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Goyal asked Indian startups to develop corporate governance standards on the basis of which financial auditors can scrutinise accounts and report wrongdoings

He urged the Indian startup community to take the issue of corporate governance seriously

He also asked entrepreneurs to incorporate and list startups in India and not move to tax havens

Minister of Commerce and Industry Piyush Goyal has advised Indian startups to practise self-regulation to strengthen corporate governance standards. 

Addressing the Global Unicorn Summit, Goyal recommended that the Indian startups should develop corporate governance standards on the basis of which financial auditors can scrutinise  accounts and report any wrongdoings. 

“We need to strengthen that (corporate governance) in our startup ecosystem. The kind of reports that we are reading of late about revenue and data fraud, tax evasion, these kinds of malpractices need to be clipped at an early stage. Otherwise, they will earn a bad name for our startup world,” Goyal said. 

He requested the country’s startup community to take this issue seriously in their internal interactions.

“We have by and large been insulated from this problem so far. I hope these don’t become the norm in years to come. It will really kill the entrepreneurial spirits of our young startups and can have very damaging effects in years to come,” Goyal said. 

The minister said that there are no shortcuts to success and urged the startup community to think for the long-term and create sustainable wealth.

The comments come at a time when there have been some allegations of tax evasion and wilful fraud against some startups and their founders. 

Three well-renowned Indian startups – social ecommerce platform Trell, fintech startup BharatPe and B2B fashion ecommerce startup Zilingo – are under scrutiny, along with their respective founders, for alleged financial frauds and breach of corporate governance rules. 

BharatPe cofounder Ashneer Grover and Zilingo cofounder Ankiti Bose have been suspended by the respective boards of their startups for financial irregularities and violation of corporate governance norms. 

Incorporate In India, Don’t Move To Tax Havens

The minister also urged Indian entrepreneurs to incorporate and list startups in India and not to move to tax havens. 

“We urge all of you to incorporate in India and list in India. If you have an issue or problem, please tell us about it. We will…make every effort to resolve them,” Goyal said.

Just for a few dollars more, please do not leave the nations’ borders to tax havens and other countries. The government requests all of you to look at India as your market and your nation where you will register, incorporate, work, list and pay your taxes. This is your country, Goyal added.

Many Indian startups prefer to be incorporated outside India in countries such as Singapore for a host of reasons, including lower corporate tax rates and lower tax on dividend income. 

Ecommerce giant Flipkart, mobile advertising platform InMobi and SaaS startup Capillary Technologies are among the big names incorporated and headquartered in Singapore.

During the address, Goyal also asked the venture capitalists (VCs) to promote and protect the intellectual property (IP) created by young Indian entrepreneurs. He urged them to ensure that India is the primary beneficiary of these home-grown IP innovations.

Goyal also said that the Indian startup ecosystem will have 1,000 unicorns by 2030. At present, the country has 99 startups in the unicorn club.