Modi Government's Flagship 'Startup India' Is Foundering

Hemmed in by policy irritants and the lack of an enabling environment, Startup India, the Modi government’s flagship initiative to encourage entrepreneurship, is flagging

- Shweta Punj

Anu Acharya, CEO of Hyderabad-based Mapmygenome and a pharmaceutical entrepreneur for over two decades, is no stranger to the difficult terrain of Indian business. Yet, this Young Global Leader of the World Economic Forum for the past seven years, who has nurtured firms such as Ocimum Biosolutions and Gene Logic, says the business environment in India is not start-up friendly. “In the past five years, 35 venture capitalists have advised us to register our business outside,” says Acharya.

The founder of a Hong Kong-based start-up discourages start-ups to launch in India. He recommends China, Singapore and Hong Kong as better alternatives even though India is a huge untapped market. India is “such a difficult country for start-ups”, he says. Asked if the Indian government’s Startup India initiative, launched in January 2016, has changed things for the better, he says: “No, the processes are still extremely cumbersome.”

When Prime Minister Narendra Modi announced Startup India from the ramparts of the Red Fort on August 15, 2015, it piqued business interest because start-ups seemed to have found a special place in the Indian narrative—a country brimming with possibilities. Startup India was meant to be the game changer—a funds pool of Rs 10,000 crore, incubators, self-certification of compliance with labour and environmental laws and tax exemptions as required, all aimed at promoting new enterprises and projecting India as a global start-up hub (see How’s Business?). However, three years on, the story is not so upbeat. Although 6,096 companies have been recognised as start-ups by the Department of Industrial Policy & Promotion (DIPP), only 74 start-ups have been approved to avail of tax benefits and allowed to self-certify compliance under various labour laws.