Amid Scandals At Indian Startups, Amitabh Kant Says Integrity Key To Long-Term Growth

SUMMARY

Speaking at an event, Amitabh Kant said clear norms need to be laid out for self-regulation of startups, and also emphasised that robust and timely financial reporting is the need of the hour

Constant stories of failures and bad governance may result in global investors losing confidence in the Indian startup ecosystem, the former NITI Aayog CEO said

Multiple startups like BharatPe, Zilingo, and Mojocare have been in the news for the wrong reasons, while BYJU’S has seen multiple delays in filing financial statements

At a time when multiple corporate governance lapses and disputes at Indian startups have been coming to light, India’s G20 Sherpa and former CEO of NITI Aayog Amitabh Kant has called for a self-regulatory framework for Indian startups.

Speaking at an event, Kant said there are lessons to be learnt from recent corporate governance failures at some internet companies in India and highlighted that integrity is the key to long-term growth, ET reported.

“We have seen this happening in several startups in recent times. We’ve seen this in a housing company, in a trading company, in a payments company in recent times… therefore, there are lessons to be learnt from all these examples where these challenges have arisen,” he said.

Kant said clear norms need to be laid out for self-regulation of startups – right from inception to early and growth stages, and IPO as well. Startups should make sure they are following the regulations properly and question themselves in case of non-compliance.

“For all startups, I want to point out, it is very important that there is integrity of the initial founders. It is critical for them to sustain and grow… For a startup to grow into a top class company in the long term, integrity and good governance is the key,” he added.

It must be noted that over the last year or so a number of cases of corporate governance lapses at Indian startups have come to the fore. While Zilingo and BharatPe have been involved in disputes, GoMechanic and Mojocare have been in the news for fudging numbers. Inc42 also exclusively reported about the implosion of Rahul Yadav’s Broker Network.

All these instances have the ability to shake the confidence of investors in the Indian startup ecosystem.

Kant said if there are constant stories of failures and bad governance, then global investors will lose confidence in the Indian startup ecosystem.

He also emphasised that robust and timely financial reporting by startups is the need of the hour.

It must be noted that edtech major BYJU’S is the most popular Indian startup which has been in the news for delays in filing financial statements. It published its FY21 financial report after a delay of 12 months and is yet to file FY22 results. Deloitte resigned as the statutory auditor of the company citing the delay in filing financial statements for FY22.