Piyush Goyal, Minister of Commerce and Industry, has urged the Indian startup sector to take corporate governance seriously. The minister has directed Indian startups to create corporate governance rules that financial auditors may use to audit accounts and identify wrongdoings.
Piyush Goyal, Minister of Commerce and Industry, has recommended Indian entrepreneurs to practice self-regulation in order to improve corporate governance standards.
Speaking at the Global Unicorn Summit, Goyal suggested that Indian entrepreneurs adopt corporate governance guidelines that financial auditors may use to scrutinize accounting and identify any wrongdoings.
Goyal said, “In our startup environment, we need to reinforce that (corporate governance). The types of stories we’ve been reading recently concerning revenue and data fraud, tax evasion, and other such blunders must be cut at an early stage.
Otherwise, they would bring a terrible name to our startup community.”
He asked the startup community in the nation to take this problem seriously in their internal relations.
Goyal added, “So far, we’ve been mostly immune to this problem. I hope this does not become the norm in the coming years. It would destroy the entrepreneurial spirit of our new businesses and can have long-term consequences.”
The minister stated that there are no shortcuts to success and advised the startup community to look long-term in order to produce long-term prosperity.
The remarks come at a time when several businesses and their founders have been accused of tax evasion and deliberate fraud.
Three well-known Indian firms – social ecommerce platform Trell, finance startup BharatPe, and B2B fashion ecommerce startup Zilingo – are being investigated for suspected financial fraud and violations of corporate governance regulations, along with their individual founders.
Ashneer Grover, cofounder of BharatPe, and Ankiti Bose, cofounder of Zilingo, have been suspended by the boards of their respective firms for financial irregularities and violations of corporate governance guidelines.
The minister also advised Indian entrepreneurs to incorporate and list their businesses in India rather than overseas tax havens.
Goyal added, “We strongly advise you to incorporate and list in India. Please let us know if you have an issue or a problem. We will…do all in our power to address them. Please, for a few dollars extra, do not open the country’s borders to tax havens and other countries. The government asks that you consider India as your market and your home country, where you will register, incorporate, work, list, and pay your taxes.”
The minister added, “This (India) is your nation.”
Many Indian companies opt to incorporate outside of India, in countries such as Singapore, for a variety of reasons, including lower corporation tax rates and reduced dividend income taxes.
Among the large names incorporated and located in Singapore are ecommerce behemoth Flipkart, mobile advertising platform InMobi, and SaaS firm Capillary Technologies.
During his speech, Goyal also encouraged venture capitalists (VCs) to support and preserve young Indian companies’ intellectual property (IP). He encouraged them to guarantee that India is the principal beneficiary of these indigenous intellectual property advances.
Goyal further stated that by 2030, the Indian startup ecosystem will have 1,000 unicorns. The country now has 99 businesses in the unicorn club.