India is a startup nation where young aspirational Indians are not only looking to create jobs but also solve problems facing our communities. In the past three decades, we emerged as leaders in ITES (IT Enabled Services) and provided leadership and human resources to prominent IT giants globally.
The Startup India programme was launched in 2016 to build an entrepreneurial ecosystem and provide crucial support to startups. However, Covid-19 and the emergence of environmental, social and corporate governance (ESG) have changed the way businesses are built and scaled. It is time to develop a national action plan 2.0 for startups to accelerate building the startup ecosystem.
A dedicated but autonomous institution for startups
The government has no role in doing business, but it can play a pivotal role as an ecosystem enabler. A dedicated but autonomous institution for startups would be a necessary next step. The autonomous institution can play the role of facilitating national and international collaboration, recommending policy changes to adapt to the dynamic economic, environmental, and other types of risks.
Another critical aspect for the independent department/institution would be to take entrepreneurship to tier 2 and 3 cities and rural areas. The department can also ensure convergence and coherence in policies and initiatives of other ministries, state governments and the private sector.
Foster female entrepreneurship
There is a significant disproportion when it comes to female entrepreneurship in India. According to the sixth Economic Census, only 13.76 per cent of entrepreneurs are women. India ranked 52 (out of 57 countries) in the MasterCard Index of Women Entrepreneurs.
However, the current Budget doesn't promote and foster women entrepreneurs. A dedicated institution for startups will support a network for female entrepreneurs in the country, framing policies that ensure equal access to financing, collateral-free loans, direct grants, early access to education and skilling of women entrepreneurs, and rallying the private sector financing for this.
Funding and access to venture capital investment
Indian Startup ecosystem received $ 24.1 billion worth of equity investments (NASSCOM, 2021) which fuelled the growing startup economy. On the contrary, the number of early-stage funding deals fell from 205 in 2019 to 178 in 2020 as multiple deals fell due to the pandemic forced lockdown. The government of India also allocated Rs 28.35 million for the Startup India Fund and Rs 100 million for the Fund of Funds for Startups. Therefore, there is a need to introduce funds specifically for early-stage startups.
France has set up a 4-billion Euro fund to support startup liquidity, including bridging startup funding rounds. Germany has announced a tailored startup aid programme, expanding and facilitating venture capital financing, and the UK has announced a co-financing fund for innovative companies facing financial difficulties. Australia's $500 million Business Support Fund offers $10,000 grants. A combination of loans and grants would be helpful and will allow businesses to extend their runway.
Corporate and startup collaboration
Formulating programmes that connect startup founders with scaling/established businesses, corporates, industry experts, and other fellow entrepreneurs creates mutually favourable growth conditions for both parties involved. There were 260+ unique corporates active in 2021, a significant jump from 170+ in 2020 (NASSCOM, 2021). Corporates can bring investments and offer collaborations, but they can also support incubation and acceleration programmes.
Preferred market for entrepreneurs and investments
For the sixth year in a row, New Zealand has ranked number one in the World Bank's ranking of the best country to start and run a business. Specific and attractive visa policies and customised fellowships for founders have helped the country achieve this feat.
Similarly, India should develop a vision to become a preferred investment choice for entrepreneurs to set up their ventures here. We need to create financial incentives, immigration plans, and infrastructure facilities to ensure that. India is ranked 63rd in ease of doing business (World Bank 2020), and we have a long way to cover to reach the top.
Reduce the regulatory burden on startups
NimbleFins, a research and analysis firm, concluded Germany is the best European country for startups (2019 and 2020). They looked at several aspects, including the regulatory burden on startups. Taking lessons from Germany and the UK, India can also reduce the regulatory burden on startups using digital technology artificial intelligence and converging the process into one single platform for startups across India.
Relaxed patenting options
Ease time required to register a patent. Software, including apps, which Indian entrepreneurs excel at, is ineligible for patents in India. In 2020-21, 58,502 patents were filed in India, and 28,391 patents were granted in the same period. If we compare the numbers internationally, China granted 700,000 patents in the same year. The average time for giving a patent still takes more than double the number of months compared to China and the US. India needs to create an action plan to simplify patenting, tech-enabled, and much faster than today.
Academia and startup community partnership
Collaboration between academia and the startup community is crucial, and an autonomous department dedicated to startups can play a pivotal role. The government can also foster and strengthen startup-focused international partnerships and incentivise foreign investors to set foot in Indian markets.
Special policy social entrepreneurs
The time has come for India to develop a policy and action plan for startups working in the sustainability sector and advancing the UN SDGs (sustainable development goals). The policy will be directed at social entrepreneurs working to solve some of the biggest challenges that India is facing using technology in EdTech, FinTech, AgriTech, HealthTech, and other sectors.
Entrepreneurship is about ideas meeting capital supported by a conducive ecosystem. India must take steps to sustain its economic growth to attain a double-digit growth rate in the coming years.
(Bibhu Mishra and Debrima Saha are associated with The Global Education and Leadership Foundation (tGELF))
Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.
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