By Shweta Sengar
Indian start-ups are getting tremendous backing from the new government. Several plans and policies have been formulated to pave the way for investments to flow into this sector. The ‘Make in India’ initiative by Prime Minister Narendra Modi gives a big boost to the overall industrial, commercial and manufacturing sectors in the country. Given the national policies and initiatives taken up by the new government, an increasing number of companies are willing to invest in start-ups in India. The government is keen to financially assist start-ups in the electronics sector. The policies on start-ups are a part of the which, in turn, is a part of the National Electronics Policy 2012. The funds for the start-ups will be routed via the government’s Electronics Development Fund, from which over Rs 12 billion will be invested by the end of 2020.
According to some reports, the government is also ready to work with NASSCOM in order to enhance the Indian start-up ecosystem.
In the view of Anil Bali, director, Deki Electronics, “The new government has made it very clear that it wants to turn India into a manufacturing hub. The prime minister and various members of the Indian cabinet are visiting different countries to talk to their governments and CEOs, and are urging them to invest in India. A good number of companies have already announced major investments in India. Looking at the success of these companies, other organisations will also make investment plans for India.”
‘Make in India’ – a good initiative
The ‘Make in India’ initiative is being touted as one of the best programmes for the manufacturing industry in India and start-ups are expected to be the beneficiaries. With the government announcing schemes to attract investments, more and more start-ups are expected to come up soon.
Regarding how the ‘Make in India’ will help start-ups, Anil Bali says, “The government is very keen to push manufacturing in India. By encouraging the formation of clusters, the government is providing avenues for the start-ups to enter manufacturing. For the purpose of running companies, the Modified Special Incentive Package Scheme (MSIPS) encourages investment by giving a 25 per cent subsidy on equipment.”
In the past, because the government’s focus was on software and other areas, the manufacturing sector could not take off. However, the scenario has changed now. A growing number of start-ups are entering electronics manufacturing and making the most of the current opportunities. Expressing his opinion about the ‘Make in India’ drive, K Subramanya, global consultant on solar energy and former CEO, Tata Power Solar System Ltd, says, “Make in India is a great idea and must be given a fillip. There should be focused participation to make up for the lost opportunities. At least, let us reduce imports from China and other countries, although we cannot avoid them completely. ‘Make in India’ does not mean that we must make everything here. We must only manufacture those components, parts, products and machinery that we can excel in, produce at scale and market across global markets.”
The focus on MSIPS
In order to support manufacturing on a large scale, to rule out disability factors and to attract domestic and global investments into the electronic system design and manufacturing (ESDM) industry in India, the government launched the modified special incentive package scheme (MSIPS). This is applicable to existing as well as upcoming projects. It is an all-inclusive scheme, which offers a subsidy on capital expenditure at the rate of 20 per cent for investments in Special Economic Zones (SEZs) and 25 per cent in non-SEZs. Apart from this, the policy also reimburses the countervailing duty/excise for capital equipment procured for non-SEZ units. Though such schemes are beneficial to manufacturers, often they just remain on paper; also, legitimate manufacturers in need of the subsidies are unable to avail them, while dubious ones do.
Speaking about his concerns related to the MSIPS, K Subramanya says that it is a good initiative though implementation remains the key. He says, “Government officers have to be made accountable and rewarded for outstanding performance. They should be given time-bound achievement targets so that they proactively seek and promote investments. Similarly, we need serious investors with a long-term perspective. Those who only want to benefit from government subsidies need to be nipped in the bud. We need focused manufacturing clusters, and the states must compete with each other to promote themselves as the ideal destination for setting up manufacturing units.”
Generation of employment
According to Anil Bali, the government is committed to increasing employment and is offering incentives for start-ups in order to achieve this goal. He adds that the Skill Council of India is training candidates fresh out of college in various disciplines so that they can be gainfully employed.
According to K Subramanya, “Employment generation is the key and has to be at the core of our investments. Employment has to be provided to men and women of all age groups — young, old and experienced. We must have space for everybody and a healthy mix for all. Blue collar jobs are very important to harness skills and improve the quality of life for those who cannot pursue higher education. We need to build an inclusive society and reduce migration from villages. Employment near village clusters is a better option.”
Incentives for start-ups
Industry experts also believe that the government should offer more incentives to attract investments into this sector. A lot of measures need to be taken in this regard. Also, various loopholes in the processes followed need to be eliminated to achieve operational efficiency. Less bureaucracy and paper work, speedy approvals, the elimination of the ‘inspector raj’, infrastructure support in the form of an adequate supply of electricity and water, good roads and connectivity, and affordable bank loans are some of the areas in which the government needs to improve.
Start-ups are as important as other sectors in the country. A culture of entrepreneurship and the ability to take risks should be fostered in the country. The profits generated by investments must be reinvested in growth, and the importance of innovation and discovery must be instilled. A point to be noted here is that there are over 800 start-ups that enter the fray each year in India, and more than 3000 are currently trying to make it big across the country.