Incentives provided by Indian government

it is now evident in that the Indian government is trying to nurture the spirit of entrepreneurship in the country. Various incentives and policies that the government has adopted towards business activities are evidenced by this aspect. The following are some of the available incentives to help in accelerating the growth of business enterprises and in encouraging aspiring entrepreneurs to venture into business activities. • Investment Allowances: These are financial benefits that accrue to entrepreneurs who invest in particular assets required in their businesses. The allowances arise due to tax deductions. Entrepreneurs are entitled to these allowances depending on the assets acquired or building installation. • Import Incentive Schemes: The main aim of import incentive schemes is to encourage the formation of manufacturing enterprises through reduction of import tariffs on inputs such as machinery, raw materials, etc. • Export Incentive Schemes:

once given. has constructed sheds which are used as operating premises for entrepreneurs. It was aimed at accelerating investment in SMEs and boosting credit facilities that are accessible by SMEs.incentives for Export Processing Zones (EPZs). enables entrepreneurs to operate within a given area.exporters are allowed to claim 20% as export compensation. no Value Added Tax (VAT) on exports. thereby supporting their continued growth. They include adopting new technology such as the fiber optic cable and advising entrepreneurs and assisting them to identify viable business opportunities. Examples of such sheds are the Nyayo sheds which are meant to cater for the Jua Kali artisans and the construction of Muthurwa hawkers market. • Friendly Policies: The Kenyan government formulates and implements policies that are intended to promote trade and industrial development. Plans to have SMEs listed at the Nairobi Stock Exchange were finalized at the end of the year 2010.They are common for export oriented businesses and industries e. etc. • Issuing of Trade Licenses: A trade license. Imports and exports licenses provide viable opportunities to venture in the global market. duty free imported raw materials.g. capital allowances on the installed machinery . • Provision of Industrial Sheds: The government. • Providing Training Opportunities: Various government institutions now offer training on entrepreneurship . through the Ministry of Industrialization.

000 each went to the best Woman Entrepreneur and Social Entrepreneur. increasing government expenditure. lowering borrowing rates. Special awards of Ksh. It enables them to benefit especially where they network with suppliers.750.000 respectively. also gave cash awards to promising entrepreneurs. which apart from offering invaluable training to all successful applicants to the competition. combating inflation.000 and Ksh. while the second and third best winners received Ksh.250.1million. • Market and Networking Opportunities: Networking is the key activity throughout the life of entrepreneurs. The establishment of the Kenyan Youth Fund and the Women Enterprise Fund is a clear indication of the government’s commitment to ensuring accessibility of credit facilities to both practicing and aspiring entrepreneurs. The top entrepreneur received a prize of Ksh. • Reducing bureaucracies and red tape procedures in areas such as . This has been evidenced through friendly tax system. etc. has been committed to boosting business activities within the country. customers and other business associates. • Fiscal and Monetary Policies: The government. through its fiscal and monetary policies. The government has also partnered with private training institutions to provide entrepreneurial skills to entrepreneurs.skills.500. Examples of such training opportunities are the 1st phase of 2009 Jitihada National Business Plan Competition. • Provision of Finance: The government has been actively committed to providing finance to various groups of entrepreneurs.

issuance of trade licenses is also an effort by the government to give the incentive to entrepreneurs. and ownership structure (e. the House Committee on Small Business held a hearing on the Research and Everybody wants lower taxes. Tax incentives provided by government A Tax Court decision would now allow investors in LLC and LLP companies to deduct losses against salary and investment income. When I was a staffer for a Congressman on the Ways and Means Committee. • The government’s permission to liberalize trade is yet another incentive to entrepreneurs. Given these incentive effects. Last Thursday. financing structure. yet another important task for this Administration should be to question whether our taxes are helping or hindering entrepreneurially-driven economic growth. LLCs and LLPs have been the preference for most new businesses in part because of the benefits of freedom from double taxation).g. The decision could still be repealed and its effects are different for entrepreneurs facing losses and for those that are profitable. I learned this . Taxes also often affect the very decision to launch a business. but I wanted to mention it because it highlights the relationship between the tax system and entrepreneurial activity.. Taxes influence decisions regarding hiring.

the corporate tax diminishes the incentives for effort and advice among VC investors in a start-up.S.5% in the long-run. This certainly produces negative effects. Right now. For example. Let’s remind ourselves that the tax code is a policy tool of the government. Why deter a beneficial activity with unnecessary barriers? The Small Business Administration found that lower marginal rates on entrepreneurial income boost survival rates of young firms. innovation. which is consumption-based. What incentives are there in seeking government grants for a new business? The incentives for entrepreneurs to seek government funds for their new business are considerable.was far from simply about paying more or less. Department of Treasury explained. our current tax code contains several antientrepreneurial incentives. Yet. Entrepreneurship offers so many public benefits: jobs. has the secondhighest statutory corporate tax rate among developed nations. is expected to increase economic output by up to 2. For instance. In fact. the loans given by the Australian Commonwealth government are typically . The U. that replacing the corporate income tax with a Business Activity Tax (BAT). for example. we know that entrepreneurship is key to recovery. the U. economic growth. If there was ever a time when taxes on entrepreneurial activity should be lowered and tax incentives easier to implement for entrepreneurs.S. by reducing a mature firm’s value. it is now.

and the government also gives out grant money that is usually not expected to be repaid. and thus is effectively the same as free money. saving you time and improving your chance of successfully applying .low-interest. There are resources available to offer assistance with researching the various government funds.

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