Workshop on India(s) Start up Phenomena A Revolution in Making

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Workshop on India(s) Start up Phenomena A Revolution in Making

Date: 07 Aug 2018
Speakers
Shri Atul Chaturvedi, Additional Secretary, Department of Industrial Policy and Promotion
Shri Anil Agarwal , Joint Secretary, Department of Industrial Policy and Promotion
Shri Saurabh Srivastava , Co Founder and Former Chairman of NASSCOM
Ms. Shradha Sharma , Founder, CEO and Chief Editor of YourStory

Report

Record of Discussion

Subject: "India's Startup Phenomena: A Revolution in making"

Date :      7th August, 2018

Venue:   BPST Main Lecture Hall, Parliament Library Building, New Delhi

 

Resource Persons:

  1. Shri Atul Chaturvedi, Additional Secretary, Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry.
  2. Shri Saurabh Srivastva, Co-Founder & Former Chairman, NASSCOM, Chairperson Emeritus, TIE, Delhi NCR and Founder, Angel Network.
  3. Smt. Shradha Sharma, founder and CEO, YourStory Media

At the outset, Shri Rahul Dev, Honorary Advisor, SRI welcomed the members of Parliament and the experts to the workshop on ‘India's Startup Phenomena: A Revolution in making’ held under the auspices of Speaker's Research Initiative on 07th August 2018. Referring to startups as ‘नवोद्यम’ (Navodyam) in Hindi, he defined it as the 'world of young entrepreneurs and their aspirations'.

Shri Atul Chaturvedi, AS, DIPP, through a Power Point Presentation, briefed the members of Parliament about the definition, recognition procedure, funding and benefits for startups launched by the Indian Prime Minister on 16th January 2016. The eligibility criteria laid down by DIPP ensured that any startup must be registered as a private company, limited liability partnership (LLP) or partnership firm, not more than 7 years should have elapsed since incorporation of the business entity (10 yrs for biotech), its turnover for any of the financial years should not have exceeded ₹ 25 Cr and it must have been working towards developing new or improving existing product/service.

The process of recognition as a ‘Startup’ is carried out through an online application. Entities are required to submit the online applications along with IP and other details such as founder and team, business model etc. Startup India Team evaluates proposals and takes action within 24 - 48 hrs. If suitable, then application is approved and in case where it is not suitable, then second chance is given to reapply.

Presently, 11,634 startups are recognized with the Government of India. On an average, 12 jobs have been created per startup. Approximately, 1, 06,618 jobs were reported by 9,091 startups. To provide further, the Government has simplified various processes such as fast track examination for grant of patent, income tax exemption, self certification and faster exit within 90 days. The Government has also created ₹ 10,000/- crores corpus for startups to be provided by March 2025.

The Government has provided following benefits for startups:

  • Relaxation has been provided in terms of turnover. Startups are exempted from submitting Earnest Money Deposit (EMD) or bid security while filling Government tenders. All Central Public Sector Undertakings have been directed to follow procedures and give preferential treatment to startups. Further, recognized startups can directly register and sell on Government-e-Marketplace (GeM) with no requirement of turnover and experience criteria.
  •  Patent and Trademark Benefits have also been extended to startups. 80% rebate in patent filing fees and 50% rebate in trademark filing fees have been granted for startups. The Government has empanelled 1,019 facilitators for free of cost filing and facilitation. Till date, 801 applications have received 80% patent rebate and 1,226 applications have received 50% trademark rebate.
  • In terms of facilitation and handholding, there is a dedicated facilitation support team at Invest India to handhold startups. 48 hours response time has been provided for any startup enquiry made via email, twitter, or call centre.
  •  Easing compliances for startups, inspection against 6 labour and 3 environmental laws has been relaxed for them. They are now allowed to self certify against laws. Further, Insolvency and Bankruptcy board has been constituted for fast track exit and 90 day period for winding up operations has been provided for as opposed to 4 years earlier.
  • Tax exemption has been offered to startups on investment from investor against issue of share capital and on profits and gains from income for 3 years. Startups can apply to avail exemption under Section 56 and
    Section 80 IAC of the Income Tax Act, 1961.

