The new government at the Centre should focus on improving the startup ecosystem as it's a big employment generator and has the potential to replicate the country's information technology success story, an IT industry veteran said Thursday.
Former chief financial officer of Infosys Ltd V Balakrishnan said the Narendra Modi government should focus on ease of doing business for start-up companies as there are too many regulations required to be comply with now, increasing the cost of operation.
"They should have a much more softer touch on regulations for start-ups at least in the beginning years (of startup companies", he told PTI.
"They should focus on scrapping angel tax provision because that has impacted the start-up industry much more than what any other regulation would have," he said.
The government has to focus on how make the startup ecosystem much more better than what it's today, Balakrishnan said, when asked to share his thoughts on IT industry issues that the new government should focus on.
He stressed the need for simpler compliance norms for startups at least in the first two-three years of their operations. Today they have deal with too many compliances.
Balakrishnan said more clarity is needed on regulations in the startup sector, including regarding the issue of e-commerce companies wanting to sell medicines online.
"On the regulatory front, much more clarity is required.
Much more innovation can happen; on the compliance side, they should have lesser compliance, lesser form filing so that the cost of compliance comes down", he added.
According to him, India's IT services industry is expected to grow in mid-single or high single digit in the current financial year.
"But more action on the IT side is going to happen in the startup ecosystem because the startup ecosystem can create a similar kind of success stories that IT services industry has done in the last decade," Balakrishnan said.
So, the focus of the government should be more to support innovaion and reduce compliance cost so that more and more startup companies can come in.
"They (startup companies) are going to be the largest employment creator, going to add much more value to the GDP.
Focus should be much more on startup ecosystem", he said.
India is the third largest startup ecosystem in the world and has the potential to become the second, he said, noting that more than 1,000 startups come up each year in Bengaluru alone.
"And all of them are big employment generators. India's biggest problem today is job creation and that's going to happen more in the start-up ecosystem. It can replicate the success story like IT industry but it requires much more support now from the government", Balakrishnan said.