Government to introduce startup blueprint this month

The government, in two weeks, will unveil a blueprint for startups to ease the process of setting up new ventures.

Prime Minister Narendra Modi will release the blueprint of ‘Start Up India’ programme which may include a Startups and Entrepreneurship Law to make it easier for setting up new ventures and closing unviable ones, besides clearing regulatory issues that hamper access to finance.

The government is also seeking to define a new category of business — ‘Innovative Start-ups’ — to distinguish them from micro, small, medium and large enterprises that are built on conventional business models. There would be a special support structure for such innovative start-ups, including funding from the government.

“In such start-ups, the government, through the domestic venture capital funds, could take a 25 per cent stake. We will leave the due diligence, mentoring and refining of business ideas to the professional venture capital (VC) and private equity (PE) funds,” a senior government official familiar with the policy formulation told The Hindu.

“As these start-ups gain in scale after two or three years, other investors, including PE and VC funds could buy back the government venture fund’s stake. This would help create a revolving fund to finance such ventures with transformative potential, as the government can deploy the proceeds from exiting these start-ups to fund other ideas,” the official said.

The Start Up India policy would attempt to address two key concerns the government wants to fix in India’s start-up ecosystem. Over 65 per cent of successful start-ups re-locate out of India owing to the difficulty of doing business, usually to Singapore. Secondly, 90 per cent of start-up funding presently comes from foreign VC and PE funds.

“There tends to be a bias among foreign funds for backing business models that have worked in the developed world or those that can be tried in India and replicated there. We feel that if Indian start-ups focus on the country’s unique problems, the models they build can be exported to the world,” the official said. The focus of the Start Up and Entrepreneurship Bill, that the government could announce on January 16, would be on making it easier to start, operate and close a business. The attempt would be to allow an unsuccessful venture to shut shop in a few days without risk to an entrepreneur’s personal property.

While these measures would facilitate general support for young entrepreneurs, there will be special incentives for the category of innovative start-ups that the government feels need additional support as the risks may be higher than a conventional business. At the same time, the returns from such ventures would be higher if the idea in question achieves its transformative potential.

Currently, the government-backed India Aspiration Fund, announced in the Union Budget with a first tranche of Rs.2,000 crore, acts as a fund that allocates money to different domestic venture funds which provides seed funds to innovators and entrepreneurs.

Nearly 90 per cent of the first tranche of funds have been allocated already, said another senior official, adding that another tranche would be considered once this is exhausted.

The government is trying to broad-base the methodology for identifying an ‘innovative startup.’ Officials are working out the modalities for this in the run-up to the policy and one of the options under consideration is to allow the heads of a government-backed incubator or technology development bodies in different sectors to certify or vet which start-ups are innovative.

The Prime Minister had announced the ‘Start Up India, Stand Up India’ initiative in his Independence Day address last year and is expected to announce the specifics of an action plan to back start-ups on January 16.

Government electrifies 20% more villages

The government has electrified 20 per cent of the villages that were without power at the start of this financial year, according to an analysis by The Hindu of the data provided by the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY).

As of January two,2016 the DDUGJY had electrified 3,656 or 20 per cent of the 18,452 villages without power at the start of this financial year.

In July last year, the DDUGJY said it aimed to provide round-the-clock power to rural households and adequate electricity to agricultural consumers.

The scheme had an outlay of Rs 76,000 crore out of which the Centre committed to provide a grant of Rs.63,000 crore.

Of the remaining 14,796 villages that still had to get electricity, work had started in only 1,843 (12 per cent) of them.

Out of the 5,522 villages inspected by the DDUGJY officials, 13 per cent had missed the milestones set for them for electrification.

Annual solar power capacity to quadruple next fiscal year: Goyal

Piyush Goel

India may increase its solar energy capacity four-fold during the next fiscal year ending March 2017, Piyush Goyal, Union Minister of Coal, Power and Renewable Energy says.

“Today our solar capacity is about 4,500 MW and the capacity addition target for this year is about 2,000 MW. During 2016-17, we are hoping to add 12,000 MW in solar sector alone. Thus, including other renewable sources, there will be a total capacity addition of about 15,000 MW during next fiscal,” he said.

The government is focusing on speed, skill and scale rather than subsidies to drive reforms and progress in the energy sector. The minister said water heaters that ran on solar energy had subsidy components some years ago.

“Our government inherited a huge subsidy bill,” he said adding, “If you keep depending on the clutches of the government, you would never able to achieve scale and path breaking innovation. Our government will handhold and support you in the initial period for a while, but ultimately the project has to be techno-economically viable,” he added.

LED bulbs

He highlighted the pace with which LED bulbs were distributed in the country as part of government’s energy efficiency drive initiative. Energy Efficiency Services Ltd (EESL), a public sector entity engaged in distribution of LED bulbs, is expected to contribute about seven crore bulbs this year.

“The same company distributed six lakh bulbs in 2013-14 during previous government’s regime. Due to economies of scale, the prices have come down by 76 per cent now. It is a standalone project now and there is zero subsidy. Upfront payment is Rs.10 and the balance is paid over 10 months. Today, about 4 lakh bulbs are distributed every single day,” he added.

