In India, there is a technology revolution bubbling. The use of mobile phones has never been higher, and it currently stands at well over 960 million. Following the continued explosion of smartphone usage across the country, more than 32% of these almost one billion mobile phones are smartphones. India’s large population is also advantageous to the would-be start-up entrepreneur. With over a sixth of earth’s population, the potential target market is very large. This means it can prove as a fertile testing ground before expansion further, into the global market. It is so surprise than that even India’s government are beginning to make things significantly more simple.
The Securities and Exchange Board of India has begun to change the way that the stock market operates in regard to tech companies. One of the ways in which tech companies can raise money is through an initial public offering (IPO). The start up will offer up a percentage of its shares to be bought by investors through a stock exchange.
SEBI has loosened requirements for technology firms, to allow them to do this more easily. Start-ups are now allowed to be listed on the stock exchange even if they do not generate profit. In the world of technology, where e-commerce giant Amazon continues to operate at a loss, this is not an uncommon scenario.
Where start-ups are concerned, this new development should prove highly advantageous, as without the necessary funds invested, they cannot generate profit. The government has also reduced limits on the resale of shares, lowering the length of time that investors must keep hold of shares bought during the IPOs.
The relaxation of rules, specifically for high-growth technology start-ups, is a calculated approach by the government of India. The ‘Make In India’ campaign has highlighted the government’s focus on boosting manufacturing, and reaping all of the financial rewards associated with it. The measures announced this week seek to boost India’s technology sector, and the economy with it.
In 2014, over $1bn was invested by venture capitalists in India, not all of them Indian.
India’s start-up climate has been heated up with an influx of foreign investors from China, the United States, and many other countries besides. This is not the only source of foreign funds for India’s tech start-ups. Many promising tech start-ups felt they were forced to relocate, to the US or Singapore, to enable their businesses to grow. An example is Flipkart, India’s leading e-commerce company, which is registered in Singapore. By introducing the SEBI’s new relaxed rules for technology start-ups, the Indian government hopes that this will no longer be the attractive option.
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