CSR fund expansion will redefine India's startup narrative : by Dr. Omkar Rai
- 03-10-2019
The entire world is amazed by the amplest success stories created by startups. Globally, startups are engaged in developing breakthrough innovations, building affordable solutions, generating wealth and creating enormous job opportunities for others. According to Global Startup Ecosystem Report 2019, the global startup economy has created USD 2.8 trillion value between 2016 and 2018, which is a 20.6% spike from the previous period and more than double what it was five years ago.
Startups have brought new magnetism to the narrative of entrepreneurship. Successful enterprises in the world are tapping the potential of startups to leverage their expertise and R&D to transform their vision into reality. The world has already witnessed a first-generation startup growth. The companies those started their journey with few people and nominal seed capital are now global giants and valued more than USD 1 trillion, for instance Microsoft and Apple those started on a garage mode in 70’s are the global tech giants today. Even though we joined late in this movement, India, today, is not far behind in this race.
With over 20,000 startups, India is the second largest startup ecosystem in the world having 7,200-7,700 tech startups, expected to witness 10-12% year-on-year growth. Despite global slowdown, Indian startup ecosystem is raring to surge. Low cost of doing business, proximity to customers and vendors, availability of large consumer market, 7 million graduating students per year, 4.14 million professionals in the IT services industry and 627 million internet users are the key drivers for the rapid surge of tech startups in India.
To further bolster the growth of startups, Government of India launched the Startup India programme in 2016 by bringing proactive policy measures for hand holding, funding support & incentives, building industry-academia partnership and incubation support. In the last three years, Department for Promotion of Industry and Internal Trade has already recognised 22,128 startups, which are leveraging a host of tax benefits, easier compliance and IPR facilitation. 264 startups have also been funded by SIDBI Fund of Funds. Under Scheme for Facilitating Startups Intellectual Property Protection (SIPP), around 1,800 startups have availed the benefit of 80% fee rebate and more than 150 patents have been granted.
Many such initiatives by various government departments, private players, startup accelerators, academia and industry associations in the country are in place to further buoy the growth of startups. I would like to cite one of such initiatives undertaken by my organisation STPI for supporting the startup ecosystem by way of creating Centres of Entrepreneurship (CoEs) in emerging technologies such as AI, IoT, Blockchain, AR & VR, FinTech, MedTech, Data Analytics, Agri IoT, Automotive, ESDM, Gaming & Animation, HealthTech and LegalTech. The uniqueness of these CoEs lies in a collaborative model in which various stakeholders such as government, academia, industry, industry associations and mentor pool pitch in to build world-class startups focused on R&D, innovation and IPR creation.
As opportunities for the startups are enormous in India, still there are certain challenges, which need to be addressed timely. Although few have become unicorns over the years, the majority of the startups have been fledgling due to lack of infrastructure, funding and mentorship support, market access, talent and inexperience in transforming an idea into a successful product or business model.
In the 12th edition of Global Innovation Index (GII) India has ranked 52nd in 2019 by rising 29 positions from 81st in 2015. One of the many reasons that put India lower in GII is the R&D spending in India with respect to its GDP. It’s conspicuous that R&D spending in India is 0.8% of GDP, while the countries like Israel, Republic of Korea, USA and China spend 4.3%, 4.2%, 2.8% and 2.1% of GDP respectively and the private spending in R&D in India is even more dismal. Even though, the number of Intellectual Property Rights (IPR) filed by Indian organisations in 2017-18 stacks at 47695, it is not commensurate with the potential and need of the country.
Recent announcement made by the government for expanding the scope of spending of CSR funding for incubators those are engaged in facilitating startups, which are working in the domain of R&D in science, technology, engineering and medicine, is a laudable step. According to reports, CSR spending has jumped from Rs 10,066 crore in 2014-15 to Rs 13,327 crore in 2017-18.
This initiative will give much needed impetus to the incubators in providing risk capital to the startups for the purpose of innovation and R&D for creating world class products. This step will also provide an opportunity for the companies to witness the success of incubators in real term and motivate them to invest more in R&D. As we know, India is already a preferred R&D destination for so many MNCs, these reforms taken by the government will further improvise the sentiments of the industry at national & international level and encourage them to think for expansion of their R&D setups in the country.
The startup journey in the country has just begun. Government initiatives, policy impetus, entrepreneurial drive in today’s youth and a vibrant ecosystem for tech startups can together fuel the startup growth story. Imbibing the culture of innovation and entrepreneurship early in the life of students will drive their passion to build tomorrow’s enterprises. With the desired ecosystem combined with support from the government and participation of academia and industry will rev up the startup momentum in the country.
It’s not far from today that many of the budding tech startups, young entrepreneurs and innovators would transform themselves into tomorrow’s global unicorns, not just in value, but making India a superpower in innovation and entrepreneurship, thereby creating immense economic value for the nation both in terms of creating enormous employment opportunities, eradicating the root problems of society, and playing the role of catalysts to achieve the $5 trillion economy in times to come.
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