Shri Atul Chaturvedi further apprised about the following schemes/programmes being run by the Government for capacity building of startups:

  • NITI Aayog is running a scheme viz Atal Tinkering Labs to set up tinkering labs in schools across India where young minds can give shape to their ideas through hands-on, do-it-yourself learning. More than 2400 schools across India have been selected to set up tinkering labs. Grant-in-aid of ₹ 20 Lakhs per lab will be provided over a period of 5 years.
  • Department of Science and Technology is implementing MANAK Scheme to strengthen science and technology system, increase R&D human resource base by inviting students from all Government and private schools to send their original and creative technological ideas/innovations. Approximately 30,678 students have received a grant of ₹ 10,000 each under the scheme.
  • Ministry of Human Resource Development is running Uchhattar Avishkar Yojana to jointly fund research projects, along with private entities, undertaken by IIT students. Funding support has been provided to 85 research projects so far at various IITs, for product development and commercialization.
  • Further, Ministry of Human Resource Development is setting up research facilities for incubation and joint Research and Development (R&D) efforts between academia and industry Establishment of R&D facilities across 7 IITs & IISc Bangalore ( i.e. academia-industry collaboration).
  • Supporting creation of world class incubation facilities across India that will enable entrepreneurs by mentoring and cultivating their ideas into successful ventures, NITI Aayog, Dept. of Science & Technology and Dept. of Biotechnology are setting up Incubation Centres in the country.
  • In order to promote innovation among Biotech companies and support commercialization of research, Dept. of Biotechnology has set up 4 bio-clusters at Kalyani, Bangalore, Faridabad & Pune in addition to 3 BIRAC Regional Centres at Hyderabad, Bangalore & Pune.

The Government was also supporting Indian startups looking to expand to other countries. Further, under the State Starup Initiatives, 18 States have framed Startup policies providing framework of 7 areas of intervention and 38 action points. Under Startup India Yatra, the Government has launched offline initiative to promote and support grass root innovation coming from Tier 2 and 3 cities.

Following the presentation made by Shri Atul Chaturvedi, Shri Saurav Shrivastva, Co-Founder & Former Chairman, NASSCOM, Chairperson Emeritus, TIE, Delhi NCR and Founder, Angel Network discussed the startup initiatives. Giving a historical perspective, he said that India had always been entrepreneurial which contributed 25% of global GDP in the year 1700, same as China and Europe. However, colonization and subsequent licence permit quota raj brought India down. India progressed since liberalization in 1991 which resulted in 10 fold growth in its GDP from USD 2.7 billion to USD 2.6 trillion. India’s imports grew 19 fold from USD 24 billion to USD 460 billion, exports grew 17 fold from USD 18 billion to USD 303 billion and Forex reserves grew 70 fold from USD 6 billion to USD 425 billion.

He further said that India was poised for global leadership; however there were following challenges:

  • Majority of Indians did not have access to affordable healthcare,
  • India has only 1/3rd the teachers it needed,
  • Rural areas lack access to quality education,
  • Agricultural productivity was amongst lowest, globally,
  • Water, sanitation and clean energy were badly needed,
  • India needed to create 10 – 15 million jobs every year.

However, he added that along with the aforementioned challenges, there were also opportunities. He presented the following opportunities:

  • Oldest civilization but youngest nation in the world,
  •  Over 50 % of population under 25 and 65 % under 35,
  • India produced 2.5 million graduates every year,
  • Burgeoning middle class,
  • Global leadership in IT, Telecom/Mobile, Internet, two wheelers, media and entertainment,
  • World’s largest stable democracy, and
  • Government focus on economic growth and development.

Emphasizing upon converting challenges into opportunities, he said that globally, innovative startups were the real engine for creating employment and economic growth. According to Kaufman report: US data between 1977–2005, except for 7 years, all net new jobs were created by startups. USA, Israel and other countries have transformed their economies by creating a vibrant entrepreneurial ecosystem. He underlined that India could also do the same and software industry had shown the way. Jumping from USD 50 million to over USD 160 billion in 25 years, India’s software industry was targeting USD 350 billion by 2025. In addition to providing 25% Forex earnings, it was the largest employer in organized sector and 5 of top 10 IT service companies globally were from India.

According to him, along with jobs, startups created innovative solutions that benefitted society and generated economic growth. India had world class entrepreneurs who saw its large population and their unmet needs as an opportunity. Innovative solutions leveraging technology could address challenges in healthcare, education, agriculture and related sectors. Further, Government focus on creating and enabling environment for startups had unleashed the power of entrepreneurship in India.

Terming India the New Startup Nation, he stated that India was the fastest growing startup hub globally with 26,000 startups driven by large, high growth markets across several sectors –internet/mobile, IT, education, healthcare, agriculture, cleantech, logistics, fintech, media/entertainment, biotech/pharma; lure of world class products at Indian price; increasing availability of risk capital across all stages; Government funds for startups; world class entrepreneurs with global ambitions but middle class values on cost; large, young talent pool at affordable costs; Government focus on creating enabling environment; successful role models and CXOs/Senior Execs/NRIs joining startups or starting ventures in India. He said that India hosted the youngest entrepreneurs in the world with 72% of founders who were below 35 years and there was 50 % growth of female entrepreneurs.

