AMA With Priyank Kharge On How Karnataka Government Is Working To Extend Startup Ecosystem Beyond Bengaluru

A 30-something-year-old with kind eyes, quick wit, and wry humour. He stands out for his brilliant eloquence, easy charm, and commanding presence, and is a difficult man to reach at that. We previously tried connecting him with our Facebook Live audience thrice but all of them got unceremoniously cancelled due to technical issues and paucity of time. Despite his busy schedule, however, he was kind enough to offer us a live session from our Delhi office, which is how we finally managed to sit down with him to chat about the potential of the Indian startup ecosystem and the impact government policies could have on its growth. The youngest face of the Karnataka government, the man in question is Priyank Kharge, the Minister of Information Technology, Biotechnology & Tourism.

You can watch the whole session in the video below:

As one of the major proponents of the Karnataka Startup Policy, Mr Kharge is dedicatedly working towards transforming the state into a global hub for innovation and entrepreneurship. He firmly believes in embracing the power of technology to uplift traditional sectors, such as agriculture, manufacturing and education.

Under Priyank’s leadership, the Karnataka government has launched multiple initiatives aimed at creating a complete support system for fledgeling startups. Take a gander at the list below to know more about some of these initiatives:

During our hour-long conversation, he spoke proudly about the changes that these policies and initiatives have brought in the state’s emerging startup ecosystem. Here are the most interesting insights that Priyank shared during the session:

 

Karnataka Startup Policy: Vision Statement And Scope Of Expansion

Question: There is a lot that Karnataka is doing for entrepreneurs. Can you give us a glimpse of the government’s vision for startups?

Priyank Kharge: The Karnataka government is really focussed on ensuring that we move away from the services stand that we have. As most of you are aware, we cater close to around 60-65% of all IT services’ exports in the country. I think we have matured beyond the services industry and we are moving towards innovation. At present, we are the second best ecosystem for startups.

So, we are trying to see how we can foster an environment that is based on ideation, innovation, and invention so that these startups succeed. We currently have a single-point agenda of moving away from services sector and making Karnataka a hotbed for innovation and entrepreneurship.

With the ELEVATE 100 programme, the idea is not just to identify 100 promising companies. It is also trying to see whether these companies are actually elevated. So, it could include assistance in networking, idea validation, customer acquisition, access to markets, and funding. By next week, we will be tying up all the loose ends of the ELEVATE 100 programme, and start working on actually elevating these companies.

It was just an experiment for us to see how we can onboard VCs, startups, policymakers and mentors. It was a good learning curve for us. Hopefully, if we get all the stakeholders to participate, it would likely not be restricted to ELEVATE 100, but, it could be ELEVATE 500. The next big thing for us is the upcoming Bengaluru Tech Summit that is going to happen in November.

The 20th edition of this summit will not be your regular, run-of-the-mill conference. We are going to have discussions on emerging technologies, which will decide the direction the country should be heading in the next decade or so, with respect to policy intervention, regulation, and rule changes.

Question: Karnataka government has a startup policy whose goal is to create 20,000 startups by 2020. When we talk about startup & technology in Karnataka, Bengaluru is often the only name that comes to our mind. How is your government planning to replicate the Bengaluru model for other cities of Karnataka?

Priyank Kharge: Naturally, it is a very difficult task that we have set out to do because grooming 20,000 startups during the policy period itself is going to be very challenging. We understand that as well. Before we can groom 20,000 startups, we will have to at least look at 200K startups. To have these 200K startups within the Bengaluru ecosystem is also difficult thus, we are looking throughout the state. It’s quite amazing that innovation is just not restricted to the city of Bengaluru.

Even for the recent ELEVATE 100 programme, when we set out to seek the 100 top innovations of Karnataka, we found that innovation is being bred across the state at the bottom of the pyramid. What was interesting is that out of the 1,700 startups that registered for the programme, close to around 400 of them were from other cities like Hubli, Mysuru, Udupi, Raichur and Mangaluru.

It was very encouraging for us to see that. The Karnataka government is trying to push the ecosystem outside Bengaluru and we have succeeded in doing so in Mysuru, Mangaluru and Hubli to a certain extent, but there’s still a lot more than can be done. Most importantly, we are pushing services to these tier-II cities. Last year, we clocked over $624 Mn (INR 4,000 Cr) in software exports only in these towns. We are doing all we can to reach out to startups outside Bengaluru as well.

