New Delhi: Lack of ‘sincere’ government engagement and uncertainty in regulations make it difficult for a start-up culture to thrive in India, experts said Tuesday.
They were speaking at the sixth edition of the Global Tech Summit, jointly organised by the Ministry of External Affairs and think tank Carnegie India. The summit is a flagship event on geotechnology held annually since 2016. ThePrint is a digital partner at this year’s event.
On the concluding panel on day one, Sahil Kini, co-founder and chief executive of Setu, a tech firm that provides Application Programming Interface (API) and softwares, and Asha Jadeja Motwani, an angel investor and philanthropist based in US’ Silicon Valley, spoke about ‘the future of India’s digital transformation’. Mridul Sharma, Investment Promotion Officer, Ministry of Electronics and Information Technology moderated the panel.
Asked if the government should spend long term capital on tech start-ups, Kini decried the efforts so far.
“There might be a few SIDBI (Small Industries Development Bank of India) deals here and there, but where is the capital? For an ocean of capital sitting there, where is it going into these start-ups… early stage investments in companies that are going to do meaningful work,” Kini said.
“Eight per cent of MSMEs have access to formal financing… There is a large fund, it was there in the (government) initiative. But has the money really reached the MSMEs? We’ve always been bad at follow-up on these. It is not this government or that government. We need to get better, I am not sure how,” he said.
“Other than events — I might as well be honest — I don’t think there’s been a sincere engagement…” Kini said.
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On financing
Asked about financing of start-ups, Kini said it was cumbersome to get funds designated.
“There’s a lot of domestic capital as well, for instance, the taxpayers’ money. There was a large fund of funds, about north of Rs 50,000 crore. I am not sure how much of that money has made it to the start-ups,” Sahil said.
“I think part of the reason is governance, where you will allocate large amounts of say tens of thousands of crores, and then you will get a committee, then there is a form and a process and a checklist and God knows what else to actually raise funds,” he said.
For better management, he cited the example of Singapore’s spending of government funds.
“If you were to adopt a model like Singapore, where sovereign funds are managed by professional managers, and they are able to generate tremendous returns and deploy large amounts of capital efficiently, which is something we don’t do,” Kini said.
On ease of doing business
Motwani spoke about hesitation among US-based accelerators in entering the Indian market due to the lack of ease of doing business as a tech start-up.
“We know that Indian start-ups are where the action is. I think the only fear that people sometimes have is about the (un)certainty of rules and regulations. There has to be a certainty of rules and regulations… The action is already happening, but if two or three regulations are cleaned up, we’d have a floodgate opening to India,” she said.
Speaking about regulation, Motwani cited the example of a police team turning up at social media giant Twitter’s head office in Gurugram in May this year after it flagged the ruling party’s posts as “manipulated media”.
“For example, you cannot have a police action against a start-up or a board member who may not comply with certain regulations. If Twitter doesn’t comply with something, it should be slapped with a financial penalty, but you can’t have police showing up to a Twitter office,” Motwani said.
Kini said he is a “fourth generation businessman in my family and I know that India didn’t trust businessmen for a very long time”. “There’s still some hangover left of it, though it’s changing a bit,” he said.
“These small companies should be focussed on building innovative things and not dancing around the regulations… who will come to get them. And certainly having access to a lot more domestic capital to accelerate our own journey,” he added.
(Edited by Amit Upadhyaya)
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