Mr Modi, the incumbent PM of India decided to give a push to the Indian Economy a few years back by promoting startup and entrepreneurship via an unconventional route – Startup India.

I was glad, if not ecstatic. The talk of the town “startups” was finally the talk of “Government”.

Here was a scheme to take care of a few challenges faced by entrepreneurs in our country.

Source : www.dqindia.com

Source : www.dqindia.com

With the incentives offered through startup India, anyone could start a startup. The scheme promised so many incentives that it was too good to be true.

When the scheme was launched, i could not help but wonder – will it meet the expectations of startups in India?

Frankly speaking, this was one campaign which could have helped the Indian startup culture. My expectations from this glitzy campaign were simple and straightforward(mine and PM’s taste differ here. I like subtle. His party, likes the other way) .

They were based on my experience as a startup “enthusiast” who has been a part of multiple startups. (more failures than successes).

It has been a while since the scheme was launched. Has it met your, mine and the country’s expectations? I will come to yours and the country’s expectations later but let me first go through what was it that I expected from the flagship scheme startup India.

  • Easy Loans:

Finance is the biggest road block for any entrepreneur to start. When an entrepreneur plans to start a startup, the first question he/she has is “How to raise funds for startup in India“.

Startup India, the scheme could easily remove this roadblock by providing easy loans to entrepreneurs.

With easy loans, I do not mean loans which startups could not return. From what I have heard or read, these loans are reserved for the rich and mighty of this country.

The ones, who in cahoots with the banking and political structure are responsible for almost all the NPAs in public sector bank.

By easy loans, I meant loans available at attractive rates with a decent moratorium period. A process which involves less paperwork.

The “fund of Funds” scheme had promised to allocate 10,000 Cr of funds under this scheme for startups in India by 2025. The fund is managed by SIDBI and if reports are to be believed, they have only managed to select 17 venture funds and promise them 623.5 Cr by March 2017 and that’s the committed amount. (source : https://www.indiatoday.in/education-today/featurephilia/story/startup-india-problems-1021659-2017-06-30)

From what i know, most of the money has not been reached the end startup owner and they finally gave up on the scheme and started looking for other sources of funding.

And then there were other easy loans to be given under the scheme. Unfortunately, the banks don’t want to take minor risks because of them being left with huge NPAs by big fishes.

Overall, the scheme has failed in funding startups.

  • No Income tax for few years:

One of the attractive points in startup India campaign was the exemption for companies from paying income taxes for a few years.

This was definitely a step in the right direction.

Most startups (especially the VC-less and dad-less ones) barely make enough to meet their expenses.

Imagine their joy, if the owners can take a few pennies back home for their families. Or save few extra bucks to invest further in growing their business.

I write this with a lot of pain, Only 274 early stage startups could benefit from an income tax exemption (source : https://qz.com/india/1159621/startup-india-with-only-10-of-funds-disbursed-modis-grand-plan-for-entrepreneurs-is-sputtering/).

  • Bribe less process:

I know this was too much to ask but let me explain why this was so important for me.

The day startups intend to start, they have to cross a bumpy road full of potholes. One of the prominent holes here is “the Bribe” culture in our country.

Starting from getting a firm/company registered in India to running it smoothly, without a bribe is a pain.

You visit a government office or send your CA to get your firm registered with taxation, labor, PF, ESI and god knows how many departments. All you get to hear is, there are 100+ documents to fill or a bundle of currency required to simplifying the process.

By the time your startup changes gear from neutral to 1st, you have visitors from taxation department knocking at your door at the oddest of time.

The expectations they have is stupidly unrealistic.

They expect you to get every single page of your company audited.

You got to look beyond the obvious to understand what this audit process involves.

All your compliance will turn zero, until and unless Mr. Auditor(s) from Government does not get to fill their pockets.

With me, they have always come when I am without money.

How I have managed to keep them smiling is a question the money lenders I borrowed money at exuberant rates can answer better. 🙂

Startups already had too many reasons to fail. Let bribe not be one of them.

I do not have any proof of bribe exchanging hands but we as a country, rarely have such proof. The only proof we have is of a fool-proof bribe system where no one is caught greasing their palms.

I am confident bribery as a hobby still maintains the top spot in the list of hobbies filled by our “hard working” govt employees.

  • A simple taxation process:

India is a country of diversity. Language, food, culture. Everything changes when you move from one state to another. This is what they taught us in geography. I am sure this is what makes Incredible India a campaign to bet your money on.

Unfortunately, it was just the other way around in Startup-ology. Here what changed from state to state was taxation structure.

There was no unity in diversity here. GST, the promised land of simplified taxes came out as a winner from the slug-fest between political parties.

However, GST’s launch was abrput marred with issues such as the non-functioning of software, random tax slabs, etc, etc. Things look better now and i am hopeful, GST is the saviour we all were promised.

  • Affordable Infrastructure:

Could we please have affordable office space with 24 X 7 electricity for startups?  I have heard of a lot of states providing this facility to young entrepreneurs. If only the facility is extended to more locations, I am sure there is a huge scope of growth for startups.

To make sure the policy is not exploited by startups, Government can add few clauses.

For ex, you have to move out after 2 years of operations. This will make sure the new startups do not have to stand in a queue unnecessarily.

These were my simple expectations from Startup India scheme. 

I know the campaign was a baby step to helping the startups of this country. Alas! two years after the launch, the scheme has not moved beyond baby steps.

I will go as far as to say, startup India was a political gimmick with no ground level preparation.

Consider this:

  • A recent poll conducted among startups saw 80% of them saying “they have not benefited from startup India scheme” (source : https://qz.com/india/1159621/startup-india-with-only-10-of-funds-disbursed-modis-grand-plan-for-entrepreneurs-is-sputtering/)
  • Around 39% of startups have income tax notices with them in the year 2017
  • And because of frequent tax changes and notices, companies like flipkart, inmobi and many others have moved their HQ from India to Singapore. (source : https://www.moneycontrol.com/news/business/startup/startup-india-mission-failed-to-solve-issues-of-startups-in-2017-survey-2454915.html)

Some of the famous websites have blamed India’s slow bureaucratic process (i agree with them), long criteria for selection to startup India. a scheme which is not inclusive of all sectors (healthcare) and insufficient fund deployment as reasons for the failure of startup India (source : https://www.indianweb2.com/2017/07/01/pm-modis-startup-india-couldnt-succeed-expected/)

I waited a good 2 years before updating my article. My first version of the article on startup India was full of expectations and hope i had from this step from our Government. Apart from the usual hype, there has been no real movement in startup India.

We still rank an abysmal 100 out of 130 in the ease of doing business. I know we ranked 130 earlier and you guys want me to celebrate the 30 places we jumped. However, i am not in the mood to celebrate.

We as a country have no support system for startups. Banks do not want to deal with startup owners. Government is as corrupt as it always was and we lack the basic facilities to run a business.

How can we expect to beat other countries based on policies that are not documented to succeed?

Thanks but no Thanks to everyone who thought “Startup India” was the next groundbreaking scheme.

Jasmeet Singh on EmailJasmeet Singh on LinkedinJasmeet Singh on TwitterJasmeet Singh on Youtube
Jasmeet Singh
Just another Entrepreneur at Lessons At Startup
Jasmeet has been a part of multiple Ventures. He earns his bread and butter by hanging onto his first venture, a Software Company located in India.

He is at present working on a new startup idea which like all startups will be "Disruptive" (at least he thinks so :) )

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