Mr Goyal also said that the ministry was expediting electrification of all villages without power. As on April 1, 2015, there were 18,452 villages across 19 states without electricity.

“Prime Minister, in August this year, has asked us to electrify these villages in the next 1,000 days. But we have taken a pledge to achieve that in the next 730 days. Currently we are electrifying 100-120 villages every day. We will ramp it up to 200 villages a day. We have also planned to install off-grid systems in villages that pose challenges for grid power,” he stated.

Maharashtra may waive all taxes for EVs

Maharashtra is likely to be the first State to waive value added tax (VAT), registration charges and road tax on electric vehicles (EVs), according to Mr.Goyal.

“I suggested it to the Maharashtra Chief Minister some time ago to waive all taxes on EVs as a mark of our support to clean environment. He was very responsive to the idea. So, I am confident that the state will exempt EVs from VAT, registration and tax charges,” he said.

On the challenges of imposing a charge on infrastructure for EVs, he stated: “I would ideally like to see every petrol bunk in the country to have a charging station. Normally, such vehicles can be charged at home. But, if one is doing long distance travel, he/she should be in a position to do that at a charging station. We are working on building that infrastructure.

Initial seeding

“It could be a public-private partnership or initially seeded by the government and then subsequently it could become a business model. Also, power will no longer be an issue we have surplus coal and power in the country today.”

He added that the government was keen on facilitating faster roll-out of EVs across the states and government would partner with initiatives relating to EVs, hybrid technology or biogas programmes.

Remit Excess Securities Transaction Tax to Government: BSE to Brokers

Remit Excess Securities Transaction Tax to Government: BSE to Brokers

Mumbai: Stock exchange BSE on Thursday asked its stock brokers to furnish details of excess securities transaction tax (STT) collected by them during 2013-14 and earlier as well as remit the amount to the government.

The move follows a notice issued by joint commissioner of income tax to draw attention towards excess STT collected by some brokers and sub-brokers, which is not being remitted to the government account.

BSE said in a circular that details have to be furnished within 15 days, while the “excess amount so collected needs to be remitted to the government account immediately”.

“As per instructions of the income tax department, a circular is issued to the member brokers, requesting to furnish details of excess STT collected and retained with them for FY 2013-14 and for preceding years as on March 31, 2014 directly to the address (of income tax office),” BSE said.

FAFSA Tips: What to Do Before the End of 2015

Parents and child talking to financial advisor

Applying for financial aid will soon be less of a hassle for college students and their families for Federal Student Aid — used to determine financial aid from the government as well as colleges — can be filed three months earlier, or as early as October 1, nearly a year before a student would start classes the following fall. This shift in timing will allow completed tax returns to be used to report income and assets on the FAFSA.

Under current rules, families have to wait until January 1 to start filling out the FAFSA and often file the aid application before completing the income tax return required to verify income for the previous year. For example, if you file the FAFSA in January 2016 for the 2016-17 academic year, you’ll have to scramble to file your tax return early or estimate your 2015 income and verify it later, after you’ve filed your 2015 tax return. But under the new rules, when you file the FAFSA for the 2017-18 academic year, you’ll use your 2015 tax return rather than your 2016 return to report income and assets.

With the new FAFSA schedule, you’ll be able to start thinking about financial aid earlier in order to maximize an aid award. You’ll still have until June 30 to complete the form, but applying as early as possible remains important. Most schools dole out financial aid on a first-come, first-served basis, and a college’s free money runs out fast.

Steps to Take Before the End of 2015

If your child is currently a high school senior, college freshman or college sophomore, your 2015 tax information is doubly important because 2015 income will count twice for financial aid purposes — first for the 2016-17 academic year, before the FAFSA changes go into effect, and then again for the 2017-18 academic year, when FAFSA switches to the new timeline. Taking steps to reduce income before the end of 2015 could lower your expected family income and boost your student’s financial aid award two years in a row.

Few colleges fill all of the gap between your expected family contribution and the cost of attendance, but lowering your income can lead to substantial increases in financial aid. Income, not assets, is by far the biggest factor in financial aid. “Generally, every $10,000 increase in parent income will cause about a $3,000 decrease in need-based financial aid,” says Mark Kantrowitz, publisher of Edvisors.com, a college planning Web site. If possible, hold off on taking distributions from retirement plans or realizing capital gains because the money will count as income on the FAFSA.The financial aid formula excludes assets held in retirement accounts, the cash value of life insurance policies , and the value of your home and other personal property (including cars, clothing and furniture). So consider directing a larger portion of your paycheck to your retirement accounts during your FAFSA-filing years.

A fat savings account can also lower financial aid because the federal financial aid formula considers up to 5.6 percent of parents’ assets to be available to pay for college. If you’re planning to use cash to buy a new car, do a home-renovation project or make some other large purchase — even to pay down debt — pull the trigger before you file the FAFSA.