Strike while the iron is hot. Nothing can be truer for an entrepreneur. In an era, where opportunities come fleeting, seizing the moment when it presents is critical. As the third largest start-up hub in the world, India has been the sun-shine country for start-ups and ventures, particularly in the last two-three years.
First, the policy environment has been favourable for creating start-ups. For example, there are at least 14 different departments and ministries at the Centre that have launched policies and schemes for start-ups since 2014. Not to be left behind, several States have joined the act — 22 have formally come out with innovation and start-up policies in the last three years. The cumulative targets aimed by the States till 2022 present a compelling picture. While only time will tell whether these ambitious targets would be realised, the magnitude of these targets indicates the emphasis given by States to promote start-ups. Clearly, the focus is on creating mighty oaks from small acorns. Entrepreneurs should take advantage of the favourable policy environment in launching their ventures.
Policy framework
Second, there has been a paradigm shift in the policy framework as well. As they say, “Farmers and gardeners know that one cannot make a plant grow. The plant grows itself. What is to be done is provide conditions for growth.” In the same tune, the policies have been more focussed on creating an ecosystem for start-ups. While the initial attempts have been to create start-up funds, the policy framework has become more holistic recently.
For example, the policies focus on institutional reforms that aims to ease the setting up and operation of start-ups, creation and development of infrastructure, focus on providing industry and market linkages, creation of academic and university linkages, incentives and concessions, thrust on promoting start-ups through events and awards. Each of these benefit start-ups in different ways. University linkages help start-ups access scientific, technology and research expertise whereas industry linkages help in providing the initial market access for them. Incentives and concessions help conserve cash for the start-up by reimbursements of duties and fees and subsidising patenting costs. Since creation of infrastructure involves significant externalities and may not be commercially viable or have long gestation periods for break even, public sector is well equipped to undertake such investments. The governments have also realised that creation of infrastructure can benefit many generations of start-ups.
Inclusivity and democratisation
Third, the policies are characterised by high level of inclusivity and democratisation. One does not have be a part of the “old boys’ network” to avail of the policy benefits. While the venture capital and other segments of the investor community focus on creating successful start-ups and achieving financial returns, the government policies focus more on elements that lead to an increase in the overall levels of start-up activity. The thinking is that not only would this enable creation of more start-ups thus increasing the pipeline for investors, but also result in start-ups that are more investment ready, resulting in a win-win situation for both the investor and the entrepreneur.
The start-up policy environment in the country is on a high tide today and it is up to the entrepreneur to seize the moment. In a country that has been regularly embroiled in scams, starting with aerospace to coffins, the start-up landscape has been comparatively untainted. For an earnest entrepreneur, this can be the most heartening feature.
(The writer is a Professor, Department of Management Studies, IIT Madras and Associate, Harvard Kennedy School, Harvard University. The article first appeared in The Hindu BusinessLine.)