Articles

Role and Significance of Start-Ups for Viksit Bharat@2047 (Role of Manufacturing and Service Sectors)

The following articles have been sourced from the “Chartered Secretary”, January 2025 issue, the official magazine of The Institute of Company Secretaries of India. The magazine is available for free-to-download at the site of the Institute of Company Secretaries as follows:
icsi-latest-journal-issue | ICSI

A summary of the news item-1

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Role and Significance of Start-Ups for Viksit Bharat@2047 (Role of Manufacturing and Service Sectors)
15.pdf

By CS Madhuri Jeevan Ankalkhope, ACS

Government of India has launched various schemes such as Make in India, Production Linked Incentive Scheme etc for the development of Manufacturing and Services sectors. Whether it is mobile phone manufacturing, semiconductor industry, or logistics industry, India is striving to become self-reliant. The article highlights some practical aspects of implementation of these schemes and the services company secretaries can provide in promoting good corporate governance towards achieving the ambitious goal of Viksit Bharat@2047.

Start-Ups in Tier 2 Cities: Opportunities & Challenges
19.pdf
By CS Nilabjo Chakraborty, ACS

In recent years, factors such as improved infrastructure, low cost of living, ease of doing business & better connectivity have enabled Tier 2 cities to become more fertile ground for startup entrepreneurs looking to reduce operational costs and maximize profits in comparison with more saturated Tier 1 markets. This article highlights the opportunities, success stories, and the challenges that come with this growth, along with the role of company secretaries to ensure setting up of smooth regulatory mechanisms and governance for these startups.

Start-Ups as Engines, Governance as Fuel: Charting India’s Sustainable Growth to 2047
16.pdf

By Dr. Ritu Gupta

Viksit Bharat@2047, aims for achievement of India’s growth and development goals by the time the nation celebrates its 100th year of independence. Aligning with the Sustainable Development Goals (SDGs), the article emphasise the synergy between company secretaries and startups can play a crucial role in driving socio-economic and technological advancements at different stages of startup growth.

The Role of ESG Practices and SDGs in Green Start-Ups
20.pdf

By Jyothi G. H.

The author emphasizes the critical role that green startups can play in helping India achieve its net-zero targets and advance toward a more sustainable future. Sustainable performance of existing green startups in India, and its linkage with United Nations Sustainable Development Goals (SDGs) highlights the importance of creating a supportive ecosystem through well-designed policies, investments, and robust Environmental, Social, and Governance (ESG) frameworks. It demonstrates how these startups can tackle the interconnected environmental, social, and economic challenges faced by the country.

Ethical Governance in Unicorns: Role of CS
17.pdf

By Dr. Dileep Kumar S. D.

Driving on the role of Unicorns in the modern economy the article succinctly captures the essence of ethical governance in Unicorns who adapt to sustainable business practices. Company secretaries (CS) as key enablers of ethical governance within Unicorns are uniquely positioned to foster an environment of accountability, transparency, and compliance across both internal and external stakeholders.

The Dynamic Start-Up Ecosystem in India: A Blend of Innovation, Funding and Compliance
21.pdf

By CS Purvesh Pandit, ACS

According to the NASSCOM 2023 report there are over 1,00,000 startups in India, making it the third largest startup ecosystem globally. This explosive growth has been supported by various GOI schemes such as Startup India, Atal Innovation Mission, and Micro, Small, and Medium Enterprises (MSME) schemes. Further the opportunities for company secretaries in context of the journey of startups, from incorporation to funding challenges, compliance, regulatory matters, and strategic planning are discussed. They also provide expert services in case of closure, restructuring or amalgamation of the companies to build investor onfidence.

Start-Ups and India’s National Quantum Mission
18.pdf

By CS Arunodaya Ojha, ACS, CS Tanay Ojha, ACS

Startups that have a unique ability to rapidly innovate and experiment are in an ideal position to adopt Quantum Technology and bring it to market. The article aptly covers the role of startups in India’s National Quantum Mission, which aims to develop a robust ecosystem for quantum research, innovation and commercialization. Global lessons for Indian Quantum startups and challenges faced by them with emphasis on key sectors leveraging quantum advances in India are discussed.

From Ideation to Execution: Challenges of Scaling a Start-Up in India
22.pdf

By CS Harit Kumar Verma, FCS

Through conceptual analysis of the existing literature on Start-ups, this article makes an attempt to evaluate the Government of India schemes for supporting Start-ups growth and the various challenges faced by Start-ups and provides recommendations for future research.

