Amendments to One Person Company Act are all set to give a thrust to entrepreneurial skills in the country and democratise start-up movements in small towns
Changes in the legislation will spur entrepreneurial activities in the country
The country is witnessing a massive start-up momentum for the past few years because the youth of the nation now believe in themselves and take risks to translate their ideas into entrepreneurial success by leveraging the ecosystem developed by the government and industry over a period of time. The start-up ecosystem in the country is ever evolving because of timely reforms and policy initiatives. However, it requires continuous analysis and brainstorming to take it to the next orbit. OPC amendments are steps in this direction, which will set the context for democratising entrepreneurship, increasing equitability and inclusiveness, and empowering youth of smaller cities and towns to join this bandwagon.
Amendments to the One Person Company (OPC) Act by allowing incentivisation for incorporation of a company without any restriction on paid-up capital and turnover including the flexibility of converting OPC to any form of company at any time underscores the government’s vision for encouraging youth from every nook and corner of the country to empower themselves by creating job for others. Furthermore, allowing Non-Resident Indians (NRIs) to set up an OPC in India while significantly reducing their residency limit to 120 days from 182 days will play a pivotal role in attracting FDI through NRIs without any hassles.
Need to Sensitise Youth
Start-ups in the country are doing tremendously well. However, it’s limited to few cities and closer to capital resource centres. Aspiring youth of smaller towns who want to become entrepreneurs are refrained by legal complexities, funding, and other statutory compliances required for starting a company of their own. It’s high time to disseminate and sensitise these youth about the OPC amendments at the regional level to leverage the same to start their own company, translate their skills into building successful business ventures, strengthen regional growth balance, and eventually join the mainstream of entrepreneurial journey. Particularly, removal of restriction on paid-up capital and easy access to capital will empower budding entrepreneurs to venture into a company formation with ease. This will ensure the realisation of the vision of the OPC amendments to catapult the growth at the regional level.
Bigger Role for NRIs
Apart from encouraging youth from smaller towns, OPC also provides immense opportunities to thousands of NRIs to fulfil their dream to do business in the country without any hassle for which they want minimum legal compliances and procedures to begin with. Recent OPC amendments now empower NRIs to plan their business ideas to materialise on ground. This will help in changing the start-up landscape of the country as NRIs are now able to infuse money in start-ups and work for promoting innovation and best practices and also contribute to solve societal problems meaningfully. The limited liability feature of OPCs will encourage NRIs to move from other countries and start establishing their own companies in India, which eventually will boost FDI.
India also aspires to become a software manufacturing hub by leveraging the legacy of a highly successful IT industry. During the recent pandemic, many start-ups have developed path-breaking products to address challenges in healthcare and other sectors. The recent amendments to OPC will empower these young innovators to start their own companies and develop products in a more inclusive way, while transforming India into a software product nation as envisioned in the National Software Product Policy (NPSP) 2019.
Amendments to OPC are opportune and disruptive to build a new India that aspires to become a $5 trillion economy by leveraging the potential of India in creating millions of young entrepreneurs who desire to leverage their knowledge and innovation skill. OPC could create opportunities to democratise and formalise entrepreneurship, reduce cost of doing business, speed up reverse migration, disperse economic hubs to smaller cities, fuel IP creation, generate massive employment opportunities, and bolster national GDP
The small businesses in India usually adopt ad-hoc practices to run their business, as they have a fear of compliance burdens. Consequentially, most of small businesses are not organised and their growth is constrained. Hinged on the principle of ease of doing business in India, OPC will remove cumbersome compliances and provide youth, budding entrepreneurs, small traders, artisans, and skilled professionals worry-free environment and enable OPCs to raise funds from investors and banks, leverage various government schemes, and most importantly, the owner of the OPC will not be sued in case of default. Such advantages will provide small businesses and entrepreneurs a legal framework which eventually helps in improving the ease of doing business rank of India globally.
Amendments in OPC are opportune and disruptive to build a new India that aspires to become a $5 trillion economy by leveraging the potential of India in creating millions of young entrepreneurs who desire to leverage their knowledge and innovation skill. OPC could create opportunities to democratise and formalise entrepreneurship, reduce cost of doing business, speed up reverse migration, disperse economic hubs to smaller cities, fuel IP creation, generate massive employment opportunities, and bolster national GDP.
(The writer is Director General Software Technology Parks of India, Ministry of Electronics and IT, Government of India)
