India is a land of talent. According to a report by IT industry body NASSCOM and Zinnov Consulting, the country witnesses the birth of three-four startups everyday. But, besides having a pool of talent and people who have passion to make something happen with that talent, nearly one in two startups ends up saying bye-bye sooner than later, according to published report by Xeler8. This is because the country lacks a supportive environment for these infant businesses to flourish into big giants or even make it through the initial years.

When it comes to first-time entrepreneurs, which India has in abundance, they require institutional help from the government to have a smooth sail in meeting several important business requirements like having all the required registrations, bureaucratic certifications in place and obtaining institutional finance etc. This is because if they invest months putting all these together, they end up losing their precious time and increase the risk of someone launching their idea ahead of time. This is where everyone hoped that the much hyped Startup India initiative launched by the Modi government on January 2016 will come to help, but unfortunately, one and a half year have passed since the initiative went live and nothing much has changed yet. In fact, according to the latest data available, the programme has included only a handful of startups till date.

According to the government, out of 1,368 applications that it had received, 768 entities have been recognised as startups by the Department of Industrial Policy and Promotion (DIPP). Of these, only 111 applications have been considered for tax benefits, as those startups have been incorporated after April 1, 2016. Further, the inter-ministerial board setup by DIPP has so far approved only 23 early-stage startups for tax benefits.

IndianWeb2 set to find out the reasons for the programme being such a big dud and here's what we have concluded:

Why Startup India has Failed?



One of the foremost reasons for the failure of the much hyped programme is that lack of bureaucratic professionalism still exists in India today. The operational methods being used by the government officials are still very old school, which ends up making the registration process a lot slower than it should be. Applicants applying for the programme still have to navigate through layers and layers of red tape and bureaucracy despite the digital processes that the government promised during the launch.

Secondly, the long criteria list that the government has carved out is acting as a major roadblock for a lot of entrepreneurs and startups in the country to apply for the programme. This is because the government has very conveniently left out some of most promising sectors from the criteria list. One of the them being the healthcare sector.

Anyone living in India is aware of the country's need for healthcare and the lack of an equipped infrastructure for the same. But, the Indian government has failed to recognise the sector in its criteria list for the Startup India programme. Not only this, out of the 117 incubation centres that were announced across the country under the initiative, no incubation programme has been created for developing healthcare technology in the country. This is inspite of the fact that the sector has been doing unbelievably well in the last couple of years and has raked in USD 600 million in investment from 2014 and 2016.

Last but not the least, one of the most important factor that has contributed substantially for the failure of the Startup India initiative is its inefficient fund deployment. Initially, the government had decided to dedicate a whopping INR 10,000 crores, called the Fund of Funds, through 2025 as part of the Startup India initiative. But, Small Industries Development Bank of India (SIDBI), which has been given the responsibility of managing the mega corpus has selected just 17 venture funds till March this year and declared a support of INR 623.50 crore out of the INR 10,000 crores amount.

What Needs To Change?



If the Modi government ever wishes to use the Startup India initiative as a success point in its 2019 election campaign, it needs to iron out a few quirks present in the Startup India initiative urgently.

Firstly, it needs to work towards building a stronger startup support infrastructure for new entrepreneurs and startups in order to assist them with crucial business requirements like obtaining licenses, registrations and finance etc.

Secondly, the central government needs to offer a smoother collaboration between the centre and the state governments so that entrepreneurs don't have to waste their time running from pillar to pillar jumping one bureaucratic hurdle one after another. Further, the government needs to identify the paint points slowing the process and mend them as soon as possible.

Thirdly, the government needs to focus its urgent attention on funds deployment process and streamline and optimise it as soon as possible.

Lastly, the government needs to ease up on the regulations a little bit and warm up to the idea of exploring possible collaborations between government agencies and startups for optimum utilisation of shared resources.

The government needs to realise that they require the startups for the country's economy and employment as much as the startups require them for their survival and success. Only when the government and its officials recognise this basic fact would the country and the startup ecosystem of the country be able to flourish truly.

Post a Comment

Previous Post Next Post

Related Readings