Startup India – Stand Up India : Key Highlights

The launch of Startup India Stand up India has been done with the usual fanfare, pomp and splendor associated with the Prime Minister’s penchant for high visibility, high impact shows. What is commendable is not just the diversity of players invited to speak but also the depth of discussions and inputs gathering that has gone into this exercise. The Prime Minister seems to acutely aware of the reality that the lesser a government meddles with an industry the more it is likely to thrive and prosper. Some of the measures detailed out are certainly aimed at making the government’s interference negligible. While a clearer picture will evolve in next few weeks, the highlight from the PM’s speech and subsequent releases indicate the following broad and sweeping measures that have been announced to make Startups a force to reckon with in the Indian economy.

(*)  Compliance regime based on self-certification regime :  An important step taken is to to reduce regulatory burden for Startups. They  shall be allowed to self-certify for labor and environment laws compliance. In case of labor laws, no inspection will be conducted for three years.

(*) Creation of a Startup India hub :  This seems to be a pre-cursor to creating a Single window,single umbrella solution for Startups. It will be single-point of contact so that hand holding is likely to be easier since most laws have been designed with large companies in mind and this move helps recognizing the special business needs of Startups.

(*)  Simplification is the new Mantra – A startup will be to able to set up shop by just filling up a short form through a mobile app and online portal that will be launched in April. Once this comes in it is going to push India’s ranking in the Ease-of-doing-business pecking order for sure.

(*)  Protecting IP: Patent protection is important and PM Modi said patent protection and IP rights are a ‘punji’or ‘prime asset’ and hence a major concern for Indian Startups. The government will make IPR procedure transparent for Startups.

(*) Rebate of Fees: 80% rebate on filing patent applications by Startups is a big move since protecting IPs should not become prohibitively expensive. This move will enable Startups to reduce costs in their crucial formative years. The bigger objective that helps India move ahead in the number of patents filed every year also helps Startups quantify their assets via legal provisions of a patent. It perhaps reflects the PM’s confidence in the Startup founders of the country to come up with solutions that will solve major issues facing the people. The government certainly does not want to make money from this avenue.  

(*) Public procurement for Startups : It would be a big fillip for Startups if their output can be bought by government since channeling of government funds for businesses has been a big trigger in the advanced economies too. The fact that the government has announced relaxed norms for Public procurement means there is  big market for Startups that just opened up for them. Startups (in the manufacturing sector) shall be exempted from the criteria of prior ‘experience/turnover’ without any relaxation in quality standards or technical parameters. This is an area that will have to be watched closely because of the propensity of vested interests to take disadvantage of a good scheme.

(*) Faster exits for Startups : The government is cognizant that not all Startups will become successful and hence a painful long drawn out winding down process may make it unattractive for Startups. To make it easier for startups to exit, provision for fast-tracking closure of businesses have been included in ‘The insolvency and Bankruptcy  Bill 2015’. Startups with simple debt structures may be wound up within a period of 90 days from making of an application for winding up on a fast-track basis. The PM was candid about the Parliament logjam and the delay one can expect before the bill becomes the law.

(*) The Government as a VC  perhaps : The government has mooted a Funds of funds with a corpus of Rs 10,000 crore to provide funding support for development and growth of innovation driven enterprises, Government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over a period of 4 years.

(*) Credit Guarantee Fund has been mooted so that entrepreneurship can be sustained through credit to innovators across all sections of society. This will be an important cash flow support for Startups. Credit guarantee mechanism through National Credit Guarantee Trust Company/SIDBI shall be rolled out with a budgetary corpus of Rs 500 cr per year for the next four years.

(*) Exemption from Capital Gains Tax – Exemptions shall be given in case capital gains are invested in the fund of funds recognized by the government. In addition, existing capital gain tax exemption for investment in newly formed MSMEs by individuals shall be extended to all Startups.

