National Start-up Advisory Council to suggest steps to keep control with original promoters

The government on Tuesday said it has set up a National Start-up Advisory Council under commerce and industry minister Piyush Goyal to recommend measures to build a strong ecosystem to promote budding entrepreneurs, ease access to capital, incentivise investments and keep control of start-ups with original promoters. Although the policy recommendations will come in due course, one of the objectives of the panel—to provide inputs on keeping control of start-ups with original promoters—has raised eyebrows.

Interestingly, in 2018, a task force on e-commerce under then commerce secretary Rita Teaotia had drawn criticism for suggesting necessary policy changes to enable founders of domestic e-commerce companies to retain control even if their share-holding was small. Subsequently, the draft e-commerce policy in 2019 junked the proposal, as many pointed out that foreign investors would shy away from investing in e-commerce start-ups if any such move was implemented.

In a statement on Tuesday, the commerce and industry ministry said the council will suggest steps to facilitate public organisations to foster innovation, promote creation, protection and commercialisation of intellectual property rights, make it easier to start, operate, grow and exit businesses by reducing regulatory compliances and costs.

Besides, it will have persons capable of representing interests of incubators and accelerators and representatives of associations of stakeholders of start-ups and representatives of industry associations.
The council will consist of non-official members to be nominated by the government, founders of successful start-ups, veterans who have grown and scaled companies in India, persons capable to represent interests of investors into start-ups.

The term of the non-official members will be for a period of two years. The individual names will be notified soon. The nominees of the ministries, departments and organisations concerned not below the rank of joint secretary will be ex-officio members.

Drawing capital remains the most critical challenge for Indian start-ups, despite the fact that some of them attracted big investments in 2019. Start-ups raised as much as $14.5 billion in 1,185 funding rounds, of which 459 were Series A and late-stage investments, according to the India Tech Annual Factsheet – 2019, compiled by data analytics firm Tracxn. This was substantially higher than $10.5 billion raised by the start-ups in 2018 and $10.4 billion in the previous year. The new council will be a catalyst in the effort to boost capital flows for the start-ups.

Source: Financial Express