Priyank Kharge On Women Entrepreneurship, Blockchains &  Cryptocurrencies

Question: If we look at the emerging technologies there are plenty of them coming out like automation, virtual reality, machine learning and so on. Can you tell us how is government looking at these upcoming technologies and does the government have any plans regarding cryptocurrencies?

Priyank Kharge: The Government of Karnataka has always been ahead of the digital curve. We envisaged the IT policy way back in the 1990s, long before any other state government even though that IT had a potential. The same goes with emerging technologies. Like I said, from services-based industry, we have moved to R&D. From R&D, we are now moving to innovation. When I say innovation, it does revolve around emerging technologies like AI, Big Data, machine learning, animation, gaming, cybersecurity, and so on.

We understand that, and we are trying to build an ecosystem for that. We have already come out with policies for animation, visual effects and electric vehicle manufacturing. We are setting up centres of excellence for AI and Big Data. Soon, we will also have a brainstorming summit to understand blockchain. When people talk about blockchain, the first thing that comes to mind is cryptocurrency.

The government is trying to understand the technology behind blockchain and how it can be put to use in governance. Only then will we be able to take a stand on cryptocurrency. The onus, in this case, does not lie with the state government. The central government and the RBI have to take a decision on that first.

Through that conclave, we hope to come up with some kind of policy interventions or regulations for use of blockchains and cryptocurrencies. It is a bit tricky right now to address the cryptocurrency issue. Hopefully, we will have answers to that soon.

Question: On the eve of the International Women’s Day in March this year, the Karnataka government launched a $1.5 Mn (INR 10 Cr fund) for women entrepreneurs in the state. Apart from funding support, what are some of the other steps the government is taking to encourage aspiring female entrepreneurs?

Priyank Kharge: Women entrepreneurship is something of a high priority for the Government of Karnataka. In addition to funding, we provide female entrepreneurs with mentorship, legal help, idea validation and other resources. Thrust is given to women startup founders. During the ELEVATE 100 programme, close to around 350 women entrepreneurs participated, which is a very encouraging number.

Recently, we funded around 61 companies, out of which 28 were from the biotechnology sector and about 19 to 20 startups out of these have women entrepreneurs. Also, the government has announced a ‘Women Tech Park’, wherein 300 acres have been earmarked for women-run small and medium enterprises in the state.

We have come up with a new scheme, Ksheera Bhagya, to provide milk for adequate nutrition to students. With regard to STEM, I think biotechnology is one field that is quite popular among female students and scholars, which is indeed a good thing.

Another focus has been to make our graduates more employable through proper skill development training. So, empowering the girl child, female students, and women entrepreneurs has always been a core focus of the Karnataka government.

Collaboration: The Key To Bolstering Karnataka’s Startup Ecosystem

Question: Karnataka recently signed an MoU with Finland to build a Karnataka – Finland Innovation Corridor that would facilitate collaboration between the countries in innovation, research and development as well as startup incubation. Can you elaborate on that?

Priyank Kharge: So, firstly, why does Bengaluru have such a great startup ecosystem? It’s because we have government support. We listen to stakeholders and change policies based on their inputs and suggestions we receive. When we engage, we learn a lot. This is necessary if we intend to make Bengaluru a world-class destination for startups. How do we keep ourselves abreast of what is happening in the global startup ecosystem?

To that end, we have collaborations with Finland, Australia, China, Singapore and many other nations. We just provide a platform for entrepreneurs in Karnataka to collaborate and engage with startup founders based outside India.

Question: There’s always a comparison between the startup ecosystem of different cities of India and entrepreneurs are usually not aware of all the benefits of setting up their company in one particular state vs. the other. For entrepreneurs who’re thinking to start something, why they should come to Karnataka vs going to some other state?

Priyank Kharge: I always say that if you have come to Karnataka first, you really don’t need to look outside. That’s because we have a great environment here that in turn enhances the ease of doing business. We are a government that is accessible. We understand what the stakeholders need, whether it’s industries, startups or any sector. We have a dedicated startup cell for startups and industry players, wherein we have relationship managers who help in understanding and implementing policies.

Within the Karnataka government, we provide Seed as well as venture funding and even access to mentors. We send people abroad for networking opportunities. So, we do a host of things that no other state government does. We are the only government in the country to have ideation, innovation, and invention as a part of its policy.

