Reimagining Business in New India
As the world emerges from the pandemic, it has opened up numerous opportunities. However, these opportunities come with challenges that India and the rest of the world must contend with. In this conclave, successful entrepreneurs, leaders and experts share their thoughts, opinions, insights and experiences with a focus on inspiring and guiding businesses, young entrepreneurs, and investors about the opportunities available and how to grow their business potentials.
Mr Sunil Mathur, Director General of Income Tax Investigation (TN & Puducherry)
We have just come out of a very difficult period. We are really lucky that India—our people, economy and businesses—has been very resilient. Although we had a bad FY20-21—the economy was literally in recession and growth was negative at around 6%, we did well in the subsequent FY21-22. The growth rate has been around 8.5%, and in the coming financial year, it is expected to be 7.5%. This shows that the country is recovering and the economy gaining the momentum lost two years ago. This fact is also borne out by the robustness in revenue collection. Last year, the government had targeted revenue collection of about Rs.22 lakh crore but the revenue departments could achieve about Rs.27 lakh crore. This shows that revenue collections are rising and there is momentum in the economy. This year also, after the first instalment of direct tax collection, we find that there is a growth of about 45% in net collection. These figures indicate that businesses have done well and are ready to take India into the next level. We have a new India which is looking to leap into a league of advanced nations. In this new India, our current government wants us to be Atmanirbhar Bharat—a self-sufficient and self-dependent India where businesses have a big role to play.
Efforts in Digitisation
Businesses among themselves are doing well in adopting technology. The government is also trying to keep pace with them and it is not lagging behind. The tax departments have taken a number of initiatives in digitising processes and compliance requirements, thereby making an effort to ease the compliance burden of taxpayers. You must have seen what has happened during the past 10 years in the IT department—right from payment of taxes, getting PAN number allotted, filing of income tax return, filing of TDS return and processing of returns, etc. Now you can do everything online, sitting at home!
About two or three years ago, the scrutiny of assessments by the IT department was an area where the taxpayers were required to come to the IT office. If their case got selected for scrutiny, they will have to come to the IT department to attend to proceedings of assessment and also subsequent proceedings. In August 2020, a transformative decision was taken by the government. The Prime Minister announced a scheme that honours the honest, in which it was decided that the major part of income tax department would become faceless. After two years, we have almost implemented that scheme.
The features of this scheme are very unique, and they may not be there in many of the advanced countries. Under this scheme, if your case is selected for scrutiny, you will not be required to go to the IT department. Whatever notices are issued, the communication will be online. The information will come in your registered account. Once the notices come, you will also have to file all your responses and submissions to the questions asked, online.
Territorial-less Assessment
Another feature is the scrapping of territorial jurisdiction. If you are in Chennai and say, you live in Nungambakkam area, there used to be an assessing officer in charge of Nungambakkam area and you had to appear before that officer for your scrutiny assessment. Now, your assessment will not be done by him. It may be done by anyone else in the country. Your assessment case may be assigned to somebody in Gujarat, Assam or Rajasthan. You will not have any contact with your assessing officer. He may be far-off and will communicate with you only online.
Group Assessment
The third feature is group assessment. An officer who has been assigned from any part of the country will question you, but he will not do it alone. He will prepare a draft order which will then be shared with another unit called review unit. This unit will review the draft order and only when it approves the order, a final order will be passed. This scheme is called group assessment. The idea is to make it comfortable for the taxpayer to comply with the requirements. During the initial implementation of this scheme, there were some teething problems. There may be some problems even now and we are improving them. Some of the taxpayers want to have personal hearing as they want to explain their case personally. So the government has allowed to have personal hearings too, but again, these will not be face-to-face or in person. It will be through video conference and the assessing officer will be at a remote place. The link for the video conference will be shared with the taxpayer.
The faceless and territorial-less assessment has now been extended to faceless penalty scheme and faceless appeals. The appeals were being done by the Commissioner of Appeals. Now if you appeal from Chennai, it will be heard by somebody sitting somewhere else. This is a transformative change which has been brought by the government with the intention to minimize the compliance burden of the taxpayer.
Goodbye to Parking Woes
On a lighter note, while this has brought a lot of comfort to the taxpayer, our officers have become lonely. Nowadays, there are hardly any visitors to the IT department. Earlier we used to have parking problem in our offices. It is no more there because whatever the taxpayers want to say, they have to say it online. It is also compulsory for the officers to communicate with taxpayer only through online.
Of course, there is an exception to this: the investigation wing, which is in charge of conducting IT raids. From this wing, sometimes we go to the taxpayer and at other times, the tax payer is called to our office for scrutiny.
Re-engineering of Conventional Business Using Technology
Mr Santosh Parekh, Partner, Tulsi Silks, Chennai
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Thirty years ago, we did not have a differentiator in selling our silk sarees. I stayed in a weaver’s place for three months to understand the weaving process. Then we did backward integration, added looms and designed our sarees, after which our business started picking up gradually.
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Family owned businesses must embrace technology and for which, a top-down approach is needed. It is very easy for people with business experience to adopt technology.
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To insulate from competition, businesses must focus on R&D, investing in technology and recruiting the best talent.
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We have embraced technology and we are now using apps in our entire business, providing customers and other value chain partners with great experience.
Trade from India – The Story for Next Decade
Mr Navin Ranka, Director, SPR India, Chennai
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Historically, India is very strong in trade. Trading comes to India quite naturally but we don’t focus on trade tourism as China does.
