12. An Era of StartUp Revolution in India

12

An Era of Startup Revolution in india

(case study- team start-up India & GeM)

“I see startups, technology and innovation as exciting and effective instruments for india’s transformation.” Shri Narendra Modi, Prime Minister of India

India’s young generation has read about the green and white revolutions only in textbooks. The power of the youth is strengthened through participation in such monumental economic transformations. The start-up revolution is one such chance for the present generation. This is just the beginning and we can already see some great results. All revolutionary initiatives improve gradually. There can be consequences which are difficult to anticipate. The initial success of the Start-Up India programme is the MVP of this scheme. I had a chance to participate in PM Modi’s video conference on Start-Up India. This was a good lesson in understanding how to bring together young entrepreneurs from across the country. The video conference had a limited number of representatives. Yet, it encouraged millions more. PM Modi has started many schemes like the Start-Up India, Government e-marketplace (GeM), Invest India, Make in India and Skill India to support these young minds. It is a revolution because it is awakening new confidence among our youth. The ever-increasing number of start-ups indicate an increasing number of people willing to innovate.

Organising the unorganized sector and developing social entrepreneurship is paramount. A lot still needs to be done in these fields. However, the country is moving in the right direction. I am presenting below some excerpts of the action plan of the Start-Up India. Let us first understand the motive behind the initiative. Startup India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower Startups to grow through innovation and design. In order to meet the objectives of the initiative, the Government of India is announcing this Action Plan that addresses all aspects of the Startup ecosystem. With this Action Plan the Government hopes to accelerate spreading of the Startup movement: • From digital/ technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education, etc.; and • From existing tier 1 cities to tier 2 and tier 3 cities including semi-urban and rural areas. The Action Plan is divided across the following areas: • Simplification and Handholding • Funding Support and Incentives • Industry-Academia Partnership and Incubation

Some questions written on the action plan paper of Startup India Mission clearly indicates the goal• What if your idea is not just an idea? • What if it sees light? • What if it’s really born? • What if you can get someone to believe in it? • And help you nurture it? • What if you can set a clear path for it?

• What if it can actually travel? • What if it grows and blooms? • What if the whole world embraces it? • What if your idea is not just an idea? These poetic questions represent the dilemma of young entrepreneurs. The business domain used to be dominated by a chosen few. These were clans where the upcoming generations were trained at an early age. This is a revolutionary time for small entrepreneurs as they can think of starting their business without legacy. This is not only a question of self-employment but also solving the country’s problems. Many innovators and start-ups are doing exactly the same. The Make in India is yet another milestone in the journey of start-ups in India. All these schemes are inter-connected. Businesses from all across the world are being invited to manufacture in India. The idea is to turn India into a manufacturing hub. It cannot happen without developing an indigenous talent pool that can run these manufacturing units. Investments can come from abroad but infrastructure and skilled labour cannot be imported. Therefore, the Skill India programme can support Make in India. PM Modi wants young entrepreneurs to create a favourable business atmosphere in the country. The Start-Up India is helping achieve this goal by attracting direct investment. As I have stated earlier, these are just the initial successes. These are still early days to assess the success of the scheme. But, it is safe to assume that we will witness a rise in the level of investment as well as start-ups. The Prime Minister has also assured that Make in India will be a good experience for global investors. He is keen to improve infrastructure to fuel this process. Besides start-ups initiatives, schemes like the Smart City Project are paving the way. This revolution is slowly bearing fruits. India is marching ahead in labour as well as technology. India has always been a labour-intensive market. Now, start-ups are taking this strength

to a new level with the help of technology. The advent of social entrepreneurship and technology in the unorganized sector is opening new vistas. We will soon see a new picture if these attempts remain consistent and the administration keeps supporting in the same way. Even those who could not understand the significance of the Digital India programme can recognize the ongoing transformation if they see it in the light of schemes like the Start-Up India, Make in India and Skill India. I am impressed with the pace of these changes in our economy and therefore mentioning these positive aspects. Every change brings its challenges. It is nobody’s argument that there is no scope of improvement in the implementation of all these schemes. It will take some time. However, we are witnessing shaping up of a new mindset in the country. Old habits die hard, be it individuals or a country. These habits decide our destiny. India has tried to become self-reliant ever since independence. But, many lacunae remain in the system, including the administration. This is why we find promises of efficient administration from the top leadership so enticing. Keeping this in mind, PM Modi has called upon the talent from other fields into administration. Even the Start-Up India team comprises such individuals. This team has contributed a lot to this book. Many of my shows were dedicated to the functioning of this team.

