Forbes India 15th Anniversary Special

A good time to start up

India can be the startup capital of the world if the much awaited startup policy, to be announced on January 16, delivers. Forbes India speaks to all stakeholders to get a ringside perspective of how the goal can be achieved

Published: Jan 12, 2016 02:52:20 PM IST
Updated: Jan 13, 2016 01:13:36 PM IST
A good time to start up
Image: Getty Images
Nasscom’s report pointed out that over 80,000 jobs were created last year by startups in India

A large pool of engineering talent, a strong inflow of venture capital money and a fast evolving consumer mindset all put together has fuelled the growth of startups in India. And the numbers do tell a story. According to a report released in October 2015 by IT-industry trade body Nasscom, India is the third-largest start-up ecosystem globally, after the US and the UK, with a total of over 4,200 startups (largely technology enabled) and growing. It is also one of the fastest growing start-up eco-system in the world attracting a staggering $9 billion in investments and creating 80,000 jobs last year.  

The central government on its part has taken cognisance of this and is now all set to usher in a policy that would support the spirit of entrepreneurship. On January 16, the government will announce the country’s first ever Start-up policy at an all-day event in New Delhi that will play host to the world’s most storied startup founders and investors. Some of whom include Travis Kalanick founder of taxi hailing mobile app Uber and Masayoshi Son founder of Japanese conglomerate SoftBank, a big-ticket investor in Indian startups.  

A good time to start up

While the contents of the Start-up policy are closely guarded, entrepreneurs, investors, and industry leaders share their views with Forbes India on what the government should be doing to make India the startup capital of the world. “With the average age of founders being less than 30 years the startup ecosystem represents the confident, young and aspirational India. In the early nineties the IT-services industry created a global success story. I am confident that technology startups can script a similar success story,” says V Balakrishnan, chairman, Exfinity Venture Partners, an early-stage fund focussed on investing in technology startups.  

“Mass scale job creation and sustained growth will happen only if we encourage the young generation to start businesses instead of becoming employees,” believes Bengaluru-based serial entrepreneur and angel investor K Ganesh. His vision of a new India driven by high-octane entrepreneurial energy is similar to that of Narendra Modi-led NDA government. But, the nagging question is will the government’s Start-up policy deliver on expectations?  

Shrikrishna Ramamoorthy, Partner, Unitus Seed Fund says, “In order of priority the three main areas of focus (of the Start-up policy) should be: to enable the startup ecosystem, remove impediments, and give support through incentives and encouragement.” Beyond these broad contours entrepreneurs and investors seek changes to a slew of existing norms that govern doing business in India. Kunal Bahl, co-founder and CEO of Snapdeal points out that single window clearance facilities need to be tailored to ensure simplicity in compliance (for startups). “This coupled with a unique Business ID number which may be used across applications, as proposed by a Parliamentary panel on Ease of Doing Business, will significantly reduce administrative burden for young businesses,” he says.

A good time to start up

Ganesh, citing the World Bank’s Ease of Doing Business report of 2016, says it takes 29 days to start a business in India as compared to 15 days in South Asia and 8 days in member countries of the Organization for Economic Cooperation and Development (OECD).  

“Raising funds from overseas investors, closing down companies, mergers and acquisitions are some processes that involve a lot of paperwork. Easing the norms for these processes will also help speed things up and enable startups to run efficiently,” adds Girish Mathrubootham, founder and CEO, Freshdesk.

Then comes the critical task of defining the term startup. According to Ganesh one definition that can be used is any business that employs less than 50 people and has a revenue of less that Rs 5 crore annually for the first three years of its existence. It would be interesting to note how the policy deals with this subject.

Moving on, a back-of-the-envelope estimate shared by Mohandas Pai chairman of Manipal Global Education Services, shows that close to 70 percent of the top 200 startup ventures in the country have re-domiciled outside of India. “They started in India, but shifted their headquarters outside of the country because they find it difficult to get capital, structure their organisations, sell-out, among others reasons,” says Pai, who is also an active investor. And that’s a reason why, he adds, that the government wants to have a policy to encourage entrepreneurs to stay in the country. “We are a very young country and that’s why a startup policy is very important,” says Pai.

Shashank ND, founder and CEO of Bengaluru-based healthcare startup Practo is hopeful that the government’s Start-up policy initiative will kick-start a new revolution. “It will be a catalyst for start-ups. It will just go to show that this country has enormous amount of energy, innovation and talent. If we channelise in the right way, it can create an impact that will change the future.” 

A good time to start up

As the saying goes ‘the proof of the pudding is in the eating’ and the success of this startup policy will only be known after a while. However, the efforts taken by the government to reach out to India’s youth is being appreciated.“When a Prime Minister’s vocabulary includes the words ‘start up’ , in itself, it is a huge thing that can have cascading impact beyond what meets the eye in the near term. No Indian Prime Minister, until now, had spoken those words,” says Subroto Bagchi, chairman of IT-services company Mindtree. He adds, “When I look at the start-up activity flourishing in the US and Europe today, I see the connection between empathetic governments, society and the microbial world of start-up entrepreneurs.”   

In India, we definitely see the coming together of this symbiotic environment.

(With additional reporting by Shutapa Paul in New Delhi)

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  • Hemen Parekh

    START UP RE-DEFINED No doubt , you have read the definition of a Start Up in the Start Up Action Plan document I have tried to envisage below, how that might look on that Mobile App for Registration : * Is yours a Private Ltd Co / LLP / Partnership ?........................................... Yes / No * Is your Company more than 5 years old ?....................................................Yes / No * Is your Start Up formed by splitting an existing business ?............................ Yes / No * In last 5 yrs, has your turnover exceeded Rs 25 Crores ?............................. Yes / No * Is your product/service " DIFFERENTIATED " ?............................................ Yes / No * Is your product / service " COMMERCIAL " ?............................................... Yes / No * Is your product / service " INNOVATIVE " ?................................................ Yes / No * Is your product / service driven by , " TECHNOLOGY / INTELLECTUAL PROPERTY " ? ............................................Yes / No * Is your product/service , " NEW / SIGNIFICANTLY IMPROVED " version " ?.................... ...................... Yes / No * Does your product/service add " VALUE " to customers ?................................ Yes / No * Does your product/service add " VALUE " to " WORKFLOW " ?......................... Yes / No * Have you got certification from Inter-Ministerial Board ?................................ Yes / No * Have you got recommendation from Incubator in Post Grad Indian College ?.......Yes / No MY TAKE : # Each year 12 million persons join India's work force # Of these , 3.5 million are Graduates # Rest ( 8.5 million ) are 10th / 12th Standard pass or less # No more than 1,000 persons will fulfill above mentioned " Eligibility Criteria " for Start Up # There will be endless debates on the correct meaning of words in CAPITAL letters above ! WHY SUCH STRINGENT " ELIGIBILITY CRITERIA " ? # At Rs 2.5 cr loan per Start Up, Govt Fund of Rs 2500 Cr can help only 1,000 Start Ups ! # Any relaxation in " eligibility criteria " , may result in MILLIONs of persons queue-up ! WHAT IS THE IMPLICATION ? # Funds are just insufficient to help 12 million persons to become " Self Employed " MY SUGGESTION : In India , we are talking of getting " Unemployed " to launch " Start Ups " Anywhere between 100 million to 400 million " Unemployed " for whom neither Public Sector nor Private Sector , is in any position to create jobs We want them to become " Self Employed " - what Shri Narendra Modi described in USA , as our " PERSONAL SECTOR " They are unlikely to launch technology driven , Web-based businesses , even if their businesses require them to have a Smart phone , on which , their customers can reach them They aspire to become ( list can run into 200 trades ! ) : * Street-side Vendors ( Vegetables / Shoes / Purses / Fruits / Trinkets ) * Craftsmen ( Plumber / Electrician / Carpenter / Repairer ) * Dhobi / Barber / Pan Beedi shop-owner / Tailor / Mochi * Doodh-wala / Ruddi Paper-wala / Gajra-wala / Delivery Boy * Cook / Maid / Courier / Tuition Teacher / Beautician / Taxi Driver * Home-cooked Tiffin Service / Car wash / Gardening ...... How can we help millions of JOBLESS to set up such MICRO - BUSINESSES ? By Government ( Central / State / Municipal ) getting out of their way ! HOW ? * No licenses / permits / approvals / conditions / criteria * Simple online registration on proposed Web site of DIPP for Start Ups * No personal Income tax for individuals * No Corporate Income tax for Start Ups for 10 years ( no chance of profit in first 3 years ) * Amnesty Scheme for enabling Rs 10 million*crores of BLACK MONEY to flow into such Self Employment It is still not too late for our Policy Makers to think " Out of Box " and implement. Anything less just won't make much of a difference !

