Startup India- Promoting Entrepreneurship in India
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The month of January 2016 saw the emergence of the next big phenomenon in the league of the Make in India campaign launched by the Modi government. However, the launch of this event did not witness India’s top millionaires showing up. Instead of the ‘usual suspects’, as quoted by the finance minister Mr. Arun Jaitely in his speech at the launch of the ‘Startup India event’ held on January 16, 2016 at Vigyan Bhawan, New Delhi, the event saw hundreds of young entrepreneurs marking their attendance and having rigorous discussions. The campaign was welcomed by most of the industry while others remained dubious on its sustainability in the long run.
According to the industry body NASSCOM’s startup ecosystem report for the year 2015, India is the third largest nation, after the United States and the United Kingdom, in terms of the number of startups. “India has turned out to be the fastest growing ecosystem in the world. We have moved to be the third largest as compared to last year when we were the fourth largest. If everything turns out to be okay, next year we could be the second largest,” said Mr. R Chandrasekhar who is currently the NASSCOM president. In such a growing scenario, many believe that the Startup India campaign would open up gates of enormous opportunities for the young Indian middle class as well the Indian economy.
Some of the key features of the Startup India campaign as declared by Prime Minister Narendra Modi are 3 year tax holiday, ease of certification by introduction of facility of self-certification in terms of labor and environmental laws, ease of registration by introduction of a dedicated app and portal, new scheme for IPR protection, reduction in patent registration fee, Rs 10000 corpus fund to support start-ups, etc. Apart from this, the government has also planned to support and set up multiple incubators all across the country in trying to nurture the budding talent and promote entrepreneurship.
Effect on the startup ecosystem and the economy
The startup India campaign is bound to have a large impact on the startup ecosystem in the country through all the new policies that have been introduced and the changes that have been made. India is a country with over 800 million young minds and a large number of those are English speaking. This gives India an upper edge over many other young nations. Now, since this campaign has been launched to facilitate the young minds, it is going to affect a large chunk of Indian population and hence the economy. We all understand how all the new policies are going to impact the startup ecosystem. However, there are other ways too in which this campaign is going to attract the youth towards startups.
1. Providing employment
The NASSCOM report for the year 2015 reveals that startups provided employment to around 80000 to 85000 people. With the launch of startup India, which is expected to further boost the startup ecosystem in India, this number will definitely raise exponentially in the coming years. Curbing unemployment has always been a challenge for governments across the planet but this move indirectly contributes to the cause.
Let us consider the example of a terracotta jewelry startup ‘Color D Earth’. It is a startup which employs a large number of terracotta artisans across south India. Terracotta used to be a dying art once because these artisans did not have a proper channel where they could showcase their talent and get adequately paid for it. This startup brought these people together to form a community which can thrive together and earn thus providing them employment and a better respectful living.
With the launch of startup India, more startups like this are expected to come up.
2. Growth through FDIs
One of the very important contributions this campaign will have is towards bringing in FDIs in India. This move has made eyes roll from many foreign investors all across the world. It is important to note that the chain involving the FDIs and the startups is a cycle which got a huge boost by the launch of startup India event. As the startup ecosystem in India grows, it will attract more FDIs, further enable growth of startups and the cycle continues.
Multinational Corporations like Google fund Indian startups by providing funds through the incubators. Not only Google, but many other companies such as Qualcomm etc. have shown interest in investing in startups across the nation. This definitely is very significant towards the growth of Indian economy.
What investors feel?
While the youth and the world seem to be positive and enthusiastic about this move, the investors seem to be no different. The launch event in Delhi also witnessed the presence of Softbank’s founder and CEO Masayoshi Son who is known to be one of the richest people on the planet. The company has backed many Indian startups in the past such as OlaCabs, Paytm, and InMobi etc. As he spoke on behalf on the investor community, he explicitly stated the trust and the faith that the investors have in the Indian startup community. He talked about the expectations that investors have from the government in terms of the infrastructure and support that the startups are provided with. He welcomed the new policies and the changes while applauding the young startup culture that has developed in India over years.
iSPIRIT, which is a software products think tank, says that, “Start-up India action has provided various important policies and incentives to start-ups, yet a very important question is whether the action plan adequately addresses the negative factors which have made the Indian start-up ecosystem unattractive in the past? For us, the answer seems to be no”. However, they are not the only ones who are dubious about the sustainability of this Startup India movement. While most of the entrepreneurs as well as the investors expect this attempt of the Indian government to work wonders, the question of whether or not this move will prove to be sustainable remains unanswered. It’s about time when we’ll be able to see how this turns out to be.
This article has been authored by Kavisha Agarwal from IIM Raipur