Tuesday, January 19, 2016

Commentary : Start up and boogie?

Last Saturday on 16th January 2016 the Indian prime minister announced a number of measures aiming at giving a powerful boost to the already vibrant start up ecology in the country. The occasion at Vigyan Bhavan in Delhi carried a slogan on the podium that said ‘we unobstacle’. The neologism carries much irony in that in the world of business to encourage often only means not to inconvenience or meddle as the businesses will take care of themselves. The Indian PM made a number of announcements directly aimed at the start up sector to boost growth in the country, to create jobs at a hopefully exponential scale and to also discourage the start ups from shifting their headquarters abroad as has been the case with the slightly mature companies that prefer to domicile in countries like Singapore. Indeed as the start up icon Narayan Murthy said start-ups ‘attract a lot of finance and can create 3-4 times more jobs than listed companies. By encouraging start-ups, Murthy told reporters that the country can "create more and more jobs with more and more income, more and more disposable income".

Although the start up climate in India has begun to show promise there is more hype than concrete action on the ground. Indeed it seems all self-respecting engineering colleges in the country must have an ‘incubation centre’ where the idea if not the reality of innovation is nourished. Often the incubation centres end up in real estate scams or begin with dubious motives. Management institutes in the country are to blame equally as their curriculum often fails to distinguish between motivational and inspirational hogwash and actual knowledge, skills and updated information including essentials such as the legal provisions and bureaucratic hurdles that must be faced.  

As usual the problem starts with definitions – how do you define a start up if you must make statutory provisions for boosting them? This is not an academic or semantic issue because it will determine whether your start up is entitled to the newly announced schemes by the government. Clearly, definitional rigour cannot and should not be the main issue while selecting a start up idea – this is something the venture capital or the angel investor understand very well. The question is will the Indian bureaucrat be able to play a similar role? It seems highly doubtful.  

 This article gives you a good initial guidance over the pre-requisites with some critical comments.  The prerequisites are clearly listed and provide a very practical checklist even before you send your first e-mail or plan a visit to the concerned authority. Another article from the same site provides a deeper analysis which will spur you to further analyze the offerings made by the government before you make your first moves.

No comments: