Ayush Dokania

With the unveiling of “Start-up India, Stand up India Scheme”, the Hon’ble Indian Prime Minister boosted the spirit of entrepreneurs and potential entrepreneurs & business managers to define their talents, skills and competence on a global scale. This is evident from Nasscom’s latest report published in 2015, where India stands third globally with the number of start-ups crossing 4200 in number. This makes the country youngest start-up nation with 72% founders less than 35 years.

According to Economic Survey 2015-2016, the country has more than 1900 technology enabled start-ups, led by consumer internet and financial services start-ups.1 As per the reports in newsprint, the Indian startups raised $3.5 billion in funding in the first half of 2015.Also,the number of active investors in India increased from 220 in 2014 to 490 in 2015. As of December 2015, eight Indian startups belonged to the ‘Unicorn’ club (ventures that are valued at $1 billion and upwards).” 1

According to start-up data aggregator, Tracx, total funding for Indian venture capital-backed companies topped $12 billion (Rs 82,500 crore) across more than 1,220 deals in the past two years, with $7.3 billion invested in over 880 deals in 2015 alone.

The Ministry of Commerce headed by, Nirmala Sitharaman, is in charge of the Government’s Start up – Stand-up India programme. The Department of Industry Policy & Promotion (DIPP) responsibilities, also, have been extended to include within its ambit the propagation and development of start-ups in India where the role of matchmaker between the government’s various ministries and start-ups has been assigned to it. With the boom in the start- up sector, the Ministry of Micro, Small & Medium Enterprises of the Government of India through the policy dated 10th March, 2016 relaxed the criteria relating to prior experience-prior turnover. Even the top private banks like ICICI Bank, HDFC Bank and Axis Bank are now playing venture capitalists and angel investors when the start-ups valuations are sliding at a faster rate.

In order to promote the start- up businesses in India, the government is resorting to initiatives where it will handhold the start-ups and brings them in touch with the government. The basic hurdle that is prevailing in the start-up ecosystem is the inaccessibility to the government or the unaware of the unique problems faced by the government. Even though these start-ups have the requisite technical and knowledge base, they are unable to transform themselves into “bigger start-ups”. Due to paucity of funds, less defined functional business framework and operational hindrances these start-ups resorting to easy exit rather than finding a concrete solution to sustain their business. Thus the government is keen in trying to address their unique problems with the association of these start-ups. As is evident from the recent meeting held between Petroleum Minister, Dharmendra Pardhan and Commerce Minister, Nirmala Sitharaman, the government is scouting for innovative ideas to recycle the used industrial oil, oils from restaurants and homes to derive biofuels after recycling.

Thus, the initiative of the government is to act as the facilitator between the government various ministries and start-ups. The DIPP is working on the modus operandi where it would act as a facilitator between the government and the start-ups. Also, the problems including environmental issues such as water conservation etc, will be laid out in front of these startups and would be required to revert on the same in a given timeframe. The obstacles that can be addressed through these start-ups will be sourced from various ministries. Moreover, the ministers are chalking out strategies to roll out the framework such that the objects are fulfilled.

Conclusion:

It has been a very welcome move from the government to promote start ups in the era of sliding out through dip in valuations or non crystallization of their unique business ideas. The government is resorting to all possible mechanisms where these start-ups could provide an impetus to the country’s GDP. As it has been a well known fact for the economists that the indigenous industries possess immense potential, the tapping of these sectors through regularization and bringing them under the direct control of the government’s various initiatives will surely foster the economic development of the country. As India ranks third in the world in the number of startups, these small ventures could be seen as creating “Indian Silicon Valley”.


Note- 1 http://economictimes.indiatimes.com/small-biz/startups/economic-survey-2016-19000-startups-in-india-but-exit-options-remain-bleak/articleshow/51161562.cms

(Author is associated with Vinod Kothari & Company)
Disclaimer:

This document is intended to initiate academic debate on a pertinent question. It is not intended to be a professional advice and should not be relied upon for real life facts.

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