Relief for startups/ MSME/ women entrepreneurs from COVID 19 crisis

Relief for startups/ MSME/ women entrepreneurs from COVID 19 crisis

2 April 2020
Signatures: 868Next Goal: 1,000
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Why this petition matters


This letter has been sent to Mrs Nirmala Sitharaman, Minister of Finance and Corporate Affairs, by the startup stalwarts on 30th March 2020, and I am re-running this petition to bring about people's support for this submission. I request all the people of India to please sign on this request so we are able to assist the thinkers to take this ahead...

This letter represents the voice of Startups and MSME of India. We are working with all stakeholders to create the right environment for the growth of entrepreneurship and employment within India. 

Today 39,000+ Startups across India are instrumental in building a strong ecosystem conducive for the growth of the economy, driving sustainability, and driving rapid expansion of employment opportunities across various skill sets. Indian startups have pioneered models for delivery of essentials, food and goods via e-commerce, hyper local delivery, efficient logistics, shared mobility, frictionless digital payments, online education, data sciences, health services, medical devices, and biotechnology which are helping all our citizens live better and more sustainable lives. The ease of moving into a Work From Home situation across all companies is powered by the technology by startups and entrepreneurs are working around the clock on Grand Challenges to fight the virus and to mitigate its effects.

However, Covid-19 virus has wreaked havoc across all facets of life and all sections of society. Everyone has been adversely impacted. Covid crisis threatens to destroy all of the progress and future potential of our startup ecosystem in a few short months. Our startup and micro companies across the nation are inherently young, less resilient, and most vulnerable. Many of them face likely devastation during this extraordinary economic downturn. At this dire moment, Indian startups need a robust relief package from the government, lest all our collective efforts of the past few years are in vain.

Startup Industry Representation:

The Startups of India seek support from the Government of India to save Millions of Jobs and businesses impacted by closure of all activities and supply chain across India. Startups are those companies as recognized under the Startup India Action Plan that meet the definition as prescribed under G.S.R. notification 127 (E). Given the unprecedented circumstances we request the turnover limit for startups to qualify for Covid-19 stimulus be extended to Rs 500 crores so as to provide coverage to a
large base of impacted employees.

Urgent Fiscal Support

1) Fiscal support to ensure no job losses/ creation of jobs:
a) The GOI should provide 50% of salary bills and contract wage bills paid by the startups in order to ensure there are no job losses post COVID-19 for a period of April to Sep-20.
b) Pay any bills due by the Central/State Government to start ups or MSME within 30 days of invoicing and clear all pending dues by April 15th, 2020
c) Payment cycle for startups to reduce to 45 days like in case of MSME currently its 45 days.

2) Innovative Credit Measures for Business Continuity:
a) Bank to offer 50% of loan to the extent of last year’s revenue or last two year payroll as working capital loan with low interest rates to start up without collateral through PSU Bank.
b) Allow for Startups to avail of interest free loans secured by the Income Tax and GST refunds, payable upon the receipt of the refund from CBDT or CBIC
c) COVID loans, MUDRA loans all be approved and disbursed in a specific time period like 3-4 days: processes and communication at branch level to be ramped up for this.
d) Deferral of interest payment by 12 months and soft-loans to lending startups to help them pass on the same without adversely affecting their businesses.

3) Relaxation by Statutory Authority for better operations and cash flow:
a) The GOI to expedite refund for income tax and GST by 30th April, 2020 to start ups if refund claimed is less than INR 10 cr.
b) The GOI should allow startups to claim GST refund on account of accumulated GST balance up to 50% of the balance shown in GSTR-3B in March-20 up to maximum of Rs. 20 cr.
c) No fresh notices / enforcement on ground for a period of six months ending 30th Sep 2020.
d) TDS deductions for startups in services business to be @1% instead of multiple higher current rates which vary from 2% to 10%.
e) Allow for a moratorium on the deposits of TDS and GST until 30th, June 2020.
f) GST payment under reverse charge mechanism should be revoked and output tax liability should arise at the time of collection rather than at the time of invoice generation.

4) Access to Capital for Startups :
a) Enhance the limit for SIDBI Fund of Funds commitments to Indian AIFs to 35% from the existing limit.
b) Release money from the SIDBI Fund of Funds to all VC funds who have pending capital calls, provided said money is invested into startups within 30 days of the drawdown being received.
c) Expedite release of payments to new funds applying to the SIDBI Fund of Funds provided they demonstrate the ability to close funding within 60 days of receipt.
d) Enhance drawdowns to Venture Debt Funds to ensure working capital reaches startups.
e) SEBI to expedite new fund applications and issue approvals for all pending applications if they have exceeded 30 days.
f) NIIF to launch a Fund of Fund for Indian AIFs in order to get more capital to Indian startups
g) Organization like NABARD to invest into agri-tech focused funds and co-invest into agri-tech startups.
h) SEBI to allow VCF Funds to extend their timelines beyond +1+1 in case they are currently in their extension periods.

