The year 2020 has diversified a lot of the Indian startup industry, from manufacturing to tech start-ups, especially with the bans on Chinese products to scrutiny on foreign investments and a host of new policies and hurdles to deal with, start-ups have had an action-packed year. With the onslaught of Lockdown 1.0, many ventures and start-ups were left cash-strapped, ranging from little to none to operate with. In May 2020, the government announced relief packages for start-ups, which revved up the recovery process, however the RBI moratorium, changes in foreign investment policy and regulations brought on by geopolitics have put up numerous barriers. Covid-19 has changed the way the world works, probably in an irreversible manner.
Here are the most notable policy decisions affecting start-ups within the last year:
Agri Reform Bills and Indian Agri-tech Start-up
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation), the Farmers (Empowerment and Protection) agreement on Price Assurance and Farm Services and the Essential Commodities (Amendment) were passed by the Parliament on September 20.
Though these farm laws offer a plethora of opportunities for start-ups and entrepreneurs, one cannot ignore some of the imminent issues and there is a need of close monitoring by the authorities so that farmers can trust private entities with fair pricing and at most transparency.
India Bans Chinese Apps
In the middle of the countrywide lockdown, India banned several apps and games of Chinese origin citing reasons such as data security and data sovereignty of Indian citizens. Overall, 200 Chinese mobile apps and games were originally banned.
The bans meant that Indian tech start-ups and companies had the occasion to build substitutes to the popular banned Chinese apps. Along with the Atmanirbhar Bharat and ‘Vocal for Local’ campaigns, the ban on Chinese apps gave a big push to Indian tech products.
Digital Media & OTT Players
The Information and Broadcasting (I&B) ministry brought online news portals and OTT providers under its domain as a measure to reinforce its authority over online news and content carried on OTT platforms.
As all digital media platforms, including news media and online curated content providers (OCCPs), would fall under the ministry, many that this could result in a setback for India’s high-flying video OTT space. The introduction of the Intermediaries And Digital Media Rules 2021 has brought to light more qualms regarding regulations and privacy.
FDI Policy Changes In India
The government also took measures to restrict foreign influence and unscrupulous takeovers in the wake of the decline caused by the pandemic. Under the revised FDI policy, the Indian government mandated that all investments from China and other land-border nations would only be allowed through the government approval route and disabling the direct route. This made the process of fundraising more intricate for a lot of start-ups already in discussion with these foreign funds and venture capitalists.
Ecommerce Focus On ‘Made In India’ and “Vocal For Local”
In a to push the prospects of Indian products during the pandemic, the consumer affairs ministry passed new rules and regulations directing ecommerce players to display the country of origin for products itemized on their platforms. Amazon was also fined INR 25K for not exhibiting this obligatory information.
With the launch of National Digital Health Mission (NDHM), India took a dive towards enhancing the stretched-out healthcare infrastructure and ecosystem. The NDHM has invited healthcare providers, software providers, start-ups to co-develop health-tech products. However, the absenteeism of a sturdy personal data protection law in the country makes laws like these more vulnerable.
According to the Union Budget 2021-22, start-ups will get capital gains exemption by one more year to 31 March 2022. Start-ups also get one more year to claim tax holiday. Also proposed is provisions for incorporation of one-person companies, a move which will benefit start-ups and innovators. The paid-up capital of small firms has been increased to Rs 2.50 crore from Rs 50 lakh.
These steps are in addition to the previous start-up-focused provisions announced by the government, including broadening incentives, easing regulations, providing income tax exemptions, and setting up a Rs 10,000 crore Fund run by SIDBI. The government also recently approved the Start-Up India Seed Fund Scheme with an amount of Rs 945 crore.