Today’s News Updates -7.February 2018

Tools for ranking of startups

Three new tools for States and Union Territories for ranking of startups in the country have been launched. These will act as catalysts to help the Startup India initiative to drive India’s economic growth.

The tools are: The State and Union Territory Startup Ranking Framework, the Compendium of Good Practices for Promoting Startups in India and the Startup India Kit.

About the Ranking Framework:

The key objective of the Startup States and UTs Ranking Framework is to encourage States and UTs to take proactive steps towards strengthening the Startup ecosystems at the local level. The Ranking Framework will measure the impact of each step initiated at the local level for building a strong Startup ecosystem. The Ranking Framework will also enable contnuous learning through the dissemination of good practices.

The Ranking Framework is based on the feedback collected from Startup ecosystem stakeholders, which include startups, mentors, investors, accelerators, incubators and the government bodies. Areas which should be given greater thrust like seed funding support, women entrepreneurship are given more score.

Startup India Compendium of Good Practises for promoting Startups in India:

It focuses on enriching the Startup ecosystem through ethical behaviours and is currently followed by 18 States and UTs. It covers 95 good practises across 7 areas of intervention. These are distilled into 38 action points including Incubation Support, Seed Funding, Angel & Venture Funding, Startup Policy & Implementation, Simplified Regulations, Easing Public Procurement, Awareness & Outreach.

The Startup India Kit:

It is primarily a one-stop guide on all Startup India offerings. It offers vital information, advice and assistance through website links, statistics, tools, templates, events, competitions and a glossary on startup terms. All the benefits available to startups from the Startup India initiative can be found in the kit.

Significance of Startups:

India is home to about 20,000 startups, with about 1,400 beginning operations every year. They are not only driving economic growth but also leading to technological innovations and employment generation in every state. Entrepreneurs are introducing new solutions everyday and also improving existing processes. To encourage and help statrups the Govt of India has taken the lead in creating policies and a framework. Many States and UTs have a startup focussed environment with ease of doing business for startups.

Way ahead:

The Govt has to align its strategies to tap into the infinite potential of young entrepreneurial minds. Startups need help in the journey from idea to business and business to success. States will also have to take proactive steps to enable startup ecosystems at the local level.


Inverted duty structure

The Union Budget has reinforced the correction of the inverted duty structure (IDS) which has adversely impacted manufacturing for decades.

Reforms:

The Budget has raised customs duties significantly. The goods and services tax (GST), especially the IGST or Integrated GST component, has begun to erode the advantage that the IDS was giving to foreign exporters in Indian markets. Also, the Finance Minister, in Budget 2014, had announced the beginnings of a reversal of the IDS in electronics and has sustained that effort in subsequent Budgets.

What is Inverted duty structure?

An IDS means higher duty on intermediate as opposed to final/finished goods, with the latter often enjoying concessional custom duty under some schemes. Inverted duty structure is a situation where import duty on finished goods is low compared to the import duty on raw materials that are used in the production of such finished goods. For example, suppose the tariff (import tax) on the import of tyres is 10% and the tariff on the imports of natural rubber which is used in the production of tyres is 20%; this is a case of inverted duty structure.

Concerns associated with IDS:

When the import duty on raw materials is high, it will be more difficult to produce the concerned good domestically at a competitive price. Several industries depend on imported raw materials and components. High tax on the raw materials compels them to raise price. On the other hand, foreign finished goods will be coming at a reduced price because of low tax advantage. In conclusion, manufactured goods by the domestic industry becomes uncompetitive against imported finished goods.

The disadvantage of the inverted duty structure increases with the increased use of imported raw materials. An inverted duty structure discourages domestic value addition.


“Development of Solar Cities” scheme

The Ministry of New and Renewable Energy under its scheme “Development of Solar Cities” has approved/sanctioned 60 Cities including 13 Pilot and 5 Model Cities up to 12th Five-year Plan period.

About Development of Solar Cities scheme:

The Ministry of New and Renewable Energy is implementing a programme on ‘Development of Solar Cities’ which aims to reduce a minimum of 10% of the projected demand of conventional energy of the city through renewable energy installations and energy efficiency measures. Sixty Cities are proposed to be developed as Solar Cities during the Eleventh Plan period including four Model Solar Cities and 10 Pilot Solar Cities. The Master plan for each Solar City is being prepared to assess and utilize various renewable sources including Solar, Wind, Municipal Waste etc.

The criteria set by the ministry for the identification of cities include a city having population between 50,000 to 50 lakh (with relaxation given to special category states including northeast states), initiatives and regulatory measures already taken along with a high level of commitment in promoting energy efficiency and renewable energy.

Need for Solar Cities:

Urbanization and economic development are leading to a rapid rise in energy demand in urban areas in our country leading to enhanced Green House Gas (GHG) emissions. Many cities around the world are setting targets and introducing polices for promoting renewable energy and reducing GHG emissions and the countries like Australia and USA are developing the solar cities.

Several Indian cities and towns are experiencing rapid growth in the peak electricity demand. The local governments and the electricity utilities are finding it difficult to cope with this rapid rise in demand and as a result most of the cities/towns are facing electricity shortages. In this context, the “Development of Solar Cities” programme is designed to support/encourage Urban Local Bodies to prepare a Road Map to guide their cities in becoming ‘renewable energy cities’ or ‘solar cities’.

The Solar City programme aims:

To enable and empower Urban Local Governments to address energy challenges at City – level.
To provide a framework and support to prepare a Master Plan including assessment of current energy situation, future demand and action plans.
To build capacity in the Urban Local Bodies and create awareness among all sections of civil society.
To involve various stakeholders in the planning process.
To oversee the implementation of sustainable energy options through public – private partnerships.


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