Delhi, January 16

Indian entrepreneurs will receive generous tax breaks and face dramatically reduced red tape when starting and closing a business, Prime Minister Narendra Modi said today, as he launched a pet initiative to bolster India’s fast-growing start-up scene.

Speaking at a gathering of 2,000 entrepreneurs from India, Silicon Valley and elsewhere, Modi outlined a slew of measures under Start Up India, including exempting start-ups from income tax for first three years.

“We have a million problems but at the same time we have over a billion minds,” Modi said, adding that the government will earmark INR 25 billion ($370 million) for the plan annually over four years. “We want to start a system of hand-holding for start-ups. The government will be like a friend and a mentor.”

New Delhi views start-ups as key to providing jobs for aspirational young Indians and plans to offer easier access to bank loans through the ‘Start up India, Stand up India’ campaigns first announced in August last year.

Under the measures outlined today, start-ups will also be exempt from capital gains tax and will not face inspections for labour or environmental law compliance for three years, while patent application fees will be slashed by 80 per cent.

Entrepreneurs will be able to register their businesses in a day via a mobile app — in sharp contrast to the current bureaucratic process — and will be able to wind down failures in 90 days, Modi said.

The prime minister joked that had he possessed more entrepreneurial flair, the one-time tea-seller would have been able to open a hotel chain. “No matter what Narendra Modi can or cannot do, the youth of the country can,” he said.

Finance Minister Arun Jaitley said earlier today that simpler tax rules for start-ups would be introduced in the upcoming budget in February to unshackle them from the complex regime faced by large companies.

He promised an end to ‘licence raj’ — bureaucratic controls dating from British colonial rule mandating endless permits that have stalled multi-billion dollar projects and small investors.

“The regime intended to be createda is intended to give complete freedom from the state,” Jaitley said. “The more sector becomes unregulated, better it will be.”

In September, Modi visited Silicon Valley calling on deep-pocketed investors to turn their attention to India’s thriving start-up ecosystem, with large tech hubs in Bangalore, Hyderabad and Mumbai. A report from Nasscom in October 2015 said India had the world’s fastest-growing start-up community.