Policy incentives, support organisations, universities and large corporates have all played a vital role in the evolution of an innovation-led scenario in India. Over the centuries innovation has been a key change agent the world over in an effort to provide accessible and affordable solutions to dynamic consumer needs. It plays a crucial role in determining the industrial and economic competitiveness of any country. India has been contributing innovations that have been a game changer. From the innovation of the digit '0' to Mangalyaan, India has been a land of innovations. Some people may contest this by saying that it ranks a dismal 60th on the 'Global Innovation Index', but one may fail to realise that it has been moving steadily up the ladder from 76th in 2014. India has been moving up the ranks and the move has been swifter in recent years. Currently, India ranks first among Central and South Asian countries on the 'Global Innovation Index'. The rise in innovations has also led to the eventual commercialisation of these innovations by way of start-ups. Today India is among the top global destinations for start-ups. In terms of the number of start-ups founded, it ranks amongst the top five countries in the world. By one estimate India houses over 5,000 start-ups, which in turn create more than 85,000 employment opportunities. It is projected that the number of start-ups in India will increase to more than 11,500 by 2020, with job creation from these entrepreneurs hitting 250-300K by 2020. The mortality rate of start-ups in India stands at 20-25 per cent. This has been down by 10 per cent YoY, which speaks volumes for the start-up ecosystem that exists and nurtures these ideas. The start-up ecosystem in India has matured quite rapidly over the years. Enablers like government policy and incentives, support organisations, universities, funding organisations, service providers, research organisations and large corporates have all played a vital role in the evolution of this ecosystem. The Indian government has been giving the required policy push to enable a conducive ecosystem. The government has realised that policies and incentives would be the best enabling tools to generate the required momentum and later self-sustain it. In an effort towards this, the ecosystem has seen massive overhaul in the last few years. From Start-up India, Stand-up India to Digital India, the government has been building the right platform for start-ups to succeed. The government's efforts towards ease of doing business policies, taxation policies, greater access to loans have also contributed positively to the growth of the ecosystem. To keep this innovation-led momentum going, the government as well as private players of the ecosystem will have to work very closely to review, update and upgrade the enabling factors and policies from time to time. The government will have to ensure that three fundamental things - funding, facilities and flexibility - are available to every innovator who wishes to scale up his idea and be an entrepreneur. Though a lot of work has been done on funding and facilities, flexibility needs to be given priