Prarambh Opportunity for Startups – The Big Picture – RSTV IAS UPSC

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TOPIC: General Studies 3

• Start-ups, Innovation

Prarambh- The Startup India International Summit has been organised by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry. 

• The Prarambh-Startup International summit involved the participation of BIMSTEC (Bangladesh, India, Myanmar, Sri Lanka, Thailand) nations in the first-ever conclave.
• The two-day summit marks the fifth anniversary of the Startup India initiative, launched by the Prime Minister on January 16, 2016. It also comes as a follow-up of the announcement made by Prime Minister Modi at fourth BIMSTEC Summit held in Kathmandu in August 2018, wherein India committed to host the BIMSTEC Startup Conclave. 
• With participation from over 25 countries and more than 200 global speakers, the summit is the largest startup confluence organised by the government since the launch of the Startup India initiative. 

Focus: Enhancing multilateral cooperation and engagement with countries from around the globe to collectively develop and strengthen the startup ecosystems.

India and Startups

• India today has the world’s third-largest startup ecosystem. 
• The country has more than 42,000 startups of which more than 5,700 startups are in the IT sector. 
• As many as 3,600 startups operate in the health sector, while nearly 1,700 startups are present in the agriculture sector
• The registered startups have collectively raised $63 billion across over 5,400 funding deals. 
• There are 12 jobs created per startup in India, according to the Startup India programme.
• Currently, 44 per cent of DPIIT-recognised startups have at least one women director.
• So far, 296 startups have received tax benefits under the Startup India programme while 39 regulations including Angel Tax have been simplified

These startups are changing the ‘demographic characteristics of businesses’ and the biggest USP of the startup world is its ‘disruption and diversification capacity’. Startups are quick to respond in getting the economy back to shape, in getting the livelihood going, and in the fight to get rid of diseases

Start-up India seed fund worth Rs 1,000 crore

• Under the scheme, grants up to Rs 20 lakh will be provided to the startups for ‘Proof of Concept’ whereas funding up to Rs 50 lakh can also be availed through convertible debentures or debt or debt-linked instruments for commercialization. The government will also provide guarantees for startups to raise the fundings.
• Aim: To enable startups to raise initial funding
• The government is also planning to help startups to raise debt capital by providing guarantees
• India is trying to create a startup ecosystem, which will be based on the key principle of the youth, by the youth and for the youth

Government e-Marketplace 

• Through the GeM portal, local startups have been given the opportunity to participate in government tenders at par with big companies.
• About 8,000 startups have registered on the portal so far and done business of nearly Rs 2,300 crore. 
• More than 10 startups across sectors ranging from beauty to payments turned unicorn in 2020 against nine in 2019.

About GeM:

• It is a National Procurement Portal to facilitate online procurement of common use goods and services required by various central and state government departments/organizations/public sector undertakings (PSUs). 
• It was launched in 2016 to bring transparency and efficiency in the procurement.  
• It functions under Directorate General of Supplies and Disposals (DGS&D), Ministry of Commerce and Industry. 
• GeM is a completely paperless, cashless and system driven e-market place that enables procurement of common use goods and services with minimal human interface

The Way Forward

• There is a need for Indian investors to expand their horizon to support Indian startups particularly at an early stage. 
• India should invite other countries to also engage with startups in India. The global stage is available for our startups and when we begin with our neighbourhood, we will be able to go beyond government-to-government collaboration, and business-to-business or business-to-consumer engagement to a startup-to-startup collaboration.
• There is a need for innovations to come from beyond metro, tier-I cities. Currently, 80% of India’s districts cover the startup ecosystem with 45% from smaller towns and cities that have become the brand ambassadors of local products. Besides, the development in sectors such as environment, defence, space, agriculture, finance, and education will lead to a value-creation cycle, thus creating more opportunities for the startups in these areas.
• Skill development is another area which will play a very important role in fostering the entrepreneurial spirit of giving confidence to other entrepreneurs. If we can build that confidence then failure should not be looked down upon. Failure is only a stepping stone to success. To be able to really get more and more of it, youngsters should experiment with their ideas to see what more can be done to expand their horizon and the frontiers of their engagement

Together we serve one-fifth of the world’s population and have USD 3.8 trillion GDP strength. The ongoing decade is a decade of innovation and the future technology will come from Asia’s laboratory and that the nation should take the responsibility to develop the ecosystem. – Prime Minister Narendra Modi

Important value additions

Start-Up Village Entrepreneurship Programme (SVEP) 

• SVEP is a sub-scheme of the Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM).
• Ministry: Ministry of Rural Development.
• Implemented: 2016.
• It has extended business support services and capital infusion to 153 blocks of 23 states as of August 2020.
• Partner: Entrepreneurship Development Institute of India (EDII), Ahmedabad. 
• Aim: (1) Support the rural poor to come out of poverty; (2) Support the people to set up enterprises and provide support until the enterprises stabilise; (3) Providing self-employment opportunities with financial assistance and training 
• It addresses three major pillars of rural start-ups namely finances, incubation and skill ecosystems.

SCO Startup Forum to be launched

• The first-ever SCO Startup Forum will be launched on 27th October 2020.

Key takeaways

• The forum will lay the foundation for multilateral cooperation and engagement among the Shanghai Cooperation Organisation (SCO) Member States.
• Objective: To develop and improve startup ecosystems collectively.
• The Forum shall identify areas of cooperation by launching multiple entrepreneurial activities like startup showcases through a dedicated virtual platform, mobilizing capital for startups, sharing of best practices, procuring social innovations etc.
• Also, Innovation and Startups will be the key focus area of SCO Heads of Government meeting on 30th November 2020 to be hosted by India.

Connecting the Dots:

1. What are the challenges facing the start-up ecosystem in India? Discuss. In this regard, critically assess the efficacy of measures adopted by the government under the Start-up India scheme.