The start-up community’s vote of trust in the NCR is a huge positive for India’s image as a nest for start-ups.
The national capital region (NCR)—chiefly, Delhi, Noida and Gurugram—is the rightful start-up capital of India, though the popular belief, so far, has been that it is Bengaluru. A report by TiE-Delhi-NCR, and Zinnov found that Delhi-NCR is home to 7,039 start-ups—23% of the India total—compared with Bengaluru’s 5,234, Mumbai’s 3,829 and Hyderabad’s 1,940. The NCR also houses the largest number of unicorns in the country—at 10, this is one more than Bengaluru’s count; in 2015, Bengaluru was home to five of the eight unicorns in India. Between 2012 and 2018, the NCR added five unicorns to its list while Bengaluru added three. The start-up community’s vote of trust in the NCR is a huge positive for India’s image as a nest for start-ups. So many new businesses springing up, and thriving, so close to the policy centre of the country should be an endorsement of the country’s efforts to encourage private sector participation in its growth vision.
That said, Delhi-NCR must build on its success if it is to keep its pole position as a start-up hub. The pace of founding of start-ups has been slowing since the last two years—from the peak, reached in 2015, of 6,679 new start-ups, India saw just 2,036 get registered in 2018; for Delhi, the corresponding decline was from 1,657 to 420. There are a host of factors that will need addressing if Delhi-NCR is to keep its momentum. The government’s flagship Startup India scheme aims at encouraging entrepreneurship and innovation through a multi-pronged approach—less burdensome taxation, easier regulatory compliance, and a fund of funds, among others. Government action, though, has strictly not kept up with this vision. For instance, as Siddarth Pai of 3one4 Capital has pointed out in these pages, the angel tax issue has not been comprehensively dealt with; while the Budget attempted some form of reprieve—and there were two iterations of corrective measures before this—it missed the mark widely. Given how the biggest chunk of funding for start-ups comes in at the “angel” or “seed” stage, the uncertainty over angel tax is a top pain-point the government must address. Delhi-NCR faces its unique set of challenges—high rents for commercial spaces, pollution, and talent shortage are a few of these. Delhi, despite its success, ranked in the 25-50th percentile in the States’ Startup Rankings 2018, brought out by the Union government.
The surest way to encourage start-ups, both in Delhi-NCR and elsewhere, would be for the government to engage them in governance delivery. For instance, partnering with those working on sustainable mobility solutions could ease the commutation issues people face as well as help curb pollution. There are massive opportunities for the government to engage with start-ups on waste management, water, energy-efficient electronics for households, etc. The full list of where the government can support start-ups by becoming a client—and, in the process, improve governance delivery to citizens—is a long one. It is for start-ups and the government to identify and engage.