The founders of InMobi, OYO Rooms and Mapmygenome in a selfie with Prime Minister Narendra Modi at... [+]
Surrounded by hundreds of entrepreneurs in New Delhi on Saturday,
“The less the government is involved, the greater the progress,” Modi said in his speech echoing the widely-held perception that many of India’s companies flourish despite the government, not because of it. “Please tell us what not to do,” he told the 2,000-plus crowd comprising of guests such as Uber CEO & founder Travis Kalanick and Masayoshi Son of Japan’s SoftBank. Modi said his government would make it easier to start and shut down startups by cutting through India’s bureaucratic labyrinth.
India’s is one of the global startup hotspots. Yet, despite a thriving startup culture, the action plan is the government’s very first and has come on the back of many of India’s largest and creamiest startups fleeing to foreign destinations like Singapore and the United States where the regulation is less convoluted and tax laws are friendly. A slew of India’s biggest startups such as Flipkart, the country’s largest retailer, mobile advertising firm InMobi, customer support software maker Freshdesk and software products startup Capillary Technologies have all moved overseas and will likely list on foreign stock exchanges eventually.
India's software products think tank iSPIRT said a mind-boggling 75% of all funded technology startups are re-domiciling outside India due to regulatory irritants. “The government’s action plan is directionally correct. But the tangible progress on a checklist for startups to stay-in-India has been modest. We are hopeful that many more issues can be resolved in the forthcoming Indian budget in end February,” said Sharad Sharma, co-founder, iSPIRT.
The government’s action plan has come at a time when funding for startups is not as munificent as a year ago. Startups in segments like food, hyper-local delivery and real estate have laid off hundreds of employees, indicating that overvaluations are a thing of the past and investors are asking to see results.
But India desperately needs entrepreneurs to start up companies and generate economic growth as well as jobs for the millions of engineering and other graduates entering the job market each year. The country’s biggest employer of engineers, its information technology industry, has been dawdling recently both in terms of growth and new hiring.
“We have a million problems but we have a billion minds,” said Modi, who asked entrepreneurs to go to work on solving the country’s myriad challenges. The prime minister announced that registering a new company in India, a process that takes upwards of a month, would be cut down to a day and would be made possible through a mobile app. Patent fees will be slashed by 80% and patent applications would be fast-tracked. Startups will be able to self-certify and not be subjected to labor and environmental compliance rules for three years. The government’s new bankruptcy bill will allow companies with simple debt structures to shut down in 90 days in contrast to the existing tortuous process that lasts years.
Into the weekend, entrepreneurs concurred that the new startup agenda is a good beginning. “It’s a fine plan with lots of interesting details, a lot will depend on how it is implemented,” said Anu Acharya, CEO & founder of Mapmygenome, a biotech startup. “What makes me hopeful is the awareness among top politicians and bureaucrats about the challenges entrepreneurs face,” she said.
