View: Startups need their 'Gabba Moment' | Economic Times

On January 19, an Indian startup cricket team showed the world what startups are capable of. A team bereft of established strike bowlers and star batsmen did the unimaginable by beating Australia at Gabba, clinching the Test series. Most of the freshman players had no reputation or team position to lose, only everything to gain, if they went for broke. And they did, upending all expectations.This is why startups are so critical and valued in successful economies. To compete with established players and survive, they must necessarily innovate. In the process, they create solutions that are transformational and address society’s unmet needs.Most importantly, they are the largest creators of jobs. Based on a 2010 study in the US (bit.ly/2Nww1C9) of data since 1977, the Kauffman Foundation found that net new job growth came only from startups. For India, which needs to create 10 million jobs annually, startups are clearly what the doctor ordered. A slew of enabling measures by GoI has propelled India into the top three startup nations. Current projections estimate that India will have 60,000 startups and 100 unicorns by 2025.This faith in startups was more than vindicated when Covid-19 struck. Six months ago, India was importing everything from ventilators, high-flow nasal cannula (HFNC) machines, to test kits, masks and sanitisers. Today, it is exporting them. GoI played an enabling role, but startups proved their mettle. A total of 11 unicorns emerged during the pandemic in the last 12 months, and 2021 has already delivered its first unicorn. The current total stands at 37, a growth of 33% over 2019. Startups will be the cornerstone on which Atmanirbhar Bharat will be built.US startups lead in innovations and solutions. Indian startups are already building innovative solutions to address its challenges in affordable healthcare, education, agricultural productivity, cleantech, etc. It is critical to ensure not only that the best and brightest in India, but also from around the world, try to achieve their dreams in India. This will need a few more policy measures beyond those already rolled out.These include unleashing more domestic capital and encouraging more foreign capital for startups, capital gains tax parity with listed companies, changes in ESOP (employee stock ownership plan) rules, incentivising domestic and foreign venture capitalists (VCs) to register with the Securities and Exchange Board of India (Sebi), and implementing some reforms in Reserve Bank of India (RBI) and ministry of corporate affairs (MCA) rules. India should learn from the best practises of countries that have succeeded, and build on them to create global ‘next practices’. It needs to skilfully carve out this area, while still requiring regulations for others. The Indian software industry was worth only $100 million when government realised its potential and, in partnership with industry and bureaucracy, co-created the Software Technology Park (STP) scheme. This solved the problem of telecom bandwidth, created virtual special economic zones (SEZs) where industry built its own infrastructure, took away the burden from government, and created world-class campuses. The leap of faith displayed in granting 100% tax exemption to an industry exporting intangibles paid rich dividends. This industry, comprising mostly startups — Tata Consultancy Services (TCS) being a notable exception — became a global leader in less than 30 years, and is worth about $200 billion today, accounting for 25% of India’s foreign exchange earnings, employing 15 million people directly and indirectly, and has built the brand of ‘New India’.It is time for India to move from being the back office of the world to its front office. For which startups hold the key to that office door. The writer is co-founder, Indian Angel Network