exit window
• No inspection from any inspector for three years
• Facilitation centre to support IP protection free of charge
• Exemption from Capital Gain Tax for 3 years
• No tax on profits for 3 years
• Eradicating red tapism
• Self-certification fulfillment
• Innovation hub under Atal Innovation Mission

How will it benefit startups and sellers?

Ecommerce industry is booming, agreed. But it is a very challenging and merciless industry too where small companies and sellers have had to shut their shops due to lack of immediate funds and success.

This new initiative can boost the entrepreneurial spirit by simplifying regulatory policies and reducing entry barriers. If startups get a chance to operate in a supportive environment instead of worrying about just surviving, then it will lead to more job opportunities, selling opportunities and growth of ecommerce supplementary businesses such as logistics & delivery, packaging, and content & marketing.

“At the end of the day it is about the power of entrepreneurship, how it can create lots of jobs and how there is a need to encourage our youngsters to create even more jobs,” said Narayana Murthy while speaking about Startup India initiative.

Are the funds enough?

Entrepreneurs feel that the $1.5 billion fund may prove to be too less. More so now, as global investors are being careful about funding Indian ecommerce ventures. So far, the investors have been very generous. But as not many of the ecommerce biggies have managed to earn profits thanks to the discount drive model, financiers are skeptical about pouring funds mindlessly.