India's Modi launches $1.5 bln fund to support start-ups (updated)

SB Technology

16/01/2016 16:29

(Adds detail on the fund) 
    By Himank Sharma 
    NEW DELHI, Jan 16 (Reuters) - Indian Prime Minister Narendra 
Modi launched a number of initiatives on Saturday to support the 
country's start-ups, including a 100 billion rupee ($1.5 
billion) fund and a string of tax breaks for both the companies 
and their investors. 
    India, which already has a handful of new generation success 
stories, is seeking to encourage more cutting edge technology 
and other start-ups - supporting new businesses in a country 
which badly needs to accelerate a still sluggish economic 
recovery and create millions of jobs as the workforce expands. 
    Modi's high-profile event in New Delhi - attended by 
hundreds of investors and entrepreneurs, including the founder 
of taxi-hailing app Uber, Travis Kalanick - promised a shot in 
the arm for the sector, with exemptions from tax and compliance 
inspections for three years. 
    "I urge all entrepreneurs to create companies that solve 
India's problems and create jobs," he told a packed auditorium 
in New Delhi, speaking in Hindi. 
    "Start-up does not mean a billion dollar company where 
thousands of people work. It is about employing even 5 people, 
and developing India." 
    Online companies such as e-commerce marketplaces Flipkart 
and Snapdeal, along with ride-sharing company Ola, have 
highlighted the potential for home-grown technology successes in 
a country best known for capitalising on cheap engineering 
talent as the world's back office. 
    However, the push by Modi's government is the first time 
Indian policymakers have announced an agenda directly aimed at 
promoting start-ups and entrepreneurship. 
    Modi unveiled plans for a new 100 billion rupee fund: a 
structured fund of funds that will invest in venture capital 
funds over a period of four years, financed by the government 
and the state-owned Life Insurance Corporation (LIC). 
    He also said start-up companies would benefit from cheaper 
and faster patent applications, enjoying 80 percent rebates on 
the cost of patents. A mobile app would allow companies to be 
set up within a day, he promised. 
    Moreover, they will be exempt from income tax for the first 
three years in which they make a profit. Their investors could 
also benefit: recognised funds of funds could see exemptions 
from capital gains tax, Modi said. 
    The announcements, at a government-organised conference on 
start-ups in New Delhi, come months after Modi made a whirlwind 
tour of Silicon Valley, meeting the chief executives of Facebook 
Inc  FB.O , Google Inc  GOOGL.O  and Apple Inc  AAPL.O . 
    India, with a rapidly expanding population of Internet 
users, is seen as one of the world's fastest growing start-up 
hotspots. Venture capital funds including Sequoia and Tiger 
Global have raised multi-billion dollar funds for their Indian 
investments in recent years. 
    The National Association of Software and Services Companies 
estimates the number of new companies launched in India grew by 
40 percent in the last year. 
    Earlier on Saturday, Japan's Softbank  9984.T  said it would 
"seriously" accelerate investments in India, comparing the 
growth in India's internet economy to China a decade ago. 
Softbank had previously said it would invest $10 billion in 
India over 10 years.  urn:newsml:reuters.com:*:nP8N14Z006 
    WeWork, a New York-based provider of shared office space, 
used the conference to announce its Indian launch plans. 
 urn:newsml:reuters.com:*:nP8N14Z008 
   ($1 = 67.7646 Indian rupees) 
 
 (Additional reporting by Suvashree Dey Choudhury; Editing by 
Clara Ferreira Marques and Mark Potter) 
 ((clara.ferreira-marques@thomsonreuters.com; +91 22 6180 
7257;)) 
 
Keywords: INDIA TECH/