5) Liquidity for funding startups
a) Create 10-15% top up fund for all VCs (AIF Cat I) who have already raised from Fund of Funds /govt agencies (e.g. BIRAC / Kerala) as VC Funds will need to support their portfolio as “Covid Fund”.
b) SEBI extend commitment period for all VCs (AIF Cat I) by 6 months / one year.
c) Expedite all fresh scheme applications by Indian AIFs to ensure that funding reaches startups.
d) The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme should be extended to start-ups on war footing. It will help start-ups manage cash flows and stay afloat as all VC funding will dry up at least for the next 3 quarters. Such a scheme for start-ups can be used for providing immediate short term OD facility.

6) Relaxation by Other Service Provider:
a) There should be a rent-free period of 3 months offered to start ups due to revenue loss during lockdown including government owned places and the landlord should be able to claim offset against MCD taxes/ any other taxes.
b) Electricity, water bills, telephone bills, internet bills etc should be given 90 days of relaxation for making payment for a period up to 30th September 2020.
Many countries like the US, UK, Germany and Canada among many others have announced massive bailout packages in the form of soft loans or government-backed collateral-free loans, tax holidays, a moratorium on liabilities, etc to protect their small businesses, jobs & economy from downfall (Refer Annexure A).

Extension of Timelines
Some extensions in dates for compliances have been announced by the Government recently to ease the burden posed by the COVID-19 crisis. We very much appreciate these accomodations. We are preparing a list of some additional compliances and schemes which will provide much needed relief to the industry
through extension of dates which will benefit start-ups immensely. These measures would in-fact benefit industry in general and we will therefore suggest these in a subsequent communication as across the board measures.

Support for Government Imperatives
We startups are in complete support of the lockdown imposed by GOI and would try our level best to contribute in providing essential commodities or remote assistance to GOI or people of India and also remain at home to break the chain of CoVid 19 spread. We have already formed groups to assist in the efforts and are offering our technology and services to those in need to mitigate the impact on Indian citizens.

Annexure A
Many Countries have announced Economic Relief Packages going up to 15% of their GDP. Prominent among these have announced the following for their small businesses & startups:
1. United States of America (Overall Package Size of $2 Trillion+)
a. $350 billion forgivable loan program to ensure that small businesses do not lay off employees. Businesses with up to 500 employees, can receive loans up to $10 million, based on how much the company paid its employees between Jan 1 & Feb 29. The loans will carry an interest rate up to 4%. Principal of the loan will be forgiven, company only need to pays interest
b. 50% refundable payroll tax credit on worker wages will further incentivize businesses, including ones with fewer than 500 employees, to retain workers
c. Looser net operating loss-reduction rules that will allow businesses to offset more
d. A delay in employer-side payroll taxes for Social Security until 2021 and 2022
e. Sole proprietors and other self-employed workers could be eligible for the expanded unemployment insurance benefits the bill provides
f. A portion of the $425 billion in funds appropriated for the Federal Reserve’s credit facilities will target small businesses
2. United Kingdom (Overall Package Size of £330 billion or $398 billion)
a. Coronavirus Job Retention Scheme wherein HMRC will reimburse 80% of ‘furloughed workers’ wages, up to £2,500 per month for 3 months
b. Deferring VAT for 3 months and Deferring Income Tax payments until January 2021
c. Self-employment Income Support Scheme gives a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months
d. Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
e. 12-month business rates holiday for all retail, hospitality, leisure & nursery businesses
f. Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
g. Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
h. The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years. The government will also make a Business Interruption. Payment to cover the first 12 months of interest payments. The government will provide lenders with
a guarantee of 80% on each loan
3. Germany (Overall Package Size of €750 billion or $814 billion)
a. €100 billion in credit to public-sector development bank KfW for loans to struggling businesses
b. Deferral of taxes, and “unlimited” credit to businesses
c. Economic stability fund (WSF) up to €100 billion that can take direct equity stakes in companies
d. €400 billion in loan guarantees to secure corporate debt at risk of defaulting
4. France (Overall Package Size of €300 billion or $320 billion)
a. Companies that are facing revenue issues can skip tax payments, rent & utility bills
b. Employees receive 84% to 100% of salary — the government will reimburse companies
c. Bridge Funding Round for startups through Bpifrance’s PIA through a €160 million fund (with equal contribution from Bpifrance & private investors)
d. Loans upto €2 billion wherein startups can borrow upto two years of payroll for employees based in France or 25% of annual revenue — whichever is higher
e. Up to €1.5 billion through faster VAT returns and tax returns on R&D investments

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Signatures: 868Next Goal: 1,000
Support now