(*) Tax exemption for Startups –All Startups set up after April 1,2016, shall be exempted from income-tax for a period of three years. One could also argue that the first three years are low revenue years in an ycase and a longer window would have helped the Startups better but it is certainly a right start in the right direction.

(*) The government has announces the Atal Innovation Mission to provide a platform for  showcasing innovation and providing a collaboration platform. This encompasses setting up of all kinds of support mechanisms for Entrepreneurs in form of promotion, training, incubation facilitate and Institution of innovation awards (three per state/UT) and three at national level. Launch of Grand Innovation Challenge Awards for finding low cost solution to India’s pressing and intractable problems

(*) Big commitment for setting up of 35 new incubators in institutions – Funding support of 40% (subject to a maximum of Rs 10 crore) shall be provided by central government for establishment of new incubators in existing institutions for which 40% funding by the respective state government and 20% funding by the private sector has been committed.

(*) The Government has announced the setting up of 7 new research parks modeled on the research park at IIT Madras – Government shall set up seven new research parks – six in IITs, one in IISc with an initial investment of Rs 100 crore each. These parks shall enable companies with a research focus to set up base and leverage the expertise of academic/research institution. 31 centres of innovation, 13 Startup centers and 18 technology business incubators in national institutions will be established. This is going to take some time but this is serious commitment to create an infrastructure worthy of a country like India

(*) Promoting entrepreneurship in biotechnology  seems to be a big priority for the Government .Five new bio clusters, 50 new bio incubators, 150 technology transfer offices and 20 bio connect offices will be established.

(*) The government seems to have acknowledged that it is important to catch them young. It has announced Innovation focused programmes for students .Innovation core program shall be initiated to target school kids with an outreach to 10 lakh innovations from five lakh schools. A Grand Challenge Program (National Initiative for Developing and Harnessing Innovations) to support young minds and award Rs 10 lakhs to 20 student innovations from Innovation and Entrepreneurship Development Centres has been mooted. Uchhattar Avishkar Yojana has earmarked Rs 250 crore per annum towards fostering ‘very high quality’ research amongst IIT students.

INDIA SHOULD STAND UP WITH STARTUPS – ECONOMIC TIMES

A popularly-held belief is that startups have thrived and the ecosystem has flourished because the government has stayed away from and out of it! If the absence of a government were to benefit startups and the ecosystem then we would have a thriving entrepreneurial ecosystem in Swat Valley, not Silicon Valley. The corollary isn’t good either. A government fully immersed and involved in the ecosystem can lead to entrepreneurs spending time “managing” the power structures in Delhi instead of building their businesses.

Our startup ecosystem would have developed at a greater pace if the government had played its role of being enabler, facilitator and regulator. That government should have its eyes and nose in the ecosystem but not the entire body. Close, but not too close. Here is what it must do.

EASE-OF-DOING BUSINESS

India is the eighth-largest economy and is still ranked 130 in the world for “ease-of-doing business.” Ease of doing business needs to encompass all aspects of business from starting to managing to closure. Today, the law requires a company maintain books and files taxes for eight long years even when it has no business and no employees.

ACCESS TO CAPITAL

Risk capital is the fuel needed to start a company. In India, almost all-available risk capital (or venture capital) is powered by overseas investors (called limited partners or LPs). LPs are primarily pension funds, endowments, family offices, and trusts. Why not allow large Indian pension funds, the EPFO, and other financial institutions to invest in Indian venture funds that will ultimately invest in startups?

RESEARCH AND DEVELOPMENT

Two of the most impactful technologies in recent times — GPS and the internet — were funded originally by the US Federal government for defence purposes and then dispersed for equal access by all. Indian defence spends over a billion dollars on indigenous research and development and there will be core technologies developed that can be mined to create innovative companies that solve the common citizen’s problems.

ACCESS TO GOVERNMENT DATA

As the provider of public goods and services, the government is the repository of huge public data. It sits on huge amounts of data for health, transportation, and utility services. For example: If land records and transactions were digitised, and the data made available as an open source, then online real estate companies could use this data to help consumers make more informed choices.

