Growing Start up Culture in India

Why Start up culture?

It is very clear from the current scenario of the world that the smart start up culture is emerging like a rising tide in the global market. Gone are the days when students hoped and worked for a “dream job”, that would fetch them a safe pay and status. But the changing attitude of students, for precisely learning work and experiencing the hardships of a working industry is more in drive. With the government taking the baton in its hands and actively endorsing entrepreneurship , the wheel has started rolling.

Start up culture in India as compared to USA and China

Internet culture:

India is still laid back in terms of effective usage of internet. Many Indians still do not have proper resources to have access to the personal computer. Indians are using the internet without realizing it, many Indians still do not have proper knowledge of the various ways of accessing internet. Also, the less number of internet cafes adds to its laid back position.

Competition:

The markets are growing fast but with a limited competition. The start up culture in India is fiercely competitive in the e commerce sector though many other fields are wide open. The little risk taking attitude of young entrepreneurs leads to less competition as compared to Silicon valley and China.

The Myth:

The myth about start up culture being risky and unsuitable for the future of people is ,if not highly, but prevalent in India.  India has millions of entrepreneurs. They are mostly small business owners and mostly risk – averse so they stick to traditional cash flow businesses and family run businesses. Due to people’s traditional cash flow mindset, in the tech space, start ups that can monetize quickly are favored by both entrepreneurs and investors.

India bottlenecks:

Manufacturing sector is not very preferred in India and Indians in general prefer to act as “traders” than as “makers”. India’s nominal interest rate is 10%, approximately. Hence investors turn their heads to gold investment schemes, real estates and traditional cash flow businesses which earn a greater rate of interest.

Indian start up trends

India, a home to over 4000 vibrant tech/ digital start-ups, is the third largest base across the world. Since 2010, The Indian Technology Start-ups landscape has seen a sharp rise in the creation of new start-ups and this number is expected to cross 3,100 by the end of year 2014. It is a hyper growth inflection point for the Indian start-up ecosystem, with growth, capital and acquisitions all coming together creating a perfect storm.

Bangalore , the hub for start up culture, breeding ground for 41% of the start ups in India, cities like Pune and Hyderabad are also flourishing and emerging as start up hubs. Of all the sectors, 33% belong to the e commerce domain, the highest among all other start up fields.

Start up Act:

The Modi government’s strong endeavor to make India a haven for start ups, Prime Minister Modi set up the new Start Up Act, whose announcement was done on the Independence day, that he wants to provide a powerful launchpad for startups by drastically simplifying the rules and ensuring that innovators are able to take advantage of such an enabling environment, thus unleashing entrepreneurial energies and creating jobs.

The whole cumbersome procedure of the compliance laws which falls under 22 different laws will now convert into a 2 page start up act, creating better scope for the young entrepreneurs. The whole mesh of procedures and regulations had previously kept away many entrepreneurs from adventuring into it.

The new policy will address delays in incorporation, employee stock options, lack of initial funding, cumbersome Foreign Exchange Management Act (FEMA) documentation and access to external commercial borrowings.

However, companies aiming at innovation only may be the reapers of benefit and not all companies can avail the benefits. This is also known to  include relaxation in the tax laws.

Companies which are up to 5 years old only shall acknowledge to it.

All these have been informally set into the Start Up Act and a clearer notion of it will be released shortly, according to the sources.

The main agenda of the government by initiating the new Start Up Act is clearly the targeted upsurge in employment. To enhance innovation and technology, limiting the law is one big way to attract entrepreneurship and investment.

It aims to push the manufacturing sector ahead and generate employment for unskilled and semi skilled labor.

A Nasscom report predicts to create more than a 2,50,000 lakh jobs by the end of 2020, if the start up act is passed.

Just like two sides of a coin, this initiative is rumored to have its share of backlogs. It is debatable whether an all-encompassing central law for start-ups is workable on the ground. Businesses, whether large or small, are also subject to sector-specific and state-level compliances. How a single, central law would enable start-ups to bypass all those local compliances is almost incomprehensible.

Also, it can be observed that start up companies have done exceptionally well without any government intervention so far and its intervention  might actually get things to an unexpected turn. When the government made great efforts to make easier the start up regime a few months back, these start ups ended up paying more income taxes on funds raised by angel investors.

Also, the main problem the start up companies face is with the initiation of the company and even more with shutting it down. It takes two to three months to incorporate a company here in India, whereas , in Singapore for example, it takes not more than 2 days to initiate business ventures.

Though there was a decline in the start up culture recently, there is a huge scope for making it big here in India. For the young aspiring entrepreneurs is a chance to make it big.

-Harika Prasad