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China makes 49% of US toys, 70% of world umbrellas, 60% of world buttons and 72% of US shoes. All these are not high tech.
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India’s falling behind in trade is because of its losing steam in manufacturing, while focussing heavily on services.
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Parking, safety and sanitation, restricted movement, risk of fire, rainy days and legal challenges are the key impediments to doing trade in India and showcasing it to the world.
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The solution lies in building world-class Trade Parks. Each Tier 1 city must have at least one or two trade parks.
Brand Building for Success
Mr Vijay Parthasarathy, Brand Specialist, Mind Coach and Speaker
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Businesses must develop a strong brand narrative that resonates with customers.
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Emotions are the key to build a powerful brand. It is never about what we are. It is always about who we are.
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The secret to building a powerful brand is picking the right emotions, mapping it with the target customers and then building the narrative carefully.
Tax Technology—Current and Future Trends
CA Divyesh Lapsiwala, Partner, Ernst & Young, Mumbai
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Tax technology is all about tax professionals and very less about the software itself. Therefore, tax professionals must drive the technology.
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Earlier, it used to take a long time to summarise the transactions and tax used to be the last point. Now with ERPs being used by most companies, we see frequent use of the tax module and thus, tax planning. Tax has thus determined the way of running businesses.
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The penetration of tax technology that we see in India is not seen even in many advanced countries. They are now trying to introduce the tech with many similarities to the India model (like E-invoicing and GST filing). It is a proud moment and an opportunity for us, as we go along.
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Looking at GSTIN data for the last 4 years, we can see that 80.2% tax payers are proprietary concerns paying 13.3% of GST.
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E-Invoicing is one of the most successful and transformational thing that India has done.
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The guiding principle of new approach is based on: Re-use of IP; leveraging new technology and Re-use of data.
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Efficiency, Risk & Governance and Value optimisation are critical aspects in tax transformation.
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Tax professionals must aim to offer platforms that can be operated on mobile phones and which can be easily used by the customers. This presents huge opportunities.
Stock Market and Opportunities in Alternative Investment
Mr Sudarshan Lodha, Founder & CEO, Strata Property, Bangalore
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Investments must give a return that can beat inflation.
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There are multiple products available in the market that can give you good returns and help you grow your business. Some of the alternate investment opportunities which are different from traditional investments are:
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Invoice discounting
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P2P lending / Liquid loans
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Fractional commercial real estate
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Working capital financing
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Bonds (E-rated bonds that give a very good return)
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Revenue based financing
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Asset financing (like funding charging stations for Electric Vehicles.)
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Platforms are there for all these options. They take care of the CIBIL score and other requirements that a lender / investor must be concerned with.
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KredX, Wint, Grip, Klub and Smallcase are some of these platforms. Using these platforms, one can also raise money for their own businesses.
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Though there are risks associated with these like defaulting of bill payment by a company, these can be managed by carefully selecting the companies. Investors can experiment with a minimum of 3 to 5% of their portfolio in these alternate investments and explore.
Stock Market and Opportunities in Alternative Investment
Mr R Pallava Rajan, Founder -Director, PMS Bazaar, Chennai
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There are two major categories of alternative investment.
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Category 1: Angel funds, Venture capital funds, SME funds and Infrastructure funds
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Category 2: Private equity funds, debt funds, Fund of funds, Real estate funds.
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There is enough of asset class available in our country that is well regulated and which can be picked by us, with minimum investment. All asset classes will not perform well at the same time. Investors must understand this fact and have a well-diversified and balanced portfolio.
Emerging Technology – Driver for Business Growth
Mr Vijay Hebbar, Sr. Vice President & Global Head, Sales and Marketing, KrypC, Bangalore
The Top Trends that can impact your business are:
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Smarter devices (like intelligent home robots)
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Robotics, AI and Machine Learning
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Computing Power (Use of Cloud, 5G and 6G)
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3D Printing (including printed food, metal and composite materials)
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Genomics (modified crops, disease eradication, new vaccines and medical breakthroughs)
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New Energy Solutions (Green Energy and Cost Effective)
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Quantum Computing
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Digital Trust / Blockchain (Distributed ledgers and non-fungible tokens –NFTs that transform the world)
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Extended Reality (ER) / Metaverse whose advances pave the way for incredible experiences.
Transition of Family Business to Next Generation – The Nitty-gritty and Nuances
Mr Krish Srikanth, Business Family Mentor, Life & Executive Coach Organisational Consultant, Chennai
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Business owners must know the difference between business and employment. If the day-to-day operation of a business cannot run if the owner is not there, then it is not a business. It is, in other words, self-employment for the owner.
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Have a vision for the business.
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Treat business income as separate from personal income. The owners must aim to become to financially free as individuals. Even if the business fails, the individuals must be able to run their life with the same lifestyle. Therefore, diversify your investments in different buckets.
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Different business models are followed by family run businesses. They are meritocratic model (the best person manages), democratic model (all are treated equal), multi-trust model and cash-it-out model (where the business owners fight and kill the business. It is better to sell such businesses and distribute the money to the family members)
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Writing a personal will is very important and more so, for family business owners. Believing that nothing will happen to us is akin to having a no business model.
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Business owners must have plans to overcome some of the common problems faced by the family business owners and which are:
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Ensuring other family members work properly. The talent level of the members is an important factor.
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How to get good non-family members to join the business and they remain loyal to the business.
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How to prepare and groom the family members.
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