Challenges require long term perspective: Owners of Ggn's small business units
The entrepreneurs of start-ups and smaller business units in Gurugram have given a thumbs up to Wednesday's Union Budget. However, they feel that a solution to the challenges being faced by small business units will require a long term perspective rather than only tax deductions.
Finance Minister Arun Jaitley, in his Budget speech, announced tax breaks for the start-ups and small-scale medium enterprises.
The profit linked tax deduction for the start-ups have been changed to three years out of seven from the earlier three years out of five years.
For the small-scale medium enterprises, there has been a tax reduction of 5 per cent for smaller business units with a turnover of Rs 50 crore.
Corporate tax for these units will now be 25 per cent as compared to 30 per cent that was being paid earlier by these units.
The entrepreneurs in Gurugram acknowledged that tax breaks will ensure short-term benefits in their business operations. But most of them also stated that accessibility to capital is still a major challenge that needs to be addressed.
"Most people who view the start-ups from outside may be delighted that India is the among the leading countries after the USA and China in having start-ups but there is also a flip side to it. Today, most of the start-ups are not running profitably and are facing severe difficulties. Unlike in the US and China, accessibility to capital in India is still quite cumbersome. Due to these challenges, most of the start-ups falter in their operational process and focus less on innovations," said Shobhit Bansal, who runs an educational start-up firm in Gurugram.
"As an entrepreneur, more than the tax deductions, I will see the opportunity that was provided by the Finance Minister for the start-ups in the field of agriculture, education and medicine. While these sectors may provide immense opportunities, many may refrain in exploring these sectors because there is just no capital available to them," added Bansal.
Paramjit Singh, who runs a garment commercial unit in the city mentioned that a long term dedicated policy should be designed for the commercial units.
Singh mentioned that in addition to demonetisation, there are also other factors which have created difficulties for the smaller commercial units.
"You do business with an objective of growing big. Today most of the units are not growing in Gurugram. Besides tax deductions, now, the government must also ensure that there is enough capital for the smaller units to grow into larger ones," Singh added.
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