Currently there is a roaring debate on startup ecosystem of India Vs China. This photo was already doing rounds in social media but what added the fuel to the fire is our commerce minister discussing this in the Startup Mahakumbh. He took a deep dig on our startups and mentioned that what we are doing is “entrepreneurship” and “not startup”.
Please click on the image to view the video
There has been divided response on the social media, while some suggest that at least some one has accepted the dire situation and raised a concern there are others who point out that government needs to pitch in for the success of their deep tech startups.
One of the founders of a semiconductor startup took to reddit platform responding to Mr. Goyals remarks as follows:
“We are a semiconductor startup. Started in 2018. Stopped wasting our time trying to get Indian clients—private sector, government or defense,” he wrote. He described the procurement process as discouraging and non-committal, citing repeated instances where officials responded to proposals with statements like: “You build it, then we’ll decide,” or “We won’t buy—go find whether there is a market for this.”
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The point he made was who would fund these deep tech research without the visibility of returns from the same? Who would invest the time and energy in something which might or might not click? In any business the most important part is visibility of returns, path to success.
Another perspective to counter the Commerce Minister
We all understand that world we knew is fast perishing and there is a paradigm shift awaiting at the horizon. New Leaders will be those who wield the Technology. In current scenario it seems that China has left whole world behind. Whether it is Automotives (dominated by Europeans) or Aerospace & Defence (dominated by US) or manufacturing (dominated by Japan) or any other field. While there is merit to both these arguments what’s important is to find a way to tread this path.
From Startups perspective: following points are important and need intervention.
- What support can governments (state and central) offer to startups. We need a proper plan and execution for the same.
- India has a done a commendable job jumping from 142 (in 2014) to 63 (in 2020) but what ahead of that. New businesses still struggle with basic support and regulatory hurdles.
- Deep Tech surely will need significant initial capital and the product lifecycle will be longer. This is where they expect a handholding. There has to be a funding charter for these Deep Tech. Clear identification of areas, clearly defined economic zones, strategies, etc.
- Post the product readiness what is important is market acceptance. There is a need of governments adopting the newer tech products in their ecosystem to boost this initial resistance.
From Governments Perspective: following points are important and need resolution.
- While we can always point fingers what’s also important is inclination of the industry towards R&D. If we take even the biggest of the Organizations in India, the focus on R&D has been abysmal. India R&D expenditure is roughly 1/10th that of China or US. On GDP scale its just 0.65% while in US and China its well above 2~3% (on there scale of GDP) even a small country like Israel does @ 5% of GDP. Majority of this comes from Public Sector. Private sector lags completely in this. In US and China private sector does the major weightlifting.
- We have a very strong domestic markets for Automotive, Clothes, Electronics, mobile phones. Name any private sector company who built a world class product in India in last several years. Even the 2-Wheeler companies that boast of exports do so in third world countries. There is no aspiration to become a globally renowned product. The focus of Indian corporates has been returns & this needs to change.
- Look at the Indian IT sector. For last 2 / 3 decades we are happy being the service providers (cheap labour) to the world. why have so called IT giants never tried to build a product? What are the R&D budgets of these mammoth companies? And if they will not invest in R&D who will and who should?
- Now when we look at the pharma industry that is an appreciable picture. They spend significant amounts in R&D. Do pain stacking research for years and as a fruit, they hold almost 40% of the US generic medicine market. Other industries need to take a lesson from these companies.
To conclude, I suppose both the Industry and Governments have to work closely, hand-in-hand to change this scenario for the greater good. Industry needs to be braver and more adventurous while governments need to support this adventure and ensure they have a strong ground for this.
These are a few pointers that I could think of, but I would surely love to hear your perspective on this topic. So please do contribute your views in the comments below.
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