“India has once again given a clear mandate instead of a fractured one. It should bear fruit for us in the coming years”. This statement from Siddhartha Gupta, CEO Mercer|Mettl, clearly underlines the optimism, trust and confidence in the re-elected NDA government from the Indian startup ecosystem.
Rahul Gandhi-led Congress party’s election manifesto — ‘We Will Deliver’ — failed on the D-day of General Elections 2019 as the BJP-led NDA achieved a thumping win. The Congress-led UPA’s promise of creating 34 Lakh jobs in the public sector and giving INR 72K yearly to lower income group could not stand against BJP’s strong startup and tech-oriented manifesto.
Launching its election manifesto on April 8, the Narendra Modi-led NDA government promised an investment of INR 100 Lakh Cr ($14.36 Bn) in the infrastructure sector during the next five years along with facilitating the establishment of 50K new startups by 2024. It further envisioned establishing India as a hub of financial services, as well as exploring ways to utilise deeptech for developing the agricultural sector.
Anupam Jalote, CEO of International Centre for Entrepreneurship and Technology (iCreate) excitingly said, “We are confident that with the visionary leadership coming back into power, India will stand tall in the world of deeptech innovation in areas like energy storage, energy efficiency, early disease detection, water and agritech, to name a few.”
Arpit Agarwal, principal at Blume Ventures further highlighted that the first term of the Modi-led NDA government saw a range of positive initiatives such as Startup India and closer interactions between industry bodies such as Department of Industrial Policy and Promotion (DIPP) and Indian Venture Capital Association (IVCA).
Like Agarwal, Harsh Shah, cofounder, Fynd believes that having Modi as a PM improves India’s growth prospects and funding opportunities from both local and foreign investors.
“The next five years should see faster acceleration and hopefully more concrete implementation of these continued policies, plus additional programs to improve India’s standing in the startup world (e.g. improved ease of business, more favourable tax and IP regimes, and so on),” Agarwal added.
While the re-elected NDA government is now busy celebrating its victory, let’s have a look back at major achievements of this government in its first term, as well as expectations of the Indian startup ecosystem from NDA 2.0 and the road ahead.
The Last Five Years
“The Modi Government is Pro-Technology, Pro-Innovation, Pro-Startup and Pro-Youth.”
According to Login Radius cofounder and CEO Rakesh Soni, the NDA government have demonstrated this by taking appropriate policy measures, allocating significant startup funding and promoting the startup culture.
In the last five years, the government’s initiatives have led to key financial and corporate milestones for the country. As Pankit Desai, cofounder and CEO, Sequretek said, “This govt has had 5 years already where they must have gained some insights and learnings about how to help startups flourish more.”
Prem Rajani, Managing Partner, Rajani Associates shares that the introduction of the Insolvency and Bankruptcy Code (IBC), the establishment of the Real Estate Regulatory Authority (RERA), REITs and InvITs, the huge impetus towards Foreign Direct Investment (FDI) in India, policies and reforms for startups, revising the Indian ecommerce policies, among many other moves, has enabled the country to jump to a higher global economic standing.
“This government has had a very strong focus on Digital India and Fintech, and we are happy that they will continue to do so. A lot of programs were initiated towards digitisation of the country and increasing access to fintech last year,” Harshil Mathur, CEO and cofounder, Razorpay said.
With several policies in place to make it easier for entrepreneurs in the Indian startup ecosystem to launch new businesses and create jobs, numerous startups forayed into the various unexplored sectors and have given a new shape to the economy of India.
Saahil Goel, CEO and cofounder, Shiprocket further added that the last 5 years were about structural reforms and the MSME segment went through a tough phase with the introduction of GST and demonetisation. However, the credit crunch has been somewhat eased and loans are now readily available for MSMEs which has once again created a conducive environment for growth.
“NDA-I had worked to address many fundamentals of the economy and business environment – introducing GST and rationalising rate structures, demonetisation, ease of doing business amongst other matters,” added Sameer Vakil, cofounder and CEO, GlobalLinker.
Expectations From NDA 2.0 In The Next Five Years
Ajay Adiseshann, Founder and CEO of PayMate suggests that startups are making a positive contribution to employment and over the next 10 years can potentially be one of the largest employers of both blue and white collar workers.
As a Snapdeal spokesperson said, this decisive mandate for the re-elected NDA government will allow undivided attention to national priorities like boosting employment and creating more enterprises across the country. In its second term, the NDA government has once again shown its inclination towards supporting the Indian startup ecosystem enablers and the technological workforce.
In order to accomplish these promises at an accelerating pace, there are a few critical areas that the re-elected NDA government would need to focus on, especially making the early stage as well as growth capital more easily accessible to startups.
“Our people have the mental calibre to rival Israel and the US in tech innovation. But funding needs to be made available to innovators even outside the ambit of established research and academic organisations,” added Jalote.
Here are the areas that the Indian startup ecosystem expects the re-elected NDA government to focus on in the second term:
Increased Ease Of Doing Business
Sampad Swain, CEO and cofounder, Instamojo believes that the government should introduce measures to streamline taxes and ease regulatory policies for the MSMEs of the country which would give this sector impetus and improve the ease of doing business.
Vineet Chaturvedi, cofounder, Edureka suggested the government should provide startups with a more skilled workforce. “We highly recommend Skilling Allowance for all tax paying individuals. Such a rebate that rewards continuous learning will go a long way to create a workforce that can make India a skilled powerhouse,” he added.
Solution To GST Conundrum
One reform that Razorpay’s Harshil is expecting is improved tax and GST benefits for businesses opting for digital transactions. GST led to the extreme shortage of working capital, and there’s no backup plan in place to combat this, according to Mathur. Saania Singh, cofounder, Zero Gravity Aesthetics LLP expects the re-elected NDA government to act on the issue quickly, and make working capital available through banks or reasonable interest rates.
Support The Rise Of Fintech
Alok Mittal, founder and CEO, Indifi Technologies suggests the new government must define concrete steps to mobilise access to financial services and empower fintech companies that facilitate them. For instance, extending credit guarantee schemes such as MUDRA and facilitating better data access to alternate lending companies can help in bolstering the impact and reach of these initiatives, he said.
Improved Focus On New Age Technology And Education
Artificial intelligence (AI) has the potential to double the size of Indian economy by 2025. As the government has shown willingness to promote this sector in the last budget. Most startups Inc42 spoke to wanted the government to push for AI adoption.
Talking about the interim budget’s commitment to invest close to INR 38.57Cr in the National Education Mission, Adda247 founder and CEO Anil Nagar hoped to see more such initiatives for the Teacher Training Institutes and School Assessment Programs.
“Now it’s time to move towards taking bold steps to overhaul our systems at the grass root level especially vis-à-vis education and training for innovation more than just skills, in order to ensure our position as one of the top three economies in the world,” added Ronnie Screwvala, cofounder and Chairman of upGrad.
Alekh Sanghera, cofounder of Farmart further believes that an agriculture-focussed think tank or Center for Ag modelled on the Center for AI needs to be set up by the government in order to increase engagement between government, corporations, investors and startups.
New Policy Creation And Implementation
In its second term, the government is expected to create policies where stakeholders are willing to try new products and entrepreneurs look for more opportunities to raise high-risk capital. Government PSUs and departments need to be willing to use innovative products. ”
“I would suggest that gov can expedite the growth by encouraging homegrown startups in delivering large local/Gov projects, encouraging local funding by established organizations and perhaps do away with too many regulatory processes for new gen companies,” said Pravin Agarwala, cofounder and CEO, BetterPlace.
Sanjay Sharma, founder and managing director, Aye Finance proposed that government policies need to focus on creating a supportive ecosystem which empowers micro enterprises to create globally competitive products, rather than granting loan waivers which only leads to dependency and inadequacy in the sector.
Also, the new government must consider government-owned companies as test beds for startup products or services before they go to market.
“95% of startups fail to get proof of concept customers for their product and services and no product can be built perfectly without iteration or proof-of-concept. This is the main key to success which can help one move forward,” added Mallesh Reddy, cofounder and CEO of InsureMile.
Further, there is a need for policy and infrastructure for upskilling, reskilling, and improving the ground-level education in consonance with disruptive technologies like AI, ML, and data science, added Gupta of Mercer|Mettl.
Help Build Startups Of Global Scale
Sharing his experience, Login Radius CEO Soni said, “I have spent a significant amount of time in the US and Canada; and in today’s globalized world, Indian startups are competing with the global ones but Indian startups are not getting similar support and similar environment.”
According to Soni, the government should implement some of the initiatives that have been successful in the US and Canada such as:
- Providing more support to the startup ecosystem in smaller cities.
- Creating a massive fund to co-invest with angel investors and VCs
- Continuing the emphasis on Make in India
- Allocating budget to procure products and services from startups.
Tushar Kumar, CEO of Medlife further believes that the Indian startup community will have more than 12,000 entities by 2020; the number of unicorns is also on the rise. This vibrant ecosystem is now emerging out of infancy.
“The need of the hour is long-term support from the government in strengthening the infrastructure, more effective seed-level funding support, further simplification of business registration and other regulatory compliances that start-ups have to deal with in their operational cycle,” he added.
Road Ahead For NDA 2.0 + Indian Startup Ecosystem
With the BJP coming to power again, the policies set over the past 5 years are likely to be carried forward in a more stable manner. The government has to play a key role here in policy-making, aligning education sector with evolving skill needs, continually promoting innovation culture and providing significant funding to fuel the growth.
As Indifi’s Mittal said, the government’s intentions are in the right place. Over the next five years, the government needs to introduce more well-evaluated and specific purpose driven initiatives to further boost the Indian startup ecosystem.
“These election results are a mandate of the aspirations of India’s youth and its young manpower and Technological progress is going to be the biggest asset for the country. Soon, we will have the talent to build the next Amazons, Alibaba’s and Facebooks of the world in India,” said Edureka cofounder Chaturvedi.
Farmart’s Sanghera stated that India will go from a data poor to data rich country in the next decade. Startups will use infrastructure layer such as Aadhaar or UPI to build companies of the future. “Government needs to play the role of an enabler. India needs to be seen as the most business-friendly country in the world. Currently, we are 76th spots away from our goal,” he added.
While this continuity of governance will be beneficial for innovators and Indian startup ecosystem as a whole, it is definitely going to accelerate the momentum built up in the tech startup domain. Kushal Nahata. cofounder of Fareye further added that while initially, India’s startup ecosystem was largely dominated by consumer-facing companies, B2B ventures are finally finding their feet now.
“India added 2,300 B2B start-ups in the last 5 years. With the increased focus and support from the BJP government, we are certain that the next 5 years will bring immense opportunities and growth for start-ups in fast-growing sectors like Logistics-tech, Agritech, Fintech, and Healthtech, et al,” he added.
The sweeping verdict reflects the fact that the government’s startup programmes were communicated effectively to startup stakeholders of India. While the NDA government had announced INR 10,000 Cr package under its Fund of Funds for Startups (FFS) in the last term, it has already announced plans to create a Seed Fund worth INR 20,000 Cr to boost investments in Indian startup ecosystem in its 2019 manifesto.
Despite funding disbursal being rather slow under FFS, it is, therefore, suffice to say that stakeholders in the Indian startup ecosystem see this as another golden five-year period for the Indian startups.