How Good is India Really for Start-Ups?

To cut a long story short, five or six years ago — NOT REALLY. Not for all sectors. If the startup was founded by IIT-IIM graduates and if it was in the IT sector (especially if it had to do with B2B apps) then it could succeed. If the same startup dealt with hardcore products (software, hardware, embedded gadgets, robotics) then it was less likely to succeed. However, if it belonged to the real goods sector (manufacturing, retailing, warehousing, distribution, of automobiles, electricals, housing materials, textiles, agriculture and food) or the real services sector (taxi service, travels), then India wasn’t and still isn’t a very a conducive place for a startup. If the startup requires a specific location or a conducive location then the problems, hassles, and costs increase multifold.

An essential requirement for nurturing entrepreneurship is the creation of an educational and social ecosystem that favours and encourages free thinking and fresh ideas. Since Independence, India has favoured socialistic or communistic approaches to business enterprising — and it tailored all educational systems and institutions to support this. One just needs to look at advertisements from leading colleges about guaranteed placements and jobs for proof. USA, for instance, instead went market-oriented/capitalistic from the get-go, since over 200 years back!

India stands at the 77th position in a ranking of 189 countries according to the ease of doing business. This ranking of countries is based on various parameters including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.

Is it all gloomy then? No. There have been startups that have done really well, although not in the kind of numbers a large economy like India should have had. But the system is slowly easing — governments around the country and the central government have realised that to attract private investments, they have to relax their restrictions. So the next five to 10 years should see a boom even in the real goods sectors like engineering, manufacturing & construction.

So, what has changed? People!

Over the last five years, the government of India has really pushed itself to boost startups. It has launched 50+ schemes for startups in the past few years under its Startup India initiative. Many people are not aware of the startup schemes and the limitless benefits one can avail, ranging from registration, handholding, technological and HR inputs, compliance inputs, loans, venture capital funding, location, infrastructure and more. Mainly, we need to look at what the essence of a startup really is.

Startups inherently involve disruption. What does that mean? It’s breaking rules and laws to some extent to benefit the society at large in many ways — make life simpler or easier, usher in new rules of play and create new products and services hitherto not experienced by people at large, so on. A startup goes where the existing businesses have not gone before. In fact, they are the guerrillas of business world. The existing small and big businesses may be efficient but they are not effective to the extent customers need. These include banks, insurance, pharmaceutical companies, healthcare, retailers, schools, colleges, universities, food and beverages — well, the list is endless. A small startup in any of these segments has tremendous potential to disrupt it.
Many startups have helped even these old school businesses grow due to the platforms they create and service. It is an entrepreneurial venture.

Entrepreneurship is an attitude rather than aptitude. They redefine performance of the existing products and services, and give
everything a new dimension. Example: Uber redefined the taxi service. Amazon redefined online business. The fundamental rule is that the market decides whether a startup is disruptive & thus successful, or not. So why is the government of India so keen on startups? This is to create an ecosystem and
economy that can majorly change the mindset of the general populace about the concept itself.

People are now aware what a startup means. There is respect for those who are struggling and trying to create or innovate something new. This scene was non-existent before this initiative. Changing the perception is the most onerous and almost impossible task for any government. But one must commend the government of India on this. The fear of failure & the stigma attached to it have been diminished. Media and society now talk about
them. This is a really big achievement in an otherwise traditional businesses and job-security-oriented India.

India is gradually moving towards the market economy through the startup ecosystem by boosting entrepreneurship. This means it’s finally beginning to abandon its socialist leanings and is coming out of the government-jobs-for-all-and-sundry mindset, whether one merits it or not based on economic, social, and religious status. Some government of India startup initiatives are:

  • MUDRA Bank
  • Ministry Of Skill Development and Entrepreneurship
  • Atal Innovation Mission (AIM)
  • eBiz Portal
  • Dairy Processing and Infrastructure Development
  • Fund (DIDF)
  • Credit Guarantee Scheme for Startups (CGSS)
  • Software Technology Park (STP) Scheme
  • Multiplier Grants Scheme (MGS)
  • The Venture Capital Assistance Scheme (VCA)
  • Loan For Rooftop Solar Pv Power Projects
  • NewGen Innovation and Entrepreneurship Development Centre (NewGen IEDC)
  • Single Point Registration Scheme (SPRS) and many more.

Apart from this, the government of India has also encouraged and sponsored more than 250 startup incubation centres. Startup incubators are institutions that help entrepreneurs to develop their business, especially in the initial stages. Incubation function is usually done by institutions that have experience in the business and technology world. Incubators help startups get funding. Most incubators run demo days where the entrepreneurs have a chance to present their idea before investors to secure funding. Investors also like startups from incubators as they have a certain amount of
faith in well-known incubators and expect the ideas and startups to be vetted to a large extent.

The future is ever hopeful.