Innovation and a large number of job creation , have attracted the policy makers most in the last 1 year. Indian Prime Minister Mr. Modi has launched ambitious campaigns such as ‘Digital India’ and ‘Make in India’, much success of these missions depend upon the start-ups. This is also true that start-ups are capable of attracting investments on its own, on the other hand, small industries need a strong support from government. The schemes launched in the past one year by Modi government clearly indicates where the priority lies – its start-up.
A new prospective on start-ups
Apart from Indian PM participating in the Unites Nations celebration of completing its 70 years and massive crowd pulling in Madison Square in the United Sates, there is an altogether hope among Indian start-ups – the possible outcomes of his visit for the entire start-up ecosystem in India. Attracting Indian diaspora living in the US and other developed countries to invest in start-ups and provide technology know -how is Modi’s one of the mantras to make ‘Make in India’ or ‘Digital India’ successful. Last month on the eve of the Indian Independence Day, he pledged 1.25 Lakh branches to encourage one Dalit or Adivasi entrepreneur, and at least one woman entrepreneur. It may be the first time that Indian citizens are watching a PM who is keenly interested in technology, social media and innovation, all at the same time.
Why government is focusing more on start-ups than small industries?
It won’t be correct to say that the government has neglected the small industries but it is nearly true – the government is focusing more on the start-ups. Small industries in India have been the main source of bulk employment as more than 36 million MSMEs (Micro, Small and Medium Enterprises) are providing employment opportunities for 70 million people. But in one way, it is also a burden for the government because they need to provide huge financial assistance and long term loans – a country where shortage of funds is acute, finding less cost incentive ways if possible, will be a welcome step. And it has been seen that innovative start-ups find investors easily and comparatively they create more job opportunities than MSMEs.
- According to KPMG Report 2015, 106 million people are employed in 46 million MSMEs, and near to 67% of enterprises are one person established. So, the calculation says 2.3 people per enterprise.
- According to MeritTrac Services, 4,000 odd start-ups employed 5, 00,000 people (excluding unaccounted and non-monitored start-ups). So, the calculation says 125 people per enterprise.
- Tech start-ups are attracting investments at a higher speed rate. For example, Snapdeal, an Indian e-commerce start-up attracted Nexus Venture Partners and Indo-US venture partners. Similar success stories of Flipkart, Bio-con, and other start-ups make it an attractive destination for investments (Both national and foreign investment).
- 65,000 people were employed last year alone by 3100 start-ups.
India needs job
MSMEs have enjoyed special incentives since 1967 and certain sectors of industries were reserved for smaller sectors. India has a mixed economy and it was more lenient towards socialism from the begning – policies for MSME were more alike welfare policies. After 48 years, much has changed and Indian industries have achieved well but at the innovation and research India lacks far behind than Japan, the USA, etc. So, the government is shifting its gear and focusing more on encouraging start-ups to boost the research, innovation and also creation of large scale employment opportunities.
Modi came in power due to sheer support of young generation and they expect him to deliver on the grounds of making India an entrepreneurship hub. Especially the techno know- how- young generation wants a better mechanism and policy framework. Oyo Rooms, Housing.com, etc. are some of the few names that are showing a promising future for start-up industries.
He said 50 million new houses by 2022, broadband connectivity for 600,000 villages, doubling of railway capacity and 175 Gigawatts of renewable energy generation were some of the concrete targets his Government had set, which created huge investment opportunities.
The government’s target of providing broadband connectivity for 600,ooo villages and 175 Gigawatts of renewable generation will open a door of opportunities for entrepreneurs and small scale industries too. As India’s only a quarter of population has internet access and if the government’s initiatives implemented on time, the set target can be achieved- it will provide a huge opportunity for start-ups in the digital space.
The government has yet to deliver but it can be said that stage is set for start-ups to take advantage of business friendly policies.
|Nachiket Nishant loves to write on issues related to politics and international affairs. He has done his masters in international relations. Currently, he is a lead policy researcher at The Indian Iris.|
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of The Indian Iris and The Indian Iris does not assume any responsibility or liability for the same.