Mohandas Pai
Various changes have to be brought in so that Start up India is a success, Mohandas Pai said. Picture: Manipal Global Education Chairman Mohandas Pai.IANS

Infosys ex-executive Mohandas Pai, currently chairman of Manipal Global Education, thinks the Start-up India initiative will give a great boost to entrepreneurs.

Prime Minister Narendra Modi, Finance Minister Arun Jaitley and other ministers had launched the Start-up India initiative on 16 January.

The prime minister, finance minister and commerce minister "understand what start-ups can do for India" — become a source of jobs in the country, Pai said in an interview to Moneycontrol. The biggest takeaway from the initiative is the support of the prime minister, finance minister and others, he added.

"Our policies and tax laws were forcing the best and the brightest to register (start-ups) outside India. Global investors wanted a more benign environment with tax certainty, as they were investing long-term, not the tax nightmare we have had in India. Our forex regulations were not in tune with investor needs; mergers and acquisitions could become difficult and long-drawn-out, and structuring was convoluted," Pai wrote in Business Insider.

According to him, a three-year tax holiday, as announced by the prime minister, is not of any use, because by then the company wouldn't have started making profits, but would only save themselves from tax officials.

He was also of the view that various changes had to be brought in, so Start-up India could be a success. Tax laws require more clarification, valuation of start-ups for investments require clarity, and payment systems need change, he said.

Pai said the government's definition of start-ups is an unhappy compromise.

"The definition of a start-up for much of the benefits, as a unit with a turnover of not more than Rs 25 crore, not more than five years old, working towards innovation driven by technology or IP, needing a certification from an inter-ministerial board, is an unhappy compromise driven by fears of misuse reflecting our general environment," he wrote in Business Insider.