Electric Vehicles Not Enough; Energy Storage & Charging Infrastructure Also Necessary

Question: If I talk about Delhi & Bengaluru, both cities share many common challenges from traffic congestion, pollution, rising urban population and infrastructure problems especially in Bengaluru. How are you trying to resolve these problems for the long term?

Priyank Kharge: This is fundamentally a difficult thing. We cannot build or improve a city overnight. This is a problem with any dynamic, growing city, be it New York, London, Paris, Melbourne or Mumbai. The city is growing faster than the policies. We are playing catch-up. The policies are more on a reactive basis than a proactive basis. Twenty years back, nobody thought that we will be the IT leaders.

Today when we are talking about emerging technologies, the immediate applications of AI, machine learning, and virtual reality might seem far-fetched. So, it becomes a little difficult to build a city that is futuristic, especially in terms of policies. Our government is working on it. For example, we have built 46 km of metro in record speed of four years. As a result, connectivity in Bengaluru has improved dramatically.

We have also got the tags of “most dynamic city”, “most liveable city” as well as “most sustainable city” in terms of being the most technologically advanced city. Infrastructure is a challenge for any growing city because we are growing very fast. We are pumping in as much money in infrastructure as possible.

Question: Recently, the Karnataka government became the first state to roll out an Electric Vehicle and Energy Storage policy. Can you shed some light on that? Do you think switching to 100% electric vehicles countrywide by 2030 is attainable?

Priyank Kharge: That’s a new policy that we have got. It’s been just two days since the cabinet has given its approval. I agree that moving to 100% EVs by 2030 is challenging, but we have to make the start somewhere. The idea of the policy is to make Karnataka an electric vehicle manufacturing hub for both batteries as well as energy storage.

So, we are moving towards not only manufacturing EVs but also creating an infrastructure to ensure electric vehicles can operate properly.

Challenges In Hardware Innovation, Product Development & The Potential Of IoT

Question: Bengaluru has been a leader in terms of technology and innovation. Internet of Things is one sector that is booming globally at present. In India, there isn’t much rules, regulations and policies on that. What initiatives has the Karnataka government taken to bolster growth in this area?

Priyank Kharge: The Karnataka government runs India’s first centre of excellence in IoT. The use of IoT is universal, so it becomes very difficult for us to control IoT itself across all segments. We are therefore looking at specific applications to understand how it can be regulated. For example, IoT in drones. That is something that is being studied by the Home Ministry. At the end of the day, we have to look at specific use cases and then bring in regulations.

Question: Bengaluru is the quintessential IT hub. Since the 1980s, it has been home to several IT giants. However in India overall, there is not much technical expertise when it comes it hardware innovation. Startups reaching the point of prototyping still constitute a very low percentage. What has the Government of Karnataka done to facilitate innovation in hardware manufacturing and product development?

Priyank Kharge: We are a knowledge hub when it comes to product development. What we are doing to facilitate hardware innovation is one, in the policy itself, we are looking to incubate 6,000 product-based startups out of the total of 22,000. We currently run incubators within the NASSCOM 10,000 Startups initiative, where we encourage product-based startups. We also have tie-ups with private incubators to ensure that startups in this sector are given adequate market access.

Unfortunately, we don’t have the kind of ecosystem China has. If there are product startups that need machines for their products, we buy those machines and keep them in the centres of excellence. However, it is not as mature as you would want it to be. We are working towards creating the most conducive environment for product development.

We are also identifying land for testing of these products. The Karnataka government is going to give around three to four acres only for testing of the hardware products being developed by startups, especially in biotechnology and aerospace.

Question: More than 50% of the country’s population relies on agriculture for sustenance. What are some of the things your government is doing to support agritech startups?

Priyank Kharge: Agritech is also a huge focus for the Karnataka government because we are primarily an agrarian economy. We have $1.5 Mn (INR 10 Cr) reserved exclusively for agritech companies. Through our Startup Policy, we are aggressively trying to bolster this sector. If you look at the portfolio of ELEVATE 100, around six to seven of them are from agritech. In the previous round as well, about four to five companies have been agritech startups, with special thrust on biotechnology. This is a heavily-funded segment in the state.

