INDIA ASPIRATION FUND Aiming high

A majority of the start-ups today are only focussed on the top end of the economic pyramid. And, his­torically, many start-ups in India have replicated other start-ups that have been successful elsewhere, pri­marily – the US and the UK. In fact, earlier, it would take a few years for a start-up in the US to be replicated in India. But, that is reducing signif­icantly in the last two years to a few months or a few days.

It is not bad. But, blinded by the easy opportunity to replicate start­ups, entrepreneurs are not focus­sing on the opportunity of solving big problems of India that have been plaguing the country for decades – because, entrepreneurship is about solving problems.

Also, a majority of the inves­tors, who have been investing in

the new age start-ups, do so because they know the business well from their experience in other markets. It is also difficult for social venture start-ups to raise risk capital. And, it doesn’t help that start-ups in health­care, energy, water resources and agriculture are not considered glam­orous like Ecommerce. “VCs look for much larger consumer growth sto­ries,” says Karthik Redy, managing partner, Blume Ventures. According to reports, VCs invested $2.34 billion in Indian start-ups in 2014. And this year, until June, VCs have invested $2.46 billion.

But, finally, the government has woken up to the reality of start-up boom in the country and the impact it can have. It has also realised the importance of having a domestic venture capital industry – to solve India’s problems and fulfill India’s needs. “If we are able to solve India’s problems (solar technology, afford­able healthcare delivery, electric scooter),” says Jayant Sinha, Union minister of state for finance. “We can surpass the middle income trap.” Silicon Valley is powering top 1 bil­lion people of the planet and ven­tures similar to that are of little help in solving India’s problems. “Because we have not put in place a finan­cial system, we are not able to solve India’s problems,” adds Sinha.

SIDBI has set up India Aspiration Fund (IAF), a fund-of-funds and it will manage it. There is an exter­nal investment committee that will select fund management teams which invest in entrepreneurs with scalable business models. The com­mittee includes prominent names of the industry such as Harkesh Mittal, Mohandas Pai, Sanjeev Bikhchan- dani, Kiran Karnik, Saurabh Srivas- tava, and V. Vaidyanathan.

Raising more money The announce­ment was made in the July 2014 budget. “The idea is to be anchor investors,” says Union finance min­ister Arun Jaitley. “These funds now have the ability to raise more money.” The fund, he expects, will catalyse tens of thousands of crores of equity investment in startups and msmes.

The finance minister gave anchor investment cheques to Blume Ven­tures, Ivy Cap, Carpediem advisors during the launch. “The government is trying to drive domestic invest­ment through funds like us,” says Reddy. It will be the anchor inves­tor in the fund and will contribute 25 per cent of the fund’s corpus. It gives booster to raise fund and the fund managers have the respon­sibility to convince more private investors to invest in the fund. First tranche of IAF is ?2,000 crore, but, it
has the potential to mobilise ?10,000 crore. “The mandate from SIDBI and the government is to spur domes­tic venture capital industry.” It is not mandatory for funds, in which the government is an anchor inves­tor, to invest 100 per cent of portfo­lio only in start-ups trying to solve local problems.

Nitin Sisodia, co-founder & CEO, Sohumforall, a healthcare start-up, says they had been working on this for five years and that they were sup­ported by grants from outside India. Now, there is a lot of interest from angel investors since the product is ready. The launch of sidbi’s India Aspiration Fund is a move in the right direction. “It’s fantastic. But, we need to know how can we access it,” says Sisodia.

There are Indian venture capital funds such as Ojas Ventures, Seed- fund, Venture East, among others. But the investment in local prob­lem-solving ventures has been led by corporates in their personal capac­ity. Ratan Tata has invested ?2 crore in healthcare start-up, Swasth India. Kiran Mazumdar-Shaw has invested in a diagnostic startup XCyton and healthcare startup Myhealthmate. Harsh Mariwala, chairman, Marico, and his son Rishabh have made a joint personal investment in Unitus Seed Fund, a $20 million seed-stage fund based in Bangalore and Seattle that invests in social ventures inno­vating for the masses in India. Uni­tus has made several investments in education, healthcare, agricul­ture startups. While India Inc has set aside funds to invest in start-ups, but it makes investments which are stra­tegic to the company’s business.

♦ ROHIT PANCHAL [email protected] U SIN E S sindiagroup.com

NRI STATUS

Safe harbour
This notification will cause a loss of ?100 crore annually to the exche­quer, as NRI status provides spe­cial privileges to seafarers. However, on the flip side it will induce more Indian seafarers to take up jobs with Indian ship owners. Due to the ear­lier anomaly, senior officers who used to enjoy tax-free salary on foreignIndian seafarers have reasons to be grateful to the Modi govern­ment. Last fortnight, in a gazette notification, the government clari­fied that the period of 182 days for
determining the non­resident status of the seafarer on ships with Indian flags, in foreign waters, shall be com­puted from the date of joining the ship for the voyage till the date he embarks back to the Indian shores. In other words the journey made by Indian ships even in coastal waters, en route foreign shores and back shall also be taken into account. It further clari­fied that the date stamped on the con­tinuous discharge certificate (CDC) at the time of joining the voyage and return will be taken as sufficient evi­dence of the journey. “Over 15,000 Indian seafarers will benefit from the Income Tax relief announced by the Union government,” explains, Abdulgani Serang, general secretary, National Union of Seafarers of India. Serang who has been with the union for more than three decades, said that the Union has been demanding that the coastal leg of the journey of Indian flag ships going in foreign waters should be considered as non­resident period.

vessels were reluctant to take on voyages to foreign shores by ships with Indian flags. In many cases such offi­cers were denied NRI status by a few days. Such was not the case with seafarers plying on Mg relief foreign ships as their stay even in the coastal territo­ries was taken into account for calcu­lating their nri status period.

Retrospective eff ectThe announce­ment to set aside the anomaly was promised by the finance minister in the last Union budget. However, with the amendment coming into force only in August, the government has decided to make it effective with ret­rospective effect. In other words it has seafarers to avail of this benefit from last fiscal. Tax payers fil­ing their Income Tax returns before 31 August, 2015, will get the benefit of the period from 1 April, 2014 to 31 March, 2015.

The NUSI union is now mulling to get the concession extended to even seafarers plying on coastal routes ie. from say Vishakapatnam to Mundra. The rationale being that even this voyage is for a large part done out­side the Indian maritime and hence should legally qualify as a voyage done outside the limits of Indian territorial waters.

♦ DAKSESH PAREKH [email protected]

 

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