The Role of Start-Ups in Shaping the future of E-Commerce in India: Growth, Challenges and Quick Commerce
24.pdf

By CS Nikhil Kalra, ACS, CS Yash Gupta, ACS

One of the key drivers of evolution of E-Commerce in India is the M-Commerce that is equipped with tools of artificial intelligence, social media platforms, digital payments. E-Commerce is supported with Government initiatives such as Digital India and the Open Network for Digital Commerce (ONDC) that aim to integrate small businesses into the digital economy. Further the rise of Quick Commerce has catered to the demand of ultra-fast delivery services. The article elaborates regulatory framework, challenges and the role of E-Commerce in developing countries with outlook for future in India.

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1. Government of India’s plans for raising huge amounts of funds towards capex for
various projects, not to mention the expected demand from the private sector which
together will take away a substantial part of the available funds in the market;
2. The oft-made comment by various experts for the need to reduce the cost of logistics
to around 8% to 9% of the GDP from the present 12% to 13% which would have a
Issue of Municipal Bonds and the Emerging Dimensions
2
bearing on the availability of the funds since investments will be required on a large
scale;
3. The positive effects of the efforts put in by the Government of India for enlarging the
bond market in India; and
4. The acceptance of India by the international financial community as an investment
destination.
While commercial entities and the Governments both Central and State have been issuing
bonds by way of raising funding, municipal bonds are beginning to find acceptance and
becoming attractive from an investor-perspective. As regards the reference to the
U.S.Treasury’s role and the involvement, it is a logical step to plug into the U.S. experience
considering the role played by the municipal bonds in the development of infrastructure in the
United States of America.
Having given the outline of the news item, this article expands on the various aspects of the
above proposal.
Municipality
Per Article 243P(e) of the Constitution of India, a municipality means an institution of self-
government constituted under Article 243Q which goes on to describe the constitution of
municipalities.
The role of Securities and Exchange Board of India (SEBI)
SEBI has been active in creating the necessary ecosystem for an effective financial market for
funding municipal projects. About a decade ago, SEBI took the first steps in this process. On
15 th July, 2015, SEBI issued the ‘SEBI (Issue and Listing of Municipal Debt Securities)
Regulations, 2015’ (‘ILDM Regulations’) and further amended the regulations on 21 st
August, 2019, relaxing certain provisions in the Regulations and at the same time introducing
further discipline into the framework to help smart cities and other entities engaged in city
planning and urban development work.
The ILDM Regulations defined “municipal debt securities” to mean non-convertible debt
securities which create or acknowledge indebtedness, and include debenture, bonds and such
other securities of an issuer.
Issue of Municipal Bonds and the Emerging Dimensions
3
SEBI, in November 2022, clarified that a municipalities under the ILDM Regulations may
issue a ‘green debt security’ or ‘Green Municipal Bonds’, falling within the definition of
‘green debt security’ per Regulation 2(1)(q) of the SEBI (Issue and Listing of Non-
convertible Securities) Regulations, 2021. SEBI also by Gazette Notification dated February
02, 2023 amended the definition of green debt security to include among others ‘blue bonds’
(i.e. those activities that would fall within the marine ecosystem). SEBI is also suggesting
that tax-breaks may be granted to retail investors. However, this may not find favour with the
Central Government since the present thinking is to simplify the tax system by eliminating
allowances and deductions.
It may be noted that these regulations will apply only when the securities are proposed to be
listed on stock exchanges.
Accounting and Audit Requirements
According to a news item dated 2 nd October, 2024, only issues by 12 out of a total of 4,000
municipal bodies are currently listed amounting to Rs.2,700. The President of the Institute of
Chartered Accountants of India (ICAI) was also quoted as having said that there are 2.65
lakhs of Panchayats and 4,000 Municipal Bodies and that there is a need to strengthen the
accounting and auditing ecosystem in order to pave the way for raising finance from the
markets. The President made the observation that these bodies which prepared their accounts
traditionally in the ‘single entry’ mode would need to shift to the ‘double entry’ mode.
While both the private and public sector companies have come under a well regulated system
of accounting and auditing in the past decade, municipalities have fallen behind them in
certain respects as mentioned in the preceding paragraph. Recognising the need to ensure the
widening of the bond market for municipal issues, the Institute of Chartered Accountants of
India had been active in formulating accounting standards. The following is an extract from
the ICAI’s publication ‘Accounting for Local Bodies (ASLBs) – At a Glance’.
‘ICAI, being a partner in nation building, is also involved in on-going accounting reforms in
Government including Local Bodies. Accounting Standards for Local Bodies (ASLBs) are
being formulated by the ICAI which are based upon the International Public Sector
Accounting Standards (IPSASs) since March 2005. Till date, 27 ASLBs have been issued
including one cash based ASLB to facilitate transition from cash to accrual system of
Issue of Municipal Bonds and the Emerging Dimensions
4
accounting. As of now, ASLBs issued by the ICAI are recommendatory in nature and will
become mandatory from the date specified in this regard by the concerned State
Government’.
Where finance is involved, audit of financial books and statements has become mandatory
and completing the cycle of accounting and audit based on the accepted commercial
principles. This is also recognised universally as a firm foundation for bringing about a
greater governance which would be the basic premise before issuing securities to the public.
This system of audit is also enhanced by an oversight by the Governments in ensuring the
systems of governance are in place. While these audits and oversight cover the financial
propriety, in appropriate cases social audits concentrating on impact assessment i.e. ensuring
the end results are achieved would be highly desirable. The ICAI has issued in the recent past
16 Social Audit Standards covering aspects such as hunger, poverty, malnutrition etc. These
standards can be made applicable for examining the social impact assessment of the projects
by specially trained social auditors.
Thus, it is heartening to note that a very important segment of the economy is now beginning
to enter the mainstream of commercial markets. Some of these activities will no doubt attract
investors who are into ‘green investing’.