Karnataka Government Mandating Computer Literacy And Promoting Regional Languages

Question: In the education space, we are unable to reach everyone. Karnataka recently made it mandatory for state government employees to pass computer literacy exams. It’s good that 35% of the workforce is computer literate, but how can this percentage be increased?

Priyank Kharge: Firstly, we are the first state that has ensured all government officials become computer literate. So, the younger employees are expected to have some level of proficiency in computers. For the older generations, we are trying to see how we can make them digital literates as well. That’s the reason why we came out with this programme. In the first batch, 35% of them passed the test.

Now, we are trying to link their performance and promotions to that. Having said that, we have something called KEONICS programme, which provides basic to the most advanced computer skills like coding, at subsidised prices. We have over 10,000 centres across the state for this programme.

The Karnataka government is also coming up with schemes with the Startup Policy aimed at making our graduates and dropouts more employable. That is going to be a game-changer because that will be an industry-driven programme, not just a government initiative. So, we will get the curriculum from the industry, so as to be able to bridge the gap between the industry and higher education.

Question: As per a recent Google-KPMG study, nine out of 10 new Internet users will be a regional language-based user. The Government of India recently announced that it would be providing 5 Mn users with email IDs in Hindi. What is Karnataka government doing to acquaint local language speakers with the world of Internet?

Priyank Kharge: The Kannada language is also a classical language. We promote startups that are doing something to document that language or trying to promote it in any way. A lot of social analytics happen in vernacular languages. People talk about the government and its schemes in vernacular language. How do we analyse that? We are trying to encourage analytical companies that are using Kannada for Big Data. That will surely help us.

The Karnataka government has also come up with a Unicode and already have around three to four fonts. One Unicode will be universal to speakers of every language. In fact, out e-governance platform is also a little ahead of the Digital India E-governance platform.

Question: When it comes to emerging technologies, it can be a double-edged sword. While it helps create jobs, there are fears that automation, including AI and machine learning technologies, could leave a lot of people jobless. Given that our education system currently cannot support such a system, what is the Government of Karnataka in that direction?

Priyank Kharge: I agree that there is a general fear surrounding automation. But this was also the case when the Industrial Revolution happened or when computers came into existence. For instance, when Rajeev Gandhi spoke of computers, members of the BJP raised concerns. But it ended up creating jobs and category leaders. Today, Bengaluru has more than 1 Mn people who are hired directly or indirectly by technology companies.

While automation might affect the workforce right now, what we are insisting on the need for re-skilling. There are huge job opportunities in AI, cybersecurity, gaming, and so on. We need to re-skill to be able to ensure that people do not lose jobs because of automation.

On That Note

In April 2015, Ronnie Screwvala, an Indian entrepreneur and philanthropist wrote in his book titled Dream with Your Eyes Open, “Indian entrepreneurs will be unstoppable.” Celebrated as the world’s third largest startup ecosystem, India is currently home to as many as 4,750 tech startups. Predictions by NASSCOM suggest that the number will likely increase 2.2x to around within the next three years. Today, the Indian startup network is populated by a fast-growing group of young innovators and problem solvers who collectively amassed $5.56 Bn in funding in H1-2017 alone.

The PM Narendra Modi’s sustained efforts to encourage entrepreneurship among the country’s young populace has further fueled this growth. Under the umbrella of ‘Startup India, Standup India’ movement, the central and state governments have loaded the startup community with a number of perks. Whether it’s the $1.5 Bn Fund of Funds scheme, various tax exemptions or numerous efforts to bring in foreign support, the government has left no stone unturned.

At the state level, Karnataka is currently spearheading the startup revolution, in an attempt to create a nurturing environment for entrepreneurs and budding startup founders. From launching its own Startup Policy back in 2015 to earmarking a separate fund for women entrepreneurs, the Karnataka government, under the guidance of leaders like IT, BT & Tourism Minister Priyank Kharge, has successfully fostered a culture hinging on “ideation, innovation, and invention”.

During the interaction with Inc42, Priyank elaborated, “Karnataka is home to the world’s fastest-growing startup ecosystem. The Karnataka government is trying to nurture this ecosystem with strong policies like the IT Policy, Startup Policy, BT Millennium Policy, ESDM Policy and the KAVGC Policy, giving the ecosystem a strong foundation to help entrepreneurs and established industries to flourish. The promise of making Karnataka the global hub for startups and a hotbed for innovation will continue.”