    on Jan 21, 2016
  • Hemen Parekh

    " BACK FACTORY " OF THE WORLD ? China is known as the " Factory " of the World India is known as the " Back Office " of the World Can India become the " Back Factory " of the World ? Wrong question ! Right question is : WHEN can we become the " Back Factory " of the World ? Answer is " hiding in plain sight " ! This week , an astronaut , sitting in a satellite 400 km above the earth and hurtling through space at 16,000 km per hour , operated a robot on the earth Earlier , Indian scientists sitting in Shri Harikota space centre , have operated MOM ( Mars Orbital Mission ) remotely From a distance of millions of miles And soon , astronauts will be sending emails to earthlings from millions of miles away , using " Space Internet " on their Mobile phones Invariably , each such team of scientists , comprised Indians ! So , WHEN can our scientists - and software START UPs - enable Indian workers , sitting in Hyderabad / Chennai etc , to operate / manipulate , machinery in factories of Europe / America / China ? I believe this can become a reality by 2020 , if Central Government and State Governments , just get out of the way of our scientists / START UPs and leave them alone ! Then tell them : " You are our next generation of Freedom Fighters . Free our millions from poverty / starvation / jobless depression / ignominy / suicides Like war - ravaged people of North Africa , Indians cannot invade Europe / Australia / Canada , in search of jobs / better life We depend upon you to bring the jobs to India - remotely executed jobs such as , * Operating Machinery in Factories abroad * Controlling Air Traffic at Airports around the World * Operating upon patients in Hospitals , all over * Teaching students in Schools , in remote Africa * Any job that currently requires immediate presence of a worker And , if you set up a " BACK FACTORY " , you don't need to pay Corporate Income Tax for next 10 years ! Simply register on web site of Income Tax Department as a " BACK FACTORY " owner and file annual " Zero Corporate Tax Return " When this happens , * Millions of skilled Indian workers will operate factories around the World , sitting in , internet connected " BACK FACTORIES " in small Indian towns * Foxconn will not need to replace its high-wage Chinese workers with one million robots ( as officially announced sometime back ) At half the wages of those Chinese workers , Indians will operate Foxconn factories , all over the World , remotely ! * " Contract Labour Act " will need to be replaced with " Back Factory " Act * " Minimum Wages Act " will need to be scrapped ! * India will not need to fight with WTO on " Manpower / Service Exports " * " Make in India " will morph into " Make from India " I hope , while announcing the START UP policy today ( 16 Jan 2016 ) , Hon PM will ask , Narayan Murthy / Sam Pitroda / Azim Premji / Sundar Pichai / Satya Nadela / Ray Kurzweil etc : " How soon can this be done ? How can you help ? " ------------------------------------------------------------------------- (This suggestion was sent to Prime Minister on 10 Sept 2015 ) hemen parekh / blogs

    on Jan 16, 2016