Sansad TV Perspective: India's Startup Ecosystem

In the series Sansad TV Perspective, we bring you an analysis of the discussion featured on the insightful programme ‘Perspective’ on Sansad TV, on various important topics affecting India and also the world. This analysis will help you immensely for the IAS exam, especially jn the mains exam, where a well-rounded understanding of topics is a prerequisite for writing answers that fetch good marks.

In this article, we feature the discussion on the topic: India’s Startup Ecosystem

Anchor: Vishal Dahiya

Guests:

1. Dr. Jagadis Gupta Kapuganti, Founder, Fruvetech Private Limited & Winner of National Startup Awards, 2022
2. Prof (Dr) Unnat P Pandit, Controller General of Patents, Designs and Trademarks (CGPDTM), DPIIT, Ministry of Commerce & Industry
3. K Yatish Rajawat, Sr Journalist

Context: National Startup Awards 2022

Highlights of the discussion:

• Introduction
• Case Study
• India’s Startup Journey
• Existing Challenges
• Way Ahead

Introduction:

• The Startup India initiative was launched on 16th January 2016 with the intent to build a strong ecosystem for nurturing innovation, and startups and encouraging private investments in the startup ecosystem of the country. 
• Four years later in 2020, the National Startup Awards were started to recognize and reward outstanding startups and ecosystem enablers. 
• India is the 3rd largest startup ecosystem in the world, with 107 Unicorns. The total number of startups in India increased from 471 in 2016 to 84,012 in 2022. 
• More than 4,500 startups have been recognized in sectors relating to emerging technologies such as the Internet of Things, robotics, artificial intelligence, analytics, etc. 
• The government has launched a number of initiatives to promote startups across the country as part of the Startup India initiative, such as the Startup India Action Plan, the Fund of Funds for Startups Scheme, Regulatory Reforms, Support for Intellectual Property Protection, Self-Certification under Labour and Environmental Laws, Income Tax Exemption for 3 Years, Faster Exit for Startups, the Startup India Seed Fund Scheme, etc.

Also read: PIB Summary & Analysis for UPSC for 6th Jan 2023: Startup India Innovation Week

Case Study of Fruvetech:

• Fruvetech Private Limited is a Winner of the National Startup Awards, 2022. Fruvetech implies ‘Fruits and Vegetables Technology’.
• The startup has developed a formula to inhibit the gaseous hormone called ethylene, which is responsible for the ripening of food. If the amount of ethylene is regulated it will delay the process of ripening and increase the shelf life of fruits and vegetables, which are otherwise perishable products.
• The technology of Fruvetech is adaptable throughout the supply chain beginning at the field level to the consumption level.
• Status of the Startup:
  • The startup has developed five different kinds of products to be used at different stages like at the field level (by the farmers), retailer level, distribution depots, consumer level, etc.
  • The Fruvetech product is in the pre-commercialization stage.
  • It has filed nearly nine national and international patents.
• The Startup benefitted from several schemes of the government like the Biotechnology Ignition Grant from BIRAC. BIRAC helped in expediting the research. It further tagged the startup to the Incubator.
• It was also supported by an NGO. Ultimately, they were recognized by DPIIT which helped them in applying for patents.

India’s Startup Journey:

• The journey of startups in India became path-breaking with one appeal of the government that India should design its own solutions.
• The number of start-ups in India increased from 471 to more than 84000 in a period of six years. This can be attributed to the dedication and hard work of the youth, academia, industry, and the government.
• The journey yielded strategic growth for India. The changes in the Intellectual Property mechanism also benefitted the startup ecosystem.
• It played a major role in making India ‘Atmanirbhar’ (self-reliant). For instance, the 100% import of ventilators during the COVID-19 pandemic was substituted by almost fifteen times cheaper ventilators designed in India.
• The two major aspects that have helped in boosting innovations and the startup culture in India are:
  • Enabling environment created by the various government policies.
  • Industries’ own dedication and zeal.
• It should be noted that the startup ecosystem was already existing for two decades. But as the government became more cognizant about its role in innovation and employment generation, it was given a push.

Challenges for the Startups:

• Currently, the system is largely funded by venture capitalists and the majority of the funding comes from global investors.
• The startup ecosystem is currently facing the challenge of the so-called ‘funding winter’, successive rounds of funding are becoming difficult, and valuations are going down. This is a market-driven issue, where the government can’t do much and should be resolved within the ecosystem itself.
• The regulatory cost in India is currently high.
• Once the product is developed, there is a need for support to bring the product to the market, as most of the startups end up in the development of the products. This implies that there is a requirement for the final push to the product by the government.
  • However, the government is of the opinion that several policies are already in place from the ideation stage to the commercialization stage.
  • It is also argued that during the final stage angel investors, venture capitalists, and other sorts of funding should be there from the industries’ side.
  • Commercialization also depends on products’ performance and consumers’ acceptability.
  • Moreover, a startup that is building the product is best placed to commercialize it. Thus, it is not the responsibility of the government or the administration to promote a product.
• There is an issue with the slow pace of intellectual property creation. This is because it is evaluated from the single dimension of technology. The other two dimensions of commercial readiness and societal acceptance are often neglected.
• The grants of the Department of Science and Technology are majorly absorbed by public institutions like IITs and IIsc with no share given to the private sector and market forces.

Way Forward:

• The government can create an environment where it is easier for startups and entrepreneurs to raise funds with less amount of regulation and intervention by the government.
• The defunct laws in India should be eliminated.
• The Indian government should invest more in Research and Development (R&D) and help in converting them to consumer products. For instance, the National Science Foundation of the United States gets an annual budget of $ 8.3 billion which gives grants and funds to both public and private universities across the U.S. 
• All the dimensions of a model namely technological, social and commercial should be evaluated for better product positioning.
• The public investment should monitor the outcomes for further grants.

Read all the previous Sansad TV Perspective articles in the link.

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