India is setting up a 100 billion rupee (US$1.5 billion) fund to encourage startup businesses and pledging easier regulations for entrepreneurs.
Prime Minister Narendra Modi announced the plan to create the kind of jobs needed to develop his country of of 1.3 billion people.
Bloomberg is reporting that startups will get tax breaks such as income-tax exemptions for the first three years, quicker patent applications, a credit guarantee program and easier routes to wind up if they fail.
The fund will be established over four years.
“The government should not interfere in startups,” Modi told an audience that included billionaire Masayoshi Son, founder of Japan’s SoftBank Group Corp., and Uber Technologies Inc. chief executive Travis Kalanick.
“India’s youth should be a job creator, not a seeker.”
Asia’s No. 3 economy is in the midst of an internet startup boom that has lured billions of dollars and raised questions about whether valuations are becoming stretched.
Much of the money is coming from foreign investors such as SoftBank.
A lack of tax breaks has curbed the involvement of local investors.
“About 70-80 percent of the funding is coming from overseas,” said Harish Visweswara, a partner at consultant Grant Thornton India LLP.
The government needs to curb red tape and get rid of the numerous permits and licenses required to run a simple business, he said.
The administration’s objective is to reduce obstacles from complex rules, Finance Minister Arun Jaitley said.
Son said he has invested almost US$2 billion into India in the past year and plans to scale up his plans.
SoftBank has invested in e-commerce provider Snapdeal.com and the ride-hailing service Ola Cabs in India, as well as the real-estate website Housing.com and hotel-booking app Oyo Rooms.
The company is also part of a planned US$20 billion solar power venture.
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