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India-UK
India-UK
Taglines like ‘Ecosystem minus the system’, ‘N0 tunnel only light’, are not something one gets to read in government policies. It was refreshing to see the ‘Startup Action Plan’ that seeks to give wings to the prevailing entrepreneurial spirit in the country. Government support to budding entrepreneurs is not completely novel. Countries like Israel have done that in the past. But the sheer size and scale of Narendra Modi government’s thrust to the startup culture, clearly, is remarkable.
“India is already one of the top 3 entrepreneurial hotbeds in the world. It bodes well that the current government, for the first time, has understood the criticality of startups for employment and economic growth. This revolution can make us the world’s second largest entrepreneurial hub after the US, take us to double-digit GDP growth, eliminate poverty and take India to the position it enjoyed 300 years ago, when it accounted for 25 per cent of global GDP,” says Saurabh Shrivastava, Chairman, Indian Angel Network.
As per Nasscom, startups rose from a mere 162 in 2006 to 4,400 in 2015. Roughly 1,000-1,500 technology startups originate every year, but only 150-300 survive. Several shutdown for want of capital, or incorrect product mix or go wrong in scaling up business.
Experts say, India needs over 10 million jobs a year and global data shows that it is startups, not large enterprises that create net new jobs in any country. Currently, startups employ about 85,000 and counting.
The ‘SAP’ will not only foster a conducive ecosystem for startups to accelerate their growth but will also provide the much-needed fillip to ease of doing business and encourage development of innovative products and solutions in India.
While several commend initiatives like the 3-year window for self-certification, 3-month window for closing down a startup, and tax sops, there are some glitches.
“The government seems to have gone with only one definition covering innovative startups. This needs clarification as if it is the latter, then all other businesses, which can’t get themselves registered or classified as innovative will be shackled,” reasons Harish HV, Partner - India leadership team, Grant Thornton India LLP, and member, Ispirit, which engages with the government, RBI & SEBI on startup policy issues.
He adds that though the startup hub was an interesting idea, whether it meets the concept of PM’s speech “How can we do less and let you do more”. It seems difficult to envisage that startups will go to a government set up startup hub for mentorship. Bureaucrats will not have the ability to mentor or guide them. If they turn to external mentors, then there will be the usual favouritism and selection of the people through panels etc.
If people from outside are to be paid it increases costs. What the government should do is to have a mentor who can guide founders on policy questions, help in public procurement and such things where it can add real value.
This article first appeared in The New Indian Express on 24 January, 2016.