The hassle-free business environment fuelled the US startups ecosystem. India is no match here and after over 15 months of NDA rule, there is little change in the regulatory or business environment to help startups.
PM Narendra Modi will be visiting Ireland and the US from September 23-29. While the Ireland visit is significant in the sense that it is after almost 60 years that an Indian prime minister is visiting the country, his US visit starting on September 24 has generated tremendous interest, especially because of his star-studded engagements in Silicon Valley – the home of technology, innovation and startups.
Once the UN-part of his engagements are over, PM Narendra Modi will visit the West Coast on September 26th and 27th.
Beginning from a Townhall Q&A at the Facebook headquarters, for which he has invited questions through Facebook or the ‘Narendra Modi Mobile App, he is also slated to take a look at some recent technological innovations at the Google (Alphabet) campus and Tesla Motors, besides addressing a Renewable Energy Roundtable with USDOC and Stanford University.
But it is his engagement with startups that PM Modi appears to be giving a lot of attention.
“An event that I am enthusiastic about is the ‘India-US Start-up Konnect.’ India is emerging as a hub of startups in a wide range of areas and we aspire to take this further. We want the world to see our innovation capabilities in the startups sector. At this event, a group of Indian startups will showcase their innovation and forge partnerships with the vibrant American startup industry,” the prime minister said in one of his Facebook posts on the visit.
Software industry body NASSCOM, TiE Silicon Valley, and IIM-Ahmedabad’s business incubator CIIE, will host the first ‘India-US Startup Konnect’ in Silicon Valley on September 27, which will showcase Indian innovation capabilities, ‘represented by more than 30 startups across a variety of sectors such as agriculture, healthcare, energy, financial inclusion, and biotechnology, as well as leading technology business incubators in the country’.
This will be a window for opening up possibilities for tie-ups with the Silicon Valley partners.
But, while addressing the event PM Modi will do well by keeping in mind that the business environment for startups in India requires major improvement to attract foreign investors.
Pankaj Jain, partner, 500 Startups, talking about the problems that startups face in India in an interview with The Financial Express, outlined some of the measures to be taken if the government is serious about promoting this critical segment.
Jain said: “The most impactful (approach) would be to change the legal framework for money to flow from one place to another. Whether the money is coming from the US, Europe or Singapore, let that flow into India and flow back easily. When that happens, you will find the best deals taking place. The whole legal framework and the Companies Act need to be burnt. It is archaic and it is a shackle. It prevents startups from starting out or shutting down. Many times, startups will have to shut down in 6 months and there is no easy framework for shutting down a company”.
It is true that the number of tech product/digital startups in India has grown to be the fourth-largest in the world behind the US, UK and Israel – if this domain has to be expanded, the regulatory and clearance mechanism in the country needs to be simplified drastically.
Without this, the startup ecosystem will remain limited to the segments where the government’s role is limited in the business and that too in a very restricted manner.
PM Modi must have prepared himself to deal with the Patel protests during his visit, but those willing to invest in India will be more interested in knowing how he plans to overturn his government’s failure to push reforms and improve the business environment. Mere rhetoric and promises might not work anymore.