Startup India: Govt’s role is to help build a culture, not a startup

by | Feb 3, 2016

Start-ups thrive best on innovation—that free-wheeling creativity which strives for value creation and doesn’t put monetization first. The core guiding principle of start-ups is: Create value; money will follow.

Let’s acknowledge it—the birthplace of start-ups as we know them today is the Silicon Valley, and the norm for a start-up there is to focus on innovation, not on monetization, at least during the build-up process. The entrepreneurial norm in India has traditionally been the reverse—to do the monetization bit first and then build things up. (That start-ups become greedy when they grow into corporations is a subject for another discussion some other time.)

There is a need to build a start-up culture as opposed to the profit-making culture that exists in today’s business environment. There should be a focus on IP creation, and solving India’s real problems—not only growth problems faced by the businesses and industries but also the economic, social and environmental issues facing the people at large.

Well well…so what is in this context that the government should not do? Let me come back on this a little later.

Incubate, mentor, grow

To its credit, the Start-up India program has got this piece somewhat right. One set of the 19-point Action Plan talks about creating incubators for fostering and mentoring start-ups. In order to augment the incubation and R&D efforts in the country, says the government, it would set up or scale up 31 centres at national institutes.

Even better, the government has done well to recognize the need to mentor potential start-ups in a pre-incubation stage and then ready them for incubation. The framework is outlined under a proposed Atal Innovation Mission (AIM) with Self-Employment and Talent Utilization (SETU) Program.

However, there is enough room for further improvement. At present, there seems to a developmental skew towards a few sectors and urban centers where these incubators would likely be located. The list of participating departments and agencies for setting up of new incubators is very much indicative of that skew. The list reads: Department of Science and Technology, Department of Biotechnology, Department of Electronics and Information Technology, Ministry of Micro, Small and Medium Enterprises, Department of Higher Education, Department of Industrial Policy and Promotion and NITI Aayog.

Remove the disconnect

In what reads like a definition of Start-up India, the opening statement in the Action Plan document calls it “a flagship initiative of the Government of India, intended to build a strong ecosystem for nurturing innovation and start-ups in the country that will drive sustainable economic growth and generate large scale employment opportunities.”

Further, with this Action Plan the Government hopes to “accelerate spreading of the start-up movement from digital and technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education, etc.; and from existing tier 1 cities to tier 2 and tier 3 cities including semi-urban and rural areas.”

However, the rest of the document, including the detailed description of what qualifies to be a start-up, seems to be overly fixated on technology. Of the 31 centers that the government proposes to set up or scale up, 18 would be Technology Business Incubators (TBIs). Also, the fact that these TBIs would be set up at premiere institutions like IITs and IIMs, means they would be mostly located in large urban centers.

There is a special section in the document dedicated to biotechnology, which is a good thing. However, it would have been better if a sector like agriculture was given a primary thrust. It would have also been good if there was a focus on serious sustainability issues such as air pollution, water conservation, sanitation, municipal solid waste management, renewable and alternative energy generation, afforestation, and so on. There also is a crying need for skilling a rapidly growing population of youth so that they could become employable by various sectors.

Yes, that would have certainly meant that NGOs could have got a more active role to play in nation building while also becoming channels for generating employment for a large cross section of youth. However, the Action Plan in its current form fails to see that opportunity as it is also (apart from technology) fixated on monetization. How else would one otherwise explain that the definition of a start-up doesn’t include entities such as trusts or NGOs and only lists out private limited companies, registered partnership firms and limited liability partnerships?

In its current format, Start-up India is about creating just another category of businesses—apart from the existing ones like large enterprises, small and medium enterprises and micro enterprises—with a likely focus on the technology sector.

Yes, that’s very much a thing that the government should not do.

And there’s more

Did I forget to say that the government should not attempt to define a start-up in the first place? Well, if I didn’t, then let me state it now: it should not.

While I was concluding this write-up, a journalist friend who has gone through the grind to transform herself into a social entrepreneur, in a social media timeline post described Start-up India as “another Rojgar Yojna (employment scheme) with a modern name.. I find that quite apt, and think an even better term would be “swa-rojgar yojna” (self-employment scheme).

It is also being apprehended that, like it has happened with so many other government schemes in the past, Start-up India funds also have the potential to get misappropriated by undeserving fraudsters.

In saying all this, am I also saying that Start-up India is a step that the government should not have taken? No, no way.

The government certainly deserves the credit for thinking of start-ups and taking a step to help build more start-ups. It has clearly faltered somewhat but then all start-ups do. The faltering is because the government has thought… well, like a government. To take the right steps, it will need to think like a start-up. To be more correct, the team in the government that is driving this whole program should think and act like a start-up.

That may not be easy, because all these years the government has thought and acted differently! Now, in order to appreciate the start-up model, the stakeholders will need to do a bit of unlearning and relearning. Are they ready—and game for it?

This article was first published in Governance Now.