Budget 2018: We need to skill 500 million people, says Ramesh Abhishek
Ramesh Abhishek, secretary, DIPP on start-ups, tax policies for start-ups and the government’s Make in India scheme
New Delhi: Ramesh Abhishek, secretary, Department of Industrial Policy & Promotion (DIPP) spoke about start-ups, tax policies for start-ups and the government’s Make in India scheme at the CNBC-TV18 Mint Budget Verdict conclave.
On the start-up ecosystem:
Tax benefits to start-ups have been extended by two years and, secondly, under the finance act, the definition of a start-up eligible for tax benefit has been aligned with the definition given by DIPP—a broader definition of start-ups which can create wealth and provide jobs. These are two specific interventions for start-ups.
On angel tax:
Any investments coming from angel funds is not counted as income for start-ups under section 56 of the law. It is also known to people investing in start-ups that any investment made above fair market value will be counted as income... The mechanism that has been worked out from April 2016 onwards is that there is an inter-ministerial committee and if they certify a start-up then this income is not counted towards tax for the start-up. What we have proposed and what we will soon get ratified by the department of revenue is that such start-ups which receive angel funding from April 2016 onwards will be eligible for being exempted.
On questioning the basis of valuation:
If any investment is made in any risky business models through AIFs (alternative investment funds) that are registered by Sebi (Securities and Exchange Board of India), they are exempted and their investment is not counted as income under section 56. Many angel investor groups don’t operate through the angel fund route under Sebi regulations but they operate as individuals and invest directly. After the Start-up India scheme was announced by the Prime Minister in January 2016, the income tax law has been amended and certified start-ups are now eligible for the investment not being counted as income.
On Make in India:
The programme was meant to promote manufacturing and increase its share in our GDP (gross domestic product) from 16-17% to 25%. We have to be competitive when we manufacture but look at our costs, our logistics costs are high—14% of GDP as compared to 7% in China. The government has been making huge investments in public infrastructure which will reduce cost of logistics and GST (goods and services tax) will also help, it is already helping...
Skilling of manpower needs to be done, we need to skill 500 million people. Ease of doing business was not even a topic three-and-a-half-years back, but there is a lot of work done in that direction now— even in tax polices issues like inverted duty structure—everything needs to be addressed.
We can only manufacture when we are competitive and this cannot be achieved in 1-2 years. Improving our competitiveness is a medium and long-term process. The government is improving competitiveness through various interventions like tax policy, fiscal policy, infrastructure and skilled manpower.