OUTCOME MEASUREMENT

Any government initiative is viewed with cynicism because government initiatives are never measured for outcomes, and even if such measures exist, they are not in the public domain. I believe that the government should measure its startup initiatives against measurable outcomes (such as jobs created) and do so in a transparent manner.

Communism failed because private enterprises are better at creating jobs than government and within private enterprises, small and medium businesses create more jobs than large enterprises. The biggest loss to any economy isn’t startups that didn’t make it but startups that could have been but for want of support.

To paraphrase Mark Twain, The government is merely a servant, a temporary one! It can’t be its prerogative to determine what is a right startup and what is not, who can be an entrepreneur and who can’t be.

Source: Economic Times

Startups: New Year Resolutions

Every time Earth finishes a lap of 940 million kilometers, people greet each other to celebrate it. They build a long list of resolutions to enjoy the next lap peacefully.

Some begin a year by staying fit, some want to be intellectual, while others aim to live happily. But, there are group of people who are passionate towards bringing a transformational change. Such groups are known as entrepreneurs.

These entrepreneurs are always thinking and have a proactive approach. They continuously accept challenges, solve real problems, wish to grow at a lightning speed and build things from scratch. They go on to inspire many like-minded individuals with similar vision and passion. But is passion enough for disruption?

“If passion drives you, let reason hold the reins” , inferred Benjamin Franklin.

So before making this New Year’s Resolution list, focus on being passionate, Following are two cents on the resolutions you can adopt.

Big Picture, Smaller Steps

To complete a picture, each pixel is equally important. Losing focus is easy when faced with obstacles on a daily basis. Pledge to celebrate every milestone, however small, to instil that sense of achievement. A good habit would be to acknowledge your team from time to time. Remind them regularly how their small steps- a line of code, an article edit, one phone call, one meeting, all coming together and creating an impact.

Re-Innovate

As Steve Jobs rightly put, “Innovation distinguishes between a leader and a follower.”

Probably the best resolution a startup should adopt. Keep experimenting, keep pivoting, keep innovating. What will set your company apart is novel thinking. Your idea is not a solution if it falls short on solving the problem.

Hence, ensure your startup evolves with customer feedback while maintaining its originality. This year, resolve to introduce unconventional methods, be prepared to walk the off-beat path, bring in refreshing ideas.

Own it, Live it.

Every successful venture is based on a foundation of individual ideators. Every word, every mail, every code should entail a sense of ownership. Instil these important core values in the problem solvers you hire. Leadership thrives in an environment of ownership. If it isn’t the case, motivate your think tanks to add it to their resolution list.

Data Driven Growth

It is not when you start, it is for you to start it right. Commit to reason out  all your decisions via data. Regularly observe the synergy between your team’s output and the market. Recognize the next immediate logical steps, which will help drive growth. Analytics is a great assistant for instantaneous feedbacks and evaluation. Adhering to this, resolution will maximise the output while automating the processes, thus eliminating the excess of any efforts.

Hiring the right bunch

Understand the demands of your company. Know where, when and whom to invest in. Hiring is that thin line, the deciding factor, between success and mediocrity. Your team can be your most prized possession, so  hire the right people for the role. Start fresh this year by understanding the problems faced by them. Recognizing and responding to their problems can go a long way in establishing the core value of loyalty. Before hiring, know what kind of team you would like to develop and recruit accordingly. Sometimes being the best is not enough, attitude matters.

An Entrepreneur is an individual chasing dreams to disrupt how the world works. In an attempt to scale quickly, losing out on the above factors is a common recurring issue. Competition may seem to work better and morale might be at an all-time low.

On days when your organisation feels the progress is at a standstill, send in this small reminder. The Earth is orbiting at 30 km/s around a galaxy moving at 250 km/s which is advancing in the universe at a rate of 600 km/s. Nobody is at a standstill, ever.

Source: Aniket Deb : http://www.entrepreneur.com/author/aniket-deb