Team Start-Up India

Launched by PM Modi on 16 January 2016, the Start-Up India scheme encourages small and big enterprises by providing loans, guidance and other help. The scheme aims at promoting entrepreneurship to increase employment opportunities in the country. The team behind the mission is equally impressive. Dr Preetdeep Singh is the co-lead of the team Start-Up India. He believes this programme has ushered in a change in the mindset of the Indian public. It is bringing investors and start-

ups together under one platform and thus saving their time and energy. According to him, it is easier to shape entrepreneurial skills among the youth if universities and incubation agencies are brought together. Training agencies and non-governmental organisations can expand their operations by becoming part of start-ups. Startups were always meant to be focal points which can attract budding entrepreneurs. The government’s efforts to increase the ease of doing business has made registration of start-ups easy. Dr Singh claims it is now possible to complete the process of registration of start-ups in just 20 minutes. The applicants only need to give company incorporation certificates or documents related to the partnership. There is no need to submit investor or incubator-related details. The application requires information on product, innovation and the purpose of the start-up. You can connect to the Start-Up India team in 48 hours after completing your application. Dr Preetdeep Singh informs that entrepreneurs can avail learning models, Amazon clouds, call centre credits and 42 applications including related to HR management, GST and customer lead. All this is free of any charge. These facilities reduce the initial investment. Explaining the functioning of the Start-Up India, its manager Palak Bhatia says the 22-member team of the Start-Up India mission works like a start-up. It solves problems reported by start-ups through e-mails or in-person, introduces new entrants to the corportate world and enabling start-ups to work smoothly. Any start-up needs guidance on issues such as GST, licensing and tax laws. The start-up India aims at providing answers to such queries in less than an hour. The centre, as well as state governments, formulate new policies like regulation of drones and e-pharmacies for start-ups. The state governments are also encouraging start-ups and follows policies on new incubators, achievements and start-up teams etc. This helps improve the start-up environment.

According to Nishant Malhotra, the assistant manager of the Start-Up India, nearly 20,000 start-ups have registered themselves with the initiative. Out of these 2,500 are collaborating with the government departments and doing a business of around INR 400 crore. New start-ups need a market. Associating with the government departments helps in taking on existing brands. Many departments like the Airport Authority of India, CRPF, BSF and the Defence ministry are welcoming more and more innovations. Nishant recounts many successful start-ups in fields such as ambulance service, education, air purification, waste management, plastic recycling etc. The Start-Up India website is an important link between the country’s start-ups. It also makes the registration process easy. The Start-Up India’s senior manager Pratham Varshneya explains that applicants need to give their e-mail Id and mention the area of their operations. This connects you to the start-up hub and map. You can then assess information about start-ups, mentors and investors in your region. The Start-Up India also encourages innovation hunt. It involves identifying and felicitating new entrepreneurs. All these facilities link start-ups to new markets. Dr Pratham cites the example of the innovation hunt by the Agriculture Ministry. Out of 1,400 Indian Agri start-ups, 1,100 participated in it. Please visit Start-Up India’s website if you are planning a start-up in India. I would recommend an extensive study of websites related to other such schemes as well. I know many ventures which are trying hard but are oblivious of the benefits provided under the Start-Up India mission. I am sharing with you one such handy information on Start-Up India’s action plan on tax exemption. Many young entrepreneurs got connected to the schemes after I apprised them.

Tax Exemption on Capital Gains

Objective: To promote the growth of Startups and address working capital requirements

Details: Innovation is the essence of every Startup. Young minds kindle new ideas every day to think beyond conventional strategies of the existing corporate world. During the initial years, budding entrepreneurs struggle to evaluate the feasibility of their business idea. Significant capital investment is made in embracing everchanging technology, fighting rising competition and navigating through the unique challenges arising from their venture. Also, there are limited alternative sources of finance available to small and growing entrepreneurs, leading to constrained cash funds. With a view to stimulate the development of Startups in India and provide them with a competitive platform, it is imperative that the profits of Startup initiatives are exempted from incometax for a period of 3 years. This fiscal exemption shall facilitate the growth of business and meet the working capital requirements during the initial years of operations. The exemption shall be available subject to non-distribution of dividend by the Startup.

