Padmaja Ruparel, president of Indian Angel Network, says the budget should permit pension funds, insurance funds and provident funds to invest a small part of their corpus in early-stage venture funds.
Given the current challenges, what would your idea of a good budget be? What measures or proposals would you like to see?
Given the constraints the government faces in raising revenue, do you see a case to increase income tax rates on the rich?
- Facilitate investment through recognition of early-stage investor classes such as angel investors
- All arms of government should acknowledge such definitions (recommended by a committee set up by the Planning Commission) to ensure prioritization of incentives to such investing - tax pass through, 10 per cent long-term capital gains, tax credits for investment through angel groups or in Category I alternative investment funds as in Singapore, the US, etc.
- Tax on capital gains on investments by angel groups or venture capital funds on a par with capital gains on investments in listed companies or mutual funds.
- Simplify IPO requirements including permitting overseas listing without requirement of domestic listing.
The so-called "super-rich" form the core of all the angel investor networks across the country and imposing higher taxes on them will have a direct impact on the now mushrooming entrepreneurship in the country.Specific to your sector, what could the current budget do to improve conditions?
- Ease entrepreneurial activity
- Set up structures like the Software Technology Parks of India to enable early-stage businesses secure single-window approvals.
- Permit self-regulation and self-compliance for businesses with turnover less than Rs 25 crore.
- Ease exit for investors: Enable preferential treatment of venture capital and angel investment in liquidation.
- Remove regulatory hurdles that inhibit domestic fund raising
- Permit pension funds, insurance funds and provident funds to invest a small part of their corpus in early-stage venture funds.
- Banks should be encouraged to invest in early-stage venture capital funds by treating such investments as "priority sector" funding without capital market exposure and provisioning norms being applied.
- Tax credits to high net worth individuals, corporate houses, and institutions that invest in early-stage venture funds, to incubators, to angel investors.
- Develop and scale up debt offerings
- Expand the lender base to include commercial banks.
- Make debt to micro and small companies as part of banks' priority lending.
- Establish and promote UNIDO-like mutual credit guarantee schemes. (UNIDO is short for United National Industrial Development Organization)
- Improve credit rating models and their coverage by different credit rating agencies.