According to him, India was becoming the New Entrepreneurship Hub because of the following trends:

  • Family-owned business ethos was declining,
  • First generation, middle class entrepreneurship was flourishing giving rise to numerous icons/role models,
  • India’s most successful/most global industry IT was created largely by first generation, middle class entrepreneurs,
  • IIT grads going overseas had dropped from 90 % to 10 % over last 5 years,
  • Since liberalization, an overwhelming majority of leading companies was created by first generation entrepreneurs,
  • Entrepreneurship/innovation cells in colleges,
  • Career options shifting from MNCs to startups, and
  • Entrepreneurs were now celebrated as creators of wealth and employment.

He further said that India was at an inflection point and the best was yet to come. He envisaged that India could assume the role of global leadership for following reasons;

  • Indian entrepreneurs were better than world class, China, USA and many other countries,
  • Indian entrepreneurs had proved themselves globally,
  • Indian entrepreneurs were now solving India’s problems,
  • Global MNCs/PEs were investing in or acquiring innovative companies,
  • Government had recognized the role of startups in creating employment and economic growth;
  • India was well positioned; had more clout politically than in recent history.

Continuing the discussion on the subject, Smt. Shradha Sharma, founder and CEO, YourStory Media began by sharing her personal experience from her being a media person to a young entrepreneur. She said that startup meant use of technology in day-to-day things or activities. Giving examples of startups such as Bigbasket, Myntra,  Flipcart, Amazon, she said that these companies were not dealing in new things but provided platforms  to do day-to-day things online.  Further, she gave examples of a number of Indian startups in medical field which were providing cost effective medical services for liver transplant, early detection of breast cancer, eye care etc.

She emphasized that technology was the key focus for global and local companies banking on growth. From a controlled economy in the 1990s, India became a global knowledge hub and destination, attracting talent and encouraging innovation. Innovations spurred startups and funding led to their strong valuations. She added that startups had become part of mainstream business, creating not just new products and solutions but also jobs.

She said that investors were pouring big money into Indian startups. Over USD 40 billion were invested between 2014 and 2018. Citing examples of 14 startups in the ‘Unicorn’ club with over USD 1 billion in valuation, she spoke about the success stories of the founders of Paytm, OYO and many other startups.

The question-answer session of the experts with the Members of Parliament commenced with a statement from a Member who said that foreign direct investment was more common in India than startups. However, success stories of many new entrepreneurs were encouraging and India’s future generation should know the stories of such successful entrepreneurs. To this, Shri Saurabh Srivastva added, today Indian entrepreneurs have confidence as well as global ambitions. Today’s startups do not want to be called merely India's biggest startup but are in the line of global leadership.

A Member of Parliament stressed upon the need for spreading awareness and motivating people about startups in small towns like Meerut. Shri Rahul Dev, Honorary Advisor, SRI  also emphasized that the startup revolution should spread all over the country.

Smt. Shradha Sharma acknowledged that exposure was very important and successful entrepreneurs should motivate energetic youth of small towns.

An Hon’ble Member presented two dimensions of the subject- first, how to facilitate creation of startups in each parliamentary constituency and second, how the solutions being offered by promising innovative startups in the field of agriculture, low-cost healthcare and related sectors could be used at the ground level. He further added that technology based startups providing technological solutions could work from anywhere in the world. However, region-specific startups could also be created. Any region had certain advantages or certain issues which they would like to solve. For example, Chhattisgarh was bestowed with medicinal plants and biodiversity.  He suggested that based on region-specific issues and advantages, theme-based startups could be created which would be beneficial to States.

Agreeing to this, a Member of Parliament stressed the importance of mental preparedness to create and run startups. Giving an example of his native State, he said that people in Assam would be more interested in investing money in business like hotels and restaurants etc. rather than startups. He further added that for creating region-based startups, investment along with productivity would be important and new generation had to come forward for this.

Commenting on the same, Smt. Shradha Sharma reiterated that there was a need for exposure and change in mentality. People should know the success stories of others, particularly of those who belonged to these States. They could organize some exposure programmes and impart training to others in their native States. Shri Rahul Dev opined that States should initiate such activities and call such startups to their states for training and exposure programmes.

Calling startups an interesting phenomenon, a Member of Parliament pointed out the success of many women Self- Help Groups (SHGs) which showed entrepreneurship skill among Indian women. He said that although, at micro levels, these SHGs were not startups, they could be as successful as startups if provided with technical, managerial and financial assistance.

Continuing the discussion, Shri Rahul Dev stressed upon the need to motivate people in their regional languages about startups. Replying to this, Smt. Shradha Sharma said that they had started Chhattisgarh growth story, among many others in Hindi.  Shri Atul Chaturvedi added that there were seven Indian languages in which learning programme was given.

The workshop concluded with a vote of thanks to the members of Parliament and the experts.