Mr PS Kumar
Past President and a Member of the Executive Committee , ACC

Mr PS Kumar
Past President and a Member of the Executive Committee , ACC

Issue of Municipal Bonds and the Emerging Dimensions

This article is prompted by the news item in ‘The Hindu’, page 2 of the issue dated 11 th
December, 2024 carrying the headline ‘GCC to receive support from U.S.Treasury to issue
municipal bonds’.

A summary of the news item-1

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Source : https://www.thehindu.com/news/cities/chennai/greater-chennai-corporation-to-receive-support-from-us-treasury-to-raise-funds-through-municipal-bonds/article68970246.ece

The Greater Chennai Corporation (GCC) is to issue municipal bonds and has started discussions with experts from various countries including the U.S.Treasury for an
aggregate value of Rs.200 crores.
The experts have stressed on the need to strengthen the financial accounting and the audit framework.
The necessary support framework by way of advisory services is already in place.Once the structure is in place, a formal application will be made to the Securities and
Exchange Board of India (SEBI) for the approval for issue of bonds which will ultimately by listed on the stock exchanges.
While the cost of raising the funds is not expected to be cheaper (i.e. will be on commercial terms) the GCC will receive 13% incentive from the Central Government
amounting to Rs.26 crores.
The proceeds will meet the partial cost of the storm-water drain project in Kosasthalaiyar Basin under the ‘Atal Mission for Rejuvenation and Urban Transformation’ (AMRUT).

According to news report dated 28 th September, 2024, the GCC is also planning on several other types of activities such as

Storm Water Drainage Systems
Solid Waste Management
Road and Rail Overbridges
Bus Route Roads
Street Lights
Parks and Playfields

Considerations for Financing Activities Given the fact that there is a deficit in spending on infrastructure, the following factors will shape the availability of money for these projects:

