'Most wealth gets captured outside India': Zerodha's Nithin Kamath says retail investors must be nudged to back entrepreneurs

Zerodha founder and CEO Nithin Kamath on Monday batted for UK-like tax relief and capital gains exemption for startup investments in India. He said the move will reduce Indian entrepreneurs' dependency on foreign VCs (Venture Capitalists). 

"UK offers 50 per cent tax relief and capital gains exemption for startup investments. This seems a great way to incentivize wealthy to invest in startups," Kamah said in a series of tweets on Monday. "We may need similar schemes to reduce our dependency on foreign VCs and better use our local wealth stuck in gold, real estate, and FDs."

The Zerodha founder said the biggest problem to solve in India is to spread wealth inclusively and not just in the top one per cent. "This is possible only when wealth creation can be captured by a large subset of Indians when Indian businesses do well," he said. 

Today, Kamath said, most wealth gets captured outside India. "We have to nudge Indian retail investors to move some of their assets from FDs, gold, and real estate to back Indian entrepreneurs and maybe help the country grow inclusively," he added. 

Responding to his tweet, Gaurav Gupta, an investment banker-turned-real estate advisor, said the situation regarding wealth capture outside India is particularly evident in the real estate sector as well. "In Gurgaon, for instance, the most sought-after properties along Golf Course Road, GCX, and prestigious DLF projects are predominantly owned by NRIs."

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Sougata Basu, another financial analyst, said he was hoping that one day the government would involve experienced entrepreneurs like Kamath in policy-making. "Otherwise the bureaucracy will keep introducing new taxes (like Angel Tax) to discourage investments in #startups," he said. 

Another user said there were some "silly rules" which allowed NRIs to invest in startups in the form of convertible debentures but the same was not available for resident Indians. "How crazy is that? Early-stage funding is key for entrepreneurs. Angel investors need this," Amrudesh, an engineer, said.

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