Goa’’s Startup Policy has the target of launching 100 startups in a year. The policy has provisions for financial incentives for employing local youth in startups. It is a part of the IT Investment Policy 2015 and has been made after talking to all stakeholders.

The policy’’s aim is to make Goa among the top 25 startup destination in Asia by 2025. It envisages startups anywhere as residents are permitted to avail benefits and launch start-ups at different locations across the state. The government plans to set up a start-up promotion cell which will serve as the nodal agency to register the start-ups established in the state as well as to provide them support in the various legal and human resource aspects. Goa’’s IT industry comprises over 100 companies, of which 70 per cent are startups. Further, about 15 per cent of the startups have turnover between Rs one- Rs five crore, which is a good track record vis-à-vis the national average.

Ø When will agency be formed that will decide 50 per cent outsourcing to start-ups?

Ø When will rules be declared to claim various incentives?

Ø When will forms to claim incentives be available on the Goa state portal?

Ø What is the time frame within which claims will be processed?

Ø Can claims be deemed to have been accepted if not processed within the set time?

Ø By when will the incentives be actually disbursed after claims have been accepted?

Goa has seen several IT policies in the past from several governments. None of them were implemented. IT policy is a state level policy and does not require any clearance from the centre and yet successive governments in Goa failed to put them in practice.

A new policy was notified in September called as Goa Start-up Policy 2017 and looks to be a better version. It is meant for start-ups. It is important to know that start-up is a unit that has not crossed a sales turnover of Rs 25 crores in any of previous years. In the year it chooses to claim incentives, it should be less than seven years since it was formed. The policy can be downloaded from the state government website.

The most important highlight of this policy is that start-ups can expect to receive at least 50 per cent of the government’’s annual spending on IT. There will be a central agency that will handle IT requirements of all departments. The policy says, “the agency shall necessarily outsource a minimum of 50 per cent of requirements to Goa based Start-ups”. This provision is very significant and it will work as a spring board to accelerate growth of start-ups.

It could lead to several small, local companies bidding for projects. Government tenders require bidders to deposit two per cent of project cost as Earnest Money Deposit (EMD). A Rs 50 lakh work will need Rs one lakh EMD from each bidder and a sizeable money of start-ups will get blocked. There are cases in the past where even two years after opening bids the work order was not released by a municipality nor was the EMD refunded. Start-ups will not be able to operate in such situations.

My suggestion is to exempt such units from EMD. Such a provision is already there in Preferential Purchase Scheme (PPS) of the directorate of industries where a unit registered as SSI has to pay nominal amount of Rs 200 towards the tender document and Rs 500 towards the EMD. It may take the government some time to incorporate this much desired change in the policy. In the meanwhile IT start-ups can register as SSI units under PPS to work around EMD problem. This will lead to double registration with the department of IT and the directorate of industries but is worth considering.

There is another matter that needs attention and that is turnaround time of projects. The process currently followed by the government departments are as follows. Proponent of a project puts forth an idea. If department decides to take this up, it needs to prepare a budget for which it sources quotations and prepares an estimate report. Typically in larger department like PWD, files moves from the JE, AE, SE, CE, PCE, secretary and minister and comes back through same levels to EE with administrative approval. This step takes several months. Then tender is floated and expenditure sanction (ES) is taken, once again file moving through all above levels. Another few months pass.

Similarly when a project is delivered, payment process involves several levels although payment is now online. For a project of three to four months, there are cases where file movement has taken eight to 10 months. This is too long a process for start-ups. It is absolutely essential to make the process lean and agile by decentralizing decision making. Different limits can be sanctioned for division and department heads for projects reserved for start-ups. IT Policy has thought of identifying an agency that will centrally collate total requirements of all government departments and allocate 50 per cent exclusively for start-ups. This agency can get choked up with documentation work. Its role could be limited to giving the NOC for project initiating department who then can do tendering work in decentralized manner.

On positive side, one can see fresh thinking that has gone in framing this policy and there are various incentives to help start-ups. Help will come from Idea-to-PoC fund, working capital fund, seed capital fund, R & D fund, one time grant fund, etc.

The Policy on the whole has positive implications. All earlier policies failed to progress beyond announcements. The government has raised hopes of youngsters and it must now deliver. A promise made is a debt unpaid. There are several activities the government has to do to execute its good intentions. The policy raises several queries (see box). .

The government should address these issues in a time bound manner and announce dates and time frames. Without dates there will be no sense of urgency. If too much time is taken to accept applications for incentives, some start-ups may just cross the seven year time limit and it will be very unfair to leave them out after a policy has been notified. For start-ups, they must make the best of this opportunity. Opportunities are like sunrises, if you wait too long you miss them.

Govt has begun well by notifying the Start-up Policy 2017. Well begun is half done! Begin again and the rest half will be done.

*The author is an IT professional and mentors start-ups. He can be reached at sanjivnadkarni@hotmail.com