Tax Exemption to Startups for 3 years

Objective : To encourage seed-capital investment in Startups Details : Under The Income Tax Act, 1961, where a Startup (company) receives any consideration for issue of shares which exceeds the Fair Market Value (FMV) of such shares, such excess consideration is taxable in the hands of recipient as Income from Other Sources. In the context of Startups, where the idea is at a conceptualization or development stage, it is often difficult to determine the FMV of such shares. In majority of the cases, FMV is also significantly lower than the value at which the capital

investment is made. This results into the tax being levied under section 56(2) (viib). Currently, investment by venture capital funds in Startups is exempted from operations of this provision. The same shall be extended to investment made by incubators in the Startups. Let us now discuss the most important part of the action plan. Understanding the world of business is vital for any innovation. It is a world that is full of creative and industrious people who will give a tough competition. Imagine a situation where you have work hard on innovation only to find that it is already in the market. You can only evaluate the strength of your product in the real world of the market. It is not only about remaining connected to the consumers but also with other startups. Collaboration between 2 start-ups has worked wonders in many instances. It can solve many problems. Many fests and interactions are organized by the Start-Up India. Here’s how they have been mentioned in the action plan.

Organizing Startup Fests for Showcasing Innovation and Providing a Collaboration Platform

Objective - To galvanize the Startup ecosystem and to provide national and international visibility to the Startup ecosystem in India

Details - A pivotal component for growth of Startups is regular communication and collaboration within the Startup community, both national as well international. An effective Startup ecosystem can’t be created by the Startups alone. It is dependent on active participation of academia, investors, industry and other stakeholders. To bolster the Startup ecosystem in India, the Government is proposing to introduce Startup fests at national and international stages. These fests would provide a platform to Startups in India to showcase their ideas and work with a larger

audience comprising of potential investors, mentors and fellow Startups. As part of “Make in India” initiative, Government proposes to: • Hold one fest at the national level annually to enable all the stakeholders of Startup ecosystem to come together on one platform. • Hold one fest at the international level annually in an international city known for its Startup ecosystem. The fests shall have activities such as sessions to connect with investors, mentors, incubators and Startups, showcasing innovations, exhibitions and product launches, pitches by Startups, mentoring sessions, curated Startup walks, talks by disruptive innovators, competitions such as Hackathon, Makerspace, etc., announcements of rewards and recognitions, panels and conferences with industry leaders, etc.

Launch of Atal innovation Mission (AiM) with selfEmployment and Talent Utilization (SETU) Program

Objective - To serve as a platform for promotion of world-class Innovation Hubs, Grand Challenges, Startup businesses and other self-employment activities, particularly in technology-driven areas

Details - The Atal Innovation Mission (AIM) shall have two core functions: • Entrepreneurship promotion through Self-Employment and Talent Utilization (SETU). • Innovation promotion: to provide a platform where innovative ideas are generated • The main components proposed to be undertaken as part of the mission include:

Entrepreneurship promotion:

• Establishment of sector-specific Incubators including in

PPP mode (refer #14 of this Action Plan) • Establishment of 500 Tinkering Labs • Pre-incubation training to potential entrepreneurs in various technology areas in collaboration with various academic institutions having expertise in the field • Strengthening of incubation facilities in existing incubators and mentoring of Startups • Seed funding to potentially successful and high growth

Startups Innovation promotion: • Institution of Innovation Awards (3 per state/UT) and 3

National level awards • Providing support to State Innovation councils for awareness creation and organizing state level workshops/conferences • Launch of Grand Innovation Challenge Awards for finding ultra-low-cost solutions to India’s pressing and intractable problems

GeM-Government e Market Palce

New ventures used to struggle to work with the government. The government’s purchase and tendering system had many loopholes. This has been rectified through the establishment of the Government e-Market Place (GeM). This is the online space for government purchase dealings enabling small start-ups to sell their products to the government. The GeM is a proverbial gem as it has helped many start-ups. The first case study of this book owes its success to the same platform. I had the chance to meet many officials of GeM. People like S. Suresh Kumar (Additional CEO), CFO Rajeev Kandpal, and product manager Anurag Awasthi provided valuable information. The GeM is strengthening schemes like Make in India, Start-Up India, Digital India and Skill India. The government plans to shift its entire buying process to this platform. The information shared by the GeM officials is also available on its website.

