Amidst the onset of the third wave of the COVID-19 pandemic, India continues to demonstrate resilience and the Indian startup ecosystem remains extremely vibrant. Our entrepreneurs continue to create and retain jobs and create value for all stakeholders and continue to play an important part in nation-building.
As a vindication of this vibrant ecosystem, Prime Minister Narendra Modi announced that India will celebrate January 16 as ‘National Startup Day’, as he termed startups as the backbone of the country’s development and which he believes would fuel economic growth.
India saw a significant rise in the number of unicorns (more than 44 in 2021, and more than three only in the first couple weeks of 2022 and the number is expected to exceed 50 by end of 2022), making it one of the fastest-growing startup ecosystems globally.
This ecosystem is, however, expecting several initiatives from the government to cater to its needs and to provide impetus for its continued growth trajectory.
Spends on healthcare and pharma
There is an expectation of an increase in budgetary allocations for the sector as the vaccination programme continues to cover more citizens and the booster dose is being administered.
It is hoped that government introduces benefits for exports to make India a global pharmacy market. It is also hoped that the government provides tax benefits for startups in critical healthcare research and health-tech services.
Impetus for ed-tech sector
Ed-tech has enabled learning to continue for students for the last two years despite COVID-19 and therefore there is a continued expectation for the government to focus on digital infrastructure in tier-3 cities and beyond.
There should also be a stronger incentive for the ecosystem to enable employability and thereby skilling and narrowing the skill-gap. One also expects a stronger implementation framework to take forward the vision of NEP 2020.
Another area that requires a rethink is the taxation of content (books) differently offline and in the digital form. Similarly, providing incentives for ‘Make in India’ for hand-held and other devices which are a key means of providing education in these times.
Ease of doing business and clarity around licensing approvals for fintech
As the country continues to grow against the backdrop of the ‘Digital India’ initiative, much needs to be done to provide certainty to entrepreneurs investing in the fintech ecosystem and thereby encouraging financial inclusion (to the un-served or under-served consumer segments).
Although the fintech sector may also benefit from regulatory oversight, and there has been welcome news that the regulator will shortly set up a specific Department for the fintech sector, a key expectation remains that licensing/approval processes are simplified and the regulators provide adequate clarity around approval procedures (within the realm of appropriate checks & balances, particularly for offshore-held enterprises).
The ability of this sector to increase transparency for everyone via increased uptake of digital transactions, and for providing increased and quick credit access particularly to SME and MSMEs is expected to be strengthened.
Increase dialogue between regulators and newer-age businesses and models
It would help if regulators focus on adopting a consultative approach for newer age businesses and business models. New-age entrepreneurs are willing to discuss with the government and regulators upfront to remain ‘compliant’ and hence a dialogue would benefit everyone.
For instance, there has been uncertainly in the crypto space leading to significant stress not just for entrepreneurs but for consumers alike. Creating any situations akin to a ban may be counter-productive for the ecosystem, and it would better serve the larger interests to have a consultative process beforehand and to regulate appropriately.
One may recall some of the earlier situations around prohibiting e-pharmacies back in the days, when these very players demonstrated the ability to delivering medicines on time to people at the peak of the pandemic.
Dream to ‘go public’
Whether talent followed capital or vice versa was a question to many in the past, and the country has shown beyond doubt in the changing times capital following talent. As per a recent report by a large US-headquartered investment banking corporation, it is anticipated India’s IPO pipeline will remain very robust over the next two years, and that around US $400 billion of market capitalisation could be added from such new IPOs over the period whereby India’s market capitalisation could increase to over US $5 trillion by 2024. It is imperative, therefore, to enable a quicker process to public listing, including direct offshore listing of Indian companies.
As Indian startups are integral in the journey to the country’s growth, and with our new age entrepreneurs being job creators for the entire ecosystem, it would be imperative to help these businesses deliver on their potential so as to make the ‘Atmanirbhar Bharat’ vision bear fruit.
The author Ankur Pahwa is Partner - Strategy & Transactions and National Leader for the E-commerce, Consumer Internet and Startups, at EY India. The views expressed are personal.
(Edited by : Kanishka Sarkar)
First Published: IST