Is Government doing anything for startups?

Securities and Exchange Board of India (Sebi) hopes to finalise norms that will help entrepreneurs raise funds via crowd funding in a few months, chairman UK Sinha said. “If these people are doing e-shopping, and they know financial markets, then they should invest in MFs and that is the direction in which we are thinking,” Sebi chairman said. Meanwhile, Sebi is also in dialogue with startups in relation to listing on the domestic stock exchanges. The market regulator had announced new norms that would facilitate listing of startups on India’s stock exchanges.

Startups face several problems like complying with laws such as the Minimum Wages Act and Employees’ State Insurance Act. Now the government is thinking of setting up a cell to iron out these difficulties. According to news reports, hectic parleys are going on among government departments for preparing the action plan and as a starter, the Centre is also planning to give exemption to startups for participating in government procurements. In his speech Mr. Modi did not mean only the ones that associated solely with the digital world but all innovative projects that young people would want to set up. Startups must go beyond the digital domain and focus much more on other sectors like agriculture and the rural economy to come up with low-cost and innovative solutions to the problems. This is the right way to go because India today needs a host of medium and small enterprises to meet its employment challenges and to develop low-cost solutions to solve myriad problems.

In September, 2015 in San Jose in California at the Indian-US startup Konnect, Prime Minister Narendra Modi said, “The mega corporations of today were start-ups of yesterday.” This was briefly one-and-half months after he challenged the start-up community, at a Nasscom event, to build new generation companies like Facebook and Google out of India.

Global reports show that startups, companies, which are headed by women, have better financial performance. Given this, Prime Minister Narendra Modi too had a meeting with some of the global CEOs in New York. Women have an edge over men as they not only control the majority share of household, they manage long term relations, and understand customers’ needs better. The government will hold seminars in small cities to build confidence amongst women in small towns and cities through the district industries centre on a regular basis, which will add to the talent pool and promote their success stories. 

The government has announced funds like the Bharat Fund, but the corpus is just Rs 900 crore. Then there is the India Aspiration Fund of Rs 2000 crore. An average angel or first round of funding required for any startup is Rs 16-18 crore. There are other funds that the government has set up for small and medium business like the MUDRA fund. Modi said at the India-US startup Konnect, “Start-ups defy the natural rates of growth. An idea can become a global name within a year. Customers can multiply at the rate of millions, employ thousands and valuations are in billions.”