Indian healthcare sector prime target for startups
An Indian doctor prescribes medical tests and medicines as she examines patients at a clinic in New Delhi. - AFP PHOTO
Dubai - The healthcare sector in India not only caters to the medical needs of 1.3 billion Indians, but also to the demand from many countries in the world notably Africa and South America
Question: Everybody is talking about setting up a startup. My young son, who has just finished his college education, wants to go back to India as he feels he has entrepreneurial talent. Will this work, and what is the best investment opportunity at present?
Answer: According to a startups perspectives report, around 16 startups emerged as unicorns during 2021, each of them valued at over $1 billion. Several fintech companies have been investing in Indian startups. The number of financial deals closed in the quarter ended September 30, 2021 increased by 83 per cent as compared to the June 2021 quarter. About 84 per cent of the funding activity was driven by growth-stage and late-stage deals. The average size of a deal was $1.6 billion. Bengaluru and the National Capital Region continue to be the key startup cities in India accounting for 76 per cent of the total funding activity. The best prospect for new startups is in the healthcare sector. This embraces a whole range of medical services. The healthcare sector in India not only caters to the medical needs of 1.3 billion Indians, but also to the demand from many countries in the world notably Africa and South America.
Question: With the slowing down of the global economy as a result of the pandemic, exports in India are stagnating and the trade deficit is high according to recent reports. Is any action being taken to reverse the trend?
Answer: The latest figures, as of December 2021, show that there has been a spectacular increase in exports. While the average monthly figure was $30 billion, the December figure of $37.3 billion records an increase of 25 per cent. According to government trade data, the sectors which recorded an increase were chemicals, engineering, textiles, and gems and jewellery. The trade deficit is primarily on account of higher import of oil and petroleum products indicating an increase in industrial activity in India. By March 31, 2022 exports are projected to cross the $400 billion mark. The increase in exports is primarily on account of India becoming a manufacturing hub for many industries, especially in the automobile and automobile components sectors. Export of IT related services is also showing a robust increase. The Indian Government’s initiative of having strategic economic partnerships with the UAE, UK, Australia and Canada is substantially responsible for the surge of exports from India.
Question: I have been advised that the best way of succession planning is to set up a trust. Many top professional firms in India are now specialising in this branch of services. What are the pros and cons of setting up a trust?
Answer: Succession plans are being evolved through private trusts by a new generation of the wealthy. This is not merely done to safeguard against possible levy of estate duty, which was abolished in India way back in 1985, but is primarily done to protect the assets and pass them on to subsequent generations. However, setting up of a trust would result in compliance costs. A private trust is recognised under the income-tax law and its income is liable to tax in the hands of the trustees who are assessed as an ‘association of persons’. The trust would have its own permanent account number and bank and demat accounts can be opened in the name of the trust. Once the assets are transferred to the trust, the settlor or donor loses control over the assets and designated trustees appointed by the settlor manage the trust based on what is specified by the settlor in the trust deed. The names of the beneficiaries are also specified together with the percentage of annual income which would be distributed amongst them. Once a trust is created, the legal battle for inheritance is avoided because the assets which are settled upon trust would no longer belong to the person who has passed away.
— H. P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India.