Shri Narendra Modi rode to power in 2014 on the promises of reviving the economy, driving development, and boosting the entrepreneurial spirit among Indians. Given India’s population, India needs 10 million new jobs a year and the surveys by an array of credible agencies suggest that start-ups, not large-scale enterprises, must be at the forefront of creating these jobs. Thus start-ups have the potential to ignite India’s growth, generate well-being, and launch a digital revolution!
To tap into the potential of start-ups, the government has launched the “Start-up India mission’ aimed at creating a conducive environment for start-ups so that more would-be entrepreneurs get inspired to take the plunge. It’s accurate to say that this is one of the flagship programs of the government. At present, India has the 3rd largest number of start-ups in the world and with the formulation of favourable policies and adequate facilities; the country can aspire to become the global leader. So which are the factors critical to the success of ‘The Start-up India, Stand up India mission’?
Firstly, to cultivate the culture of start-ups, easier availability of funds to deserving startups, wherever in the country they may be, is essential. Access to funds at reasonable interest rates would go a long way in spurring entrepreneurs to set up new enterprises. For long startups have sought to raise funds from angel investors, venture capitalists, and banks but the government recognises that more must be done. The government had earmarked $1.5 billion for this ambitious initiative and as of October 2017, about $92 million has been allocated to various start-ups. To avail funds, entrepreneurs have to make a presentation before the Venture Capital Investment Committee (VCIC) comprising eminent industry stalwarts. On the basis of the presentation, the committee decides which project to fund. The programme has, perhaps, gotten off to a slower than expected start but holds much promise.
A reduced tax burden is high on the wishlist of India’s startups and the government does seem to be listening. Under the ‘The Start-up India, Stand up India mission’, start-ups are exempted from income-tax for the period of first 3 years. The objective is to facilitate the growth of start-ups and enable them to meet their working capital requirements through profits generated by them in those 3 years. There is some apprehension among startups about the implication of the “Angel Tax” on Seed and Angel investments, but there are early signs that genuine investments may escape this predicament.
Startups also want responsiveness and support in other government and related interactions. There are some examples of this change taking place. For eg., patent applications are supposed to be fast-tracked and hence examined & processed swiftly. In addition, the government also bears the facilitation cost for any number of trademarks, patents or designs filed by start-ups. Startups only have to fork out a nominal statutory fee. In another sign, public procurement norms are also being relaxed. A significant number of startups fail –that’s just par for the course. With this in mind, now there’s an easier exit provision for start-ups under which they can wind up their operations within 90 days (compared to 180 days for other companies). It’s moves like these that helped India jump 30 places, the highest by any country, in the World Bank’s “Ease of Doing Business” index.
Startups need to be made aware of the support the government is providing. The government is trying to play a role here too by organising many seminars and symposiums, along with using a string of media platforms, to spread awareness about its ‘The Start-up India, Stand up India mission’. The objective is to let startups know about the various benefits and available support systems. Information is also being provided about the procedures associated with launching a start-up, and to clear all the doubts/questions they have in their minds.
A rising tide should lift all boats. Efforts are made towards inclusive growth by launching exclusive schemes for women and entrepreneurs from other disadvantaged backgrounds to motivate and empower them. Indian artisans are encouraged and educated about starting their own ventures and about the importance of climbing onto the digital bandwagon. This can enable them to display their work to connect with an appreciative global audience.
Flipkart, Zomato, PayTM, Housing.com, and Ola Cabs are Indian start-ups that have grown exponentially in this decade. They are now forces to reckon with even in the international markets. Their success stories provide motivation to young entrepreneurs who understand the value of a grand vision combined with unflinching diligence and innovation.
Overall, the scenario is looking very promising for Indian startups. The intent is there and the environment is conducive. But there is a long way to go yet. With its vast human capital, India’s growth has the potential to skyrocket. Imparting sound business knowledge (especially in semi-rural and rural areas), leveraging the digital ecosystem, further relaxation of regulations, faster clearances, removal of red-tapism, easier availability of funds, and a peaceful social atmosphere can come together to help India emerge as the startup nerve centre. There is a need to properly incentivize risk-taking and innovation among entrepreneurs. In return, a vibrant start-up culture will result in plentiful jobs, a soaring economy, top-of-the-line infrastructure, and extremely engaged citizens.