GeM is working under the ministry of commerce & industry, where common user goods and services can be procured. GeM is a dynamic, self-sustaining and user-friendly portal for making procurement by Government officers. Public procurement forms a very important part of Government activity and reform in Public Procurement is one of the top priorities of the present Government. Government e-Marketplace is a very bold step of the Government with the aim to transform the way in which procurement of goods and services is done by the Government Ministries and Departments, Public Sector Undertakings and other apex autonomous bodies of the Central Government. Government e-Marketplace owes its genesis to the recommendations of two Groups of Secretaries made to the Prime Minister on January 2016. They recommended setting up of a dedicated e-market for different goods & services procured or sold by Government/PSUs besides reforming DGS&D. Subsequently, the Finance Minister in his Budget speech for FY 2016-17, announced setting up of a technology-driven platform to facilitate procurement of goods and services by various Ministries and agencies of the Government. DGS&D with technical support of National eGovernance Division (Ministry of Electronics and Information Technology) has developed GeM portal for procurement of both Products & Services. The Portal was launched on 9th August 2016 by the Commerce & Industry Minister. Procurement on GeM has been authorized by General Financial Rules by making necessary changes in government rules. The GeM is a completely paperless, cashless and system driven e-marketplace that enables procurement of common use goods and services with minimal human interface.

GeM ADVAnTAGes For buyers

• Rich listing of products for individual categories of Goods/Services • Search, Compare, Select and Buy facility • Buying Goods and Services online, as and when required. • Transparent and ease of buying • A continuous vendor rating system • User-friendly dashboard for Buying and monitoring supplies and payments • Easy Return policy

For sellers

• Direct access to all Government departments. • A one-stop-shop for marketing with minimal efforts. • One-stop-shop for bids / reverse auction on products / services • New Product Suggestion facility available to Sellers • Dynamic pricing: Price can be changed based on market conditions • Seller friendly dashboard for selling and monitoring of supplies and payments • Consistent and uniform purchase procedures

Facilities Provided by GeM to the Startups

• Listing of products for individual, prescribed categories of

Goods/ Services of common use • Look, estimate, compare and buying facility on dynamic pricing basis. • Market place buying of a majority of common user Items. • Buying Goods and Services online, as and when required. • Single window system for aggregating demands and ordering • Transparency and ease of buying • Useful for low value buying and also for bulk buying at a competitive price using Reverse Auction/ e-bidding. • Continuous vendor rating system. • User-friendly dashboard for buying and monitoring supplies

and payments • Return policy • GeM brings in Transparency • GeM eliminates human interface in vendor registration, order placement and payment processing, to a great extent. Being an open platform, GeM offers no entry barriers to bonafide suppliers who wish to do business with the Government. At every step, SMS and e-Mail notifications are sent to both buyers, his/her head of the organization, paying authorities as well as sellers. Online, cashless and time-bound payment on GeM is facilitated through integration with PFMS and State Bank

Multi Option System (SBMOPS); web-services integration is being extended to payment systems of Railways, Defence, major PSUs and State Governments. Seamless processes and online time-bound payment, which is also mandated by the Department of Expenditure, has given confidence to the vendors and reduced their ‘administrative’ cost involved in pursuing officers for timely payment. The GeM and StartUp India has prepared a new start-up environment. It is preparing new entrepreneurs. We need to pay more attention to industrial education. The Skill India is also an important initiative. An increase in start-ups will also lead to an increased demand of skilled workers. This is an era of start-up revolution because the government has taken into account the interests of the start-ups. Be it linking them to government schemes or helping them with tax sops. Indian youth is now coming out of the mindset of perceiving a secure job as their ultimate aim. We need good hands in governance but capable entrepreneurs are equally required. I have traversed through the Uttar Pradesh for a programme I did for Amar Ujala. I found youngsters were already aware of Skill India but there is scope for better implementation. Yet, it is a good beginning and a foundation stone for the start-up revolution.