NEW DELHI: Indian entrepreneurs will receive generous tax breaks and face dramatically reduced red tape when starting and closing a business, Prime Minister Narendra Modi said Saturday, as he launched a pet initiative to bolster India's fast-growing startup scene.
Speaking at a gathering of 2,000 entrepreneurs from India, Silicon Valley and elsewhere, Modi outlined a slew of measures under Start Up India including exempting startups from income tax for their first three years.
"We have a million problems but at the same time we have over a billion minds," Modi said, adding that the government will earmark 25 billion rupees ($370 million) for the plan annually over four years.
"We want to start a system of hand-holding for startups. The government will be like a friend and a mentor," he said.
New Delhi views startups as key to providing jobs for aspirational young Indians and plans to offer easier access to bank loans through the "Start up India, Stand up India" campaigns first announced in August last year.
Under the measures outlined Saturday, startups will also be exempt from capital gains tax and will not face inspections for labour or environmental law compliance for three years, while patent application fees will be slashed by 80 percent.
Entrepreneurs will be able to register their businesses in a day via a mobile app -- in sharp contrast to the current bureaucratic process --and will be able to wind down failures in 90 days, Modi said.
The prime minister joked that had he possessed more entrepreneurial flair, the one-time tea-seller would have been able to open a hotel chain.
"No matter what Narendra Modi can or cannot do, the youth of the country can," he said.
Finance Minister Arun Jaitley said earlier Saturday that simpler tax rules for startups would be introduced in the upcoming budget in February to unshackle them from the complex regime faced by large companies.
He promised an end to the "licence raj" -- bureaucratic controls dating from British colonial rule mandating endless permits that have stalled multi-billion dollar projects and small investors alike.
"The regime intended to be created is intended to give complete freedom from the state," Jaitley said.
"The more the sector becomes unregulated the better it will be," he said.
In September Modi visited Silicon Valley calling on deep-pocketed investors to turn their attention to India's thriving start-up ecosystem, with large tech hubs in the cities of Bangalore, Hyderabad and Mumbai.
A report from tech industry body Nasscom in October 2015 said India had the world's fastest-growing startup community, which the government says is the third largest globally.
However, there are fears the tech bubble may be bursting, with analysts warning that many online startups are overvalued.
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