Is India taking the right steps towards creating a start-up ecosystem?

Is India taking the right steps towards creating a start-up ecosystem?

Ajai Chowdhry, one of the six co-founders of HCL and a Padma Bhushan awardee, recommends that we build an Indian entrepreneurship ecosystem that is more holistic in nature. While we are witnessing several innovative ideas, most of them are in the e-commerce and technology sphere. There is a need to innovate in order to create newer avenues for entrepreneurship. Early-stage investments and investors such as angel investors, venture and seed funds need to be recognised and promoted through development of appropriate measures and incentives

Ajai Chowdhry

AJAI CHOWDHRY

India’s entrepreneurial ecosystem has grown leaps and bounds in the past few years for everyone to sit up and take notice. The e-commerce industry (estimated around US $16 billion in 2013), besides any other in India, has witnessed tremendous growth and key players here are the young start-ups followed by the IT/technology start-ups in the country. In context of the Indian market, entrepreneurship-led economic growth is more inclusive and will act as a crucial catalyst to create employment. While we see promising figures and growth, the entrepreneurial spirit of the youth needs to be supported with the right ecosystem. There are still complexities that the Indian start-up ecosystem needs to get rid of to pave way for a much stronger entrepreneurial journey.

There is a skill gap that exists in the start-up ecosystem in India which needs to be filled with proper business mentoring. For this, our education system needs to evolve to provide proper training and skills at the technical education and B-school level. Also, young entrepreneurs need to realize that it is crucial to run a sustainable business.

A welcome step in this regard is the announcement of the Rs. 10,000 crore fund by the Government for start-ups making it amply clear that start-ups are definitely the next big wave and will make a considerable impact on the Indian economy. Also as part of its ‘Digital India’ initiative, the Government will provide broadband connectivity in villages. This development will in a way also benefit the online economy of India as it will help create more avenues for the technology start-ups to reach out to a large untapped market.

Amidst these efforts are the States who are promoting and nurturing entrepreneurship at their level. Karnataka, Kerala, West Bengal, Gujarat, Tamil Nadu, Maharashtra are few of the states which witness high entrepreneurial activity and support from its governments in terms of funds, schemes, training, incubation centres, infrastructure etc. For example, the Kerala Government has earmarked one per cent of the State budget for young entrepreneurs and start-ups amounting to Rs 500 crore annually. Another interesting program is the Bihar Innovation Forum, an initiative by the Government of Bihar in partnership with the World Bank. They identify and help scale rural livelihood innovations in Bihar. However, not all States are at par in terms of encouraging entrepreneurship and providing an environment conducive to entrepreneurship. It is essential that there are more cohesive efforts to build India as a hub of entrepreneurial activities and utilise the best resources that every part of the country can offer. It is also crucial that our start-up ecosystem brings together enterprises, Governments, investors and education/research institutes together so that similar partnerships can be built at a much greater and scalable level.

As one of the youngest nations in the world, while we have the demographic advantage of having a young working population and low dependency ratio, we also have the disadvantage of untrained professionals. There is a skill gap that exists in the start-up ecosystem in India which needs to be filled by proper business mentoring. For this, our education system needs to evolve to provide proper training and skills at the technical education and B-school level to young entrepreneurs who otherwise lack the understanding of how to run a sustainable business. With more and more companies/Government investing in young ventures and a lot of money at stake, education will play a critical role in not just building strong foundations for young start-ups but also in reducing the number of failed start-ups too. The idea should not just be to build a skilled workforce but also train people who can further create jobs.

Innovation is crucial for a thriving economy and in today’s increasingly competitive world; we are witnessing several innovative ideas and business being driven by start-ups. However, most of these start-ups lie in the e-commerce and technology sphere leading to investments and attention being focussed mostly on these sectors. As a country as vast as ours with increasing needs and demands we need to constantly innovate in order to create newer avenues for entrepreneurship. Social entrepreneurship is another area which needs to be promoted and encouraged. Besides, sectors like Electronics, Education, Healthcare, Retail and Bio-technology are all hot beds of entrepreneurship which should be explored to drive innovation.

While the Silicon Valley is the epitome of entrepreneurial success and a great example to learn from, there are other successful ideas from which the Government can learn and be inspired. One of the examples is Israel’s Yozma fund, which has raised more than US $200 million since its inception.

The new wave of entrepreneurship is backed by several avenues and forums that are recognising talent not just in India but internationally providing the right environment. One of the largest ventures present is the India Angel Network which boasts of a wide network of over 250 investors including successful entrepreneurs and CEOs investing in early start-ups. Being a member of the network, I have personally invested in close to 14 start-ups and been a part of their entrepreneurial journey.

Besides, young entrepreneurs of today have several platforms to showcase their ideas and talent in front of the right audience, giving them the perfect head start for their business. Bodies like TiE and Nasscom are also aggressively partnering in initiatives to cultivate the entrepreneurial spirit of the youth.

An interesting development in entrepreneurial activities in the country is corporates creating platforms to support and foster entrepreneurs. Companies like Dell and Tata proudly own initiatives like DWEN (Dell Women’s Entrepreneur Network) and Tata First Dot. Both are unique in its format as Dell’s network celebrates female entrepreneurial success whereas Tata First Dot is India’s first platform for student start-ups.

It can be safely concluded that the youth have made entrepreneurship a desired career choice and these new age entrepreneurs will play a positive role in driving India’s economy. At a stage when entrepreneurial activities are its peak, the ecosystem definitely requires the government to play a positive role in facilitating entrepreneurship and creating the right policies and framework. Early-stage investments and early stage investors such as angel investors, venture and seed funds need to be recognized and promoted through development of appropriate measures and incentives. And taxation roadblocks like Section 56 must be corrected.  Most importantly, the entrepreneurial culture needs to be imbibed. The entrepreneurial journey for India is full of promise. Despite the challenges that exist, the opportunities in comparison are manifold and with the right environment the future of India will most definitely be shaped by its entrepreneurs.


Ajai Chowdhry is one of the six founder members of HCL. In 2011, he received the prestigious Padma Bhushan, one of the highest civilian honours, as recognition of his consistent contribution in building the IT industry of the nation.

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