Government of India’s plans for raising huge amounts of funds towards capex for various projects, not to mention the expected demand from the private sector which together will take away a substantial part of the available funds in the market.
The oft-made comment by various experts for the need to reduce the cost of logistics to around 8% to 9% of the GDP from the present 12% to 13% which would have a Issue of Municipal Bonds and the Emerging Dimensions bearing on the availability of the funds since investments will be required on a large scale.
The positive effects of the efforts put in by the Government of India for enlarging the bond market in India and The acceptance of India by the international financial community as an investment destination.While commercial entities and the Governments both Central and State have been issuing bonds by way of raising funding, municipal bonds are beginning to find acceptance and becoming attractive from an investor-perspective. As regards the reference to the U.S.Treasury’s role and the involvement, it is a logical step to plug into the U.S. experience considering the role played by the municipal bonds in the development of infrastructure in the United States of America.
Having given the outline of the news item, this article expands on the various aspects of the above proposal.Municipality Per Article 243P(e) of the Constitution of India, a municipality means an institution of self-government constituted under Article 243Q which goes on to describe the constitution of municipalities.The role of Securities and Exchange Board of India (SEBI) SEBI has been active in creating the necessary ecosystem for an effective financial market for funding municipal projects. About a decade ago, SEBI took the first steps in this process. On 15 th July, 2015, SEBI issued the ‘SEBI (Issue and Listing of Municipal Debt Securities Regulations, 2015’ (‘ILDM Regulations’) and further amended the regulations on 21 st August, 2019, relaxing certain provisions in the Regulations and at the same time introducing further discipline into the framework to help smart cities and other entities engaged in city planning and urban development work.
The ILDM Regulations defined “municipal debt securities” to mean non-convertible debt securities which create or acknowledge indebtedness, and include debenture, bonds and such other securities of an issuer.Issue of Municipal Bonds and the Emerging Dimensions SEBI, in November 2022, clarified that a municipalities under the ILDM Regulations may issue a ‘green debt security’ or ‘Green Municipal Bonds’, falling within the definition of ‘green debt security’ per Regulation 2(1)(q) of the SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021. SEBI also by Gazette Notification dated February 02, 2023 amended the definition of green debt security to include among others ‘blue bonds’(i.e. those activities that would fall within the marine ecosystem). SEBI is also suggesting that tax-breaks may be granted to retail investors. However, this may not find favour with the Central Government since the present thinking is to simplify the tax system by eliminating allowances and deductions.It may be noted that these regulations will apply only when the securities are proposed to be listed on stock exchanges.
Accounting and Audit Requirements According to a news item dated 2 nd October, 2024, only issues by 12 out of a total of 4,000 municipal bodies are currently listed amounting to Rs.2,700. The President of the Institute of Chartered Accountants of India (ICAI) was also quoted as having said that there are 2.65 lakhs of Panchayats and 4,000 Municipal Bodies and that there is a need to strengthen the accounting and auditing ecosystem in order to pave the way for raising finance from the markets. The President made the observation that these bodies which prepared their accounts traditionally in the ‘single entry’ mode would need to shift to the ‘double entry’ mode.
While both the private and public sector companies have come under a well regulated system of accounting and auditing in the past decade, municipalities have fallen behind them in certain respects as mentioned in the preceding paragraph. Recognising the need to ensure the widening of the bond market for municipal issues, the Institute of Chartered Accountants of India had been active in formulating accounting standards. The following is an extract from the ICAI’s publication ‘Accounting for Local Bodies (ASLBs) – At a Glance’. ‘ICAI, being a partner in nation building, is also involved in on-going accounting reforms in Government including Local Bodies. Accounting Standards for Local Bodies (ASLBs) are being formulated by the ICAI which are based upon the International Public Sector Accounting Standards (IPSASs) since March 2005. Till date, 27 ASLBs have been issued including one cash based ASLB to facilitate transition from cash to accrual system of Issue of Municipal Bonds and the Emerging Dimensions accounting. As of now, ASLBs issued by the ICAI are recommendatory in nature and will become mandatory from the date specified in this regard by the concerned State Government’.
Where finance is involved, audit of financial books and statements has become mandatory and completing the cycle of accounting and audit based on the accepted commercial principles. This is also recognised universally as a firm foundation for bringing about a greater governance which would be the basic premise before issuing securities to the public.This system of audit is also enhanced by an oversight by the Governments in ensuring the systems of governance are in place. While these audits and oversight cover the financial propriety, in appropriate cases social audits concentrating on impact assessment i.e. ensuring the end results are achieved would be highly desirable. The ICAI has issued in the recent past 16 Social Audit Standards covering aspects such as hunger, poverty, malnutrition etc. These standards can be made applicable for examining the social impact assessment of the projects by specially trained social auditors.Thus, it is heartening to note that a very important segment of the economy is now beginning to enter the mainstream of commercial markets. Some of these activities will no doubt attract investors who are into ‘green investing’.

[end-read-more]

Articles

Articles

Role and Significance of Start-Ups for Viksit Bharat@2047 (Role of Manufacturing and Service Sectors)

A summary of the news item-1

Mr PS Kumar Past President and a Member of the Executive Committee , ACC

Issue of Municipal Bonds and the Emerging Dimensions

A summary of the news item-1

Mr PS Kumar Past President and a Member of the Executive Committee , ACC

Mr PS Kumar
Past President and a Member of the Executive Committee , ACC

Mr PS Kumar
Past President and a Member of the Executive Committee , ACC