In India's latest national budget, released Wednesday, the government unveiled a new policy extending the time period within which start-ups can utilize their three-year tax holidays.
Previously three out of five years, the increase to a window of seven years now offers eligible start-ups a longer leeway to become profitable and then use the tax holiday, allowing for maximum benefit.
The budget also relaxed the conditions relating to start-ups' carrying forward of losses. Previously, founders were required to continue holding at least 51 percent of voting rights before losses could be carried forward. Now, the condition applies so long as the founder remains invested, regardless of stake.
"These moves will not just play a key role in reducing the net tax outflow for start-ups, but also serve to attract more investments in the business," said Amit Singh, co-founder of Gurgaon-based bus aggregator Shuttl. Singh called the moves "pivotal" towards encouraging the start-up community.
Digitization was also a key theme of the budget.
Speaking with " Squawk Box Asia ," Singh called the digitization push by the government a "definitive change for the country and the start-up ecosystem." Shuttl is 100 percent digital and cashless by design, a move company executives decided early on. Singh said the government's initiative will move a larger segment of the transport user base "towards digital and start using digital payments and mobile apps, broadening the market in a big way."
Founded in April 2015, app-based Shuttl offers urban commuters a cost-efficient and reliable transport option in the country's notoriously congested roads. The company currently offers around 10,000 rides each day to commuters in India's National Capital Region, operating on more than 50 routes, with more than 300 buses on the platform. The company has been funded by Sequoia Capital, Times Internet and Lightspeed Ventures.
The digital economy in urban mobility
India stands at the forefront of the ever-evolving urban mobility space. Despite the recent launch of a slew of start-ups from ride-sharing in taxis to smart bus applications, the potential for transport aggregators in an increasingly frustrated and tech-savvy population remains vastly untapped.
Players in bus aggregation—such as Shuttl, Ola Shuttle, and ZipGo—continue to face challenges in the regulatory framework, particularly in issues surrounding the ambiguity and multiplicity of regulations in different cities.
These issues continue to serve as impediments for these companies' development. In February 2016, some ZipGo vehicles were seized by the state transport department for not having stage carrier permits and violating rules — one of many times in which the firm has had to suspend its services.