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Prime Minister Narendra Modi, in his speech on Independence Day, called for "Start-Up India, Stand-Up India". Who should drive start-ups - the government or the private sector?
Modi emphasised on entrepreneurship and job creation, announcing incentives for companies that generate employment besides launching a new campaign 'Start up India, Stand up India' to promote bank financing for start-ups by the underprivileged.
Each of the 125,000 bank branches in India should give loans to Dalits, women, and tribals, so that the country could, in no time, have at least 125000 start-ups by women and Dalits, Modi said.
Can India become a start-up nation? On #IndiaHangOut, Rajeev Chandrashekar, Member of Parliament and Technology Entrepreneur, Mahesh Murthy, the Founding Partner of Seedfund, Sharad Sharma, the Co-founder & CEO of BrandSigma Inc. and Harish Bijoor, the CEO of Harish Bijoor Consults Inc. discuss the potential and future of start-ups in the country.
They list out the dire needs and opportunities that our country should address to develop a true start-up culture:
1. Government in the role of a facilitator.
The government needs to step out of the way of start-ups. It needs to needs to facilitate a start-up environment but should not get into the entrepreneurial space.
2. Open collateral-funding.
The government needs to allow banks to write loans to small businesses without collateral. These banks should be allowed to invest in start-ups, regardless of caste and creed.
3. Leave equity-based funding to private sectors.
Equity-based funding, where investors are allowed to buy into the fund, should be left to venture capitalists.
4. Get rid of the inspector raj.
The government needs to find a way to create a climate where there is an ease of business.
5. Promote innovation-led entrepreneurship.
India ranks 86th in world ranking for innovation and we have steadily been dropping down the rankings for the last few years. For the country to become an open market, entrepreneurship needs to shift from copy-and-paste to innovation-led. The government needs to create an innovation ecosystem.
6. Allow start-ups to sell to the government.
New enterprises should be allowed to bid for government contracts and for this to happen, the government needs to relax its norms for bidding processes.
7. Government in the role of a market-maker.
The government needs to adopt the model of challenge grants. Under this model, the government issues challenge grants and picks the most innovative company and innovators can become rich on the back of the government. This model has been tried out successfully in the US and Europe.
8. Create public goods for private wealth creation.
The government needs to invest in public goods as they are the sources for innovation.