Narendra Modi Government’s Ambitious “Start-up India Stand-up India” Campaign Aimed at Boosting Entrepreneurship Marked its 1st Year Anniversary on January 16.
Hi Everyone Today We Will Talk About What We Achieved from “Start-up India Stand-up India” Campaign on its First Anniversary
Around 800 Startups Founded after 2011 Have Shut Shop Already, Signalling a Deteriorating Health of the Sector, According to Data Analyst Firm Tracxn. The Year 2015 had seen an 87% Increase in the Number of Startups Being Founded, the Number Dropped by 67% in 2016. Funding has Also Decreased in 2016 by Around 47.7%.
Under the Policy, Foreign VC’s can Invest in 10 Sectors: Including IT, Poultry Technology, Dairy Products, & Nanotechnology Without RBI Approval.
Now let’s talk about Hits & Misses of Start-up India Stand-up India Campaign:
Start-up India Stand-up India: Hits
- Initiatives like Startup Certification, Roping in Bodies like CBDT to Give Tax Breaks to Entrepreneurs, Setting up Incubators and Tinkering Labs have Been A Great Help in Strengthening the Startup Ecosystem.
- Several States Have Gained A Head Start. Karnataka, for Instance, is a Towering example, Due to Bengaluru’s Existing Startup Culture. But, NCR, Telangana, UP, & Kerala too have their Own Policies in Place.
- After the Successful First Phase of Operations, Startup Village in Kochi (Kerala) is Aiming to Align itself with the Centre’s ‘Startup India’ Programme.
- “In Phase I, We Succeeded in Creating a Seed Entrepreneurial Ecosystem in Kerala. In the Next 5 Years, We Plan to Support 10,000 Campus Startup Teams Across the Country, Completely Digitise the Incubation Process and Launch a New Business Model,” Explains Chairman of Startup Village Sanjay Vijayakumar.
- Startup Village is India’s First PPP Technology Business Incubator. It has Built a Momentum for an Entrepreneurial Culture in Kerala.
- Sanctioned in 2011 by the Department of Science & Technology, Startup Villagewas Setup with the Aim of Incubating 48 Startups Over a Period of 5 Years but Now has Gone Beyond the Initial Estimation.
- A Major Feature of the Expansion Plan is to Completely Digitise the Incubation Process – Right from Application Process to Admission, Allocation of Resources, Learning, Funding, Connecting to Mentors and Experts, Integration with University Education and Final Graduation. The Incubator has Received Almost 10,000 Applications.
- Uttar Pradesh has Already Launched a Startup Event in November 2016. Among other things, it triggered the Entrepreneurial Instincts of College Students and Aspiring Entrepreneurs. It has tied up with Kochi’s Startup Village (SV.CO), Which has Started many Programmes that other State Governments Can Ride on that UP has taken Full Advantage of.
- Startup Village’s SV.CO Digital Platform Private Limited Claims to be the World’s First Digital Incubator for Student Startups. It Aims to Add to its Flagship Silicon Valley #StartinCollege Programme that Aims to Build World Class Startups in an Academic, Set up Backed by Industry Mentors and Experts. It Offers Top Startup teams from India the Opportunity to Nurture their Business Idea, learn from Industry Experts, Build a Prototype and Launch to Early Customers in 6 Months. The last Week of the Programme is to be Spent at Silicon Valley for an Experience of the World Class Startup Ecosystem and the Chance to Interact Directly with Developer Teams at Companies Such as Facebook, Kumar says.
- The Start in UP Event is First-of-its-Kind Held in Uttar Pradesh along with the UP IT and Start-up Policy 2016.
- The Government has also Tied Up with IIT-BHU, KNIT-Sultanur, IIM-Lucknow (Noida) Campus for Establishing Incubation Centres Under the Startup Policy 2016 with Small Grants.
- The State Based Incubator, IT UPVAN, at Shreetron India Limited, is the Prime Incubation Centre in Uttar Pradesh for Registration of Startups that are Selected for “#StartInCollege – Silicon Valley Program.
Start-up India Stand-up India: Misses
- Anyone who has Business Sense Knows that Only a Few of Startups will be Profitable in the First 3 Years and so this Handful can Avail themselves of the Tax Break.
- When it Comes to the ‘Fund of Funds’ Under the Initiative, Rs500 Crore has Already been Provided as Fund Corpus in 2015-16 & Rs. 600 Crore has been Earmarked for 2016-2017. Cumbersome Procedures to Access Funds from the Rs. 10, 000 Cr. Corpus have, however, Made the Plan a Non-starter & SIDBI (Small Industries Development Bank of India)has Committed Only Rs. 129 Crore to VCs So far So the Progress has been Slow.
- There is Still No Exemption in MAT (Minimum Alternate Tax) which could’ve Helped Businesses to Cut Losses.
- Startup India, Stand Up India Campaign Announced a Slew of Measures Simplifying Regulations, Offering Some Handholding, A Few Tax Breaks, and a Fund of Funds to Rev Up the Startup Engine and Enable Entrepreneurship, Technological Progress and Innovation. 12 Months Down the Line, However, there has Been Very Little Forward Movement. Only a Handful of Startups have Bought into the Plan, While the Government is Still Struggling to Get the Nuts and Bolts in Place.
- Unfortunately, this Was to be Expected, Given the Fundamental Design Flaws in the Campaign.
- Let’s Start with the Big Startup Fund that Grabbed All the Headlines Last Year: This Rs10,000 Crore War Chest, Managed by the Small Industries Development Bank of India, or SIDBI, Was Supposed to Invest in Venture Capital (VC) Funds, Which in turn Would Invest in Startups. However, Not a Single Rupee has been Disbursed Yet. The Problem is Not Excessive Paperwork or Red Tape. In fact, as Indian Angel Network Chairman Saurabh Srivastava Points Out, SIDBI has Already Sanctioned Some Money but this Amount hasn’t been Withdrawn. This is Because the Bank Only Puts in 15% of the Total Corpus, While it is the VC that has to Bring the Remaining 85% to the Table. And, this Year, VCs have Struggled to Raise that Kind of Money As a Result, Funding has Almost Halved, According to Data Analysis Firm Tracxn Technologies.
- A Second Problem was that the Government had Initially Mandated that VCs Could Only Use the Money to Fund Early Stage Startups. This Severely Restricted the Investment Options of VCs, Who then Simply Ignored the Government’s Offer. So much so that, Mid Year, the Scheme had to be Restructured to Loosen the Restrictions. Under the New Rules, VCs will Only Have to Invest Half the Corpus in Startups While the Other Half can Go to Relatively Mature Firms. Critics may say this is a Dilution of the Startup India Mandate but the Fact is that the Original Plan was Not Working & Practical Changes had to be Made. For example, Another Reason for the Poor Response from VCs was the Government’s Requirement that Participating Investors had to be Registered with the Securities and Exchange Board of India (SEBI). But Some of the Biggest VCs aren’t, and the Government has Essentially Shut them Out.
- The Situation is Similar with Startups. The Government has So Complicated Access to the Programme that Startups Haven’t been Able to Get Close. Take a look at the Numbers:
- The Government Received Only About 1,368 Applications; of these, Only 502 were Recognized as Startups by the Department of Industrial Policy & Promotion (DIPP). Even Smaller Subset Just the 111 Firms Incorporated After April 1, 2016 Were Considered for Tax Benefits. Finally, the Benefits were Granted to Only 8 Startups. And that’s Just One Half of the Problem.
- The Second Problem with the Startups is Tax Benefit Specifically is that it Assumes that Startups Will be Profitable and that Too Within the First 3 Years. Yet, Only a Small Percentage of Startups Succeed at All & Even Fewer Turn Profits so Quickly, Making the Tax Holiday a Redundant Sop. This has been Pointed Out Repeatedly to the Government Which in Turn has Responded by Extending the Tax Holiday to 5 Years.
- The One Aspect of the Startup India Programme that did have Potential was that of Industry Academia Partnerships through New Incubators that Were to be Set Up Across the Country. But Progress has been Sluggish on this Count. It was Only Last Month that Some 17 Established Incubators were Selected to Receive Government Funding to Scale up Operations. To be Fair, these Processes Do take Some time but it is Important to Ensure they Remain on Track and Stay Viable. This is Not Dependent Entirely on the Government. While Part of the Lack of High-level Research & Development in the Country can be Blamed on Inadequate Government Funding and Excessive Regulation, the Private Sector’s Failure to Step up is also a Problem.
This Year’s Budget to be Announced Next Month is Expected to be a Big One for Startups.
The Startup Ecosystem is Expecting the Government to Announce Initiatives to Support them like:
- Widening of the Tax Free Regime to 5 Years from 3 Years
- Online Payments through Net Banking, UPI, Credit and Debit Cards may Get Tax Exemptions.
After Reading the Complete Article U Must have Come Across Some Hits & Misses About “Start-up India Stand-up India” Campaign.
Undoubtedly it is Best Campaign for India’s Aspiring Young Entrepreneurs; But As We Know Everything Grows Gradually So this Campaign is No Different. Everyone (Which is Directly or Indirectly Connected to Startup Ecosystem) has to Work together to Help Our Startup Ecosystem Grow.