Euphoria is in the air. Startups – the poster boys of these times – have got another fan-base, i.e., the Government of India, cheering for them. Startup India, Standup India Action Plan announced on January 16th by Prime Minister Narendra Modi has created another level of excitement among all stakeholders – be it venture funds, angel investors, incubators or startups.
It is not the first time in the history of India, that the government has announced some major policy decision, but probably it is the first time that the Govt has gone ahead and engaged with a section of society, which was not represented by any powerful industry lobby-groups, business-families, lobbyists or PR firms. If India has changed in last 18 months, then it was very much visible in Vigyan Bhavan on January 16, 2016, as more than 90% of audience must have visited those august corridors for the first time in their lives.
And the level of engagement was unprecedented; however, the real game-changer was not the flawless execution of the event or the line of speakers gracing the occasion, but the intent of Govt, which was to become an “enabler” from the position of being a “provider”. The statement, “Eventual freedom from State will be true evolution for startup”, was not made by some anti-govt activist in a dingy hut in some forest, it was made at Vigyan Bhavan by none other than Mr. Arun Jaitely, the Finance Minister of India. The statement, later endorsed by Prime Minister Modi, is a major paradigm shift in the thinking of Govt, and hence, a watershed moment in the history of India.
However, as it happens with any organization, there is always a huge gap between the vision of the CEO and execution being done at the ground level, and the Startup India / Standup India policy decisions were no exception to this. Hence, while PM Modi talked about how to remove government interference from day-to-day workings of the startups, the policies announced (barring one or two) just ended up achieving exact opposite of the stated objective.
Startups as defined by an inter-ministerial group, approval from a government approved incubator, tax exemptions, State-sponsored Fund of funds – all these measures will not reduce but increase interaction and intervention by State multi-fold, and will create multiple layers of fault-lines and defeat the very purpose of startup policy as well as act against the vision of PM Modi.
While tax exemptions and sops are welcome, they will not help startups in short-term/long-term as startups/funds are looking for a stable legal environment, clarity in tax laws and minimal interaction with government in the initial formative years. Unfortunately, things are totally reverse at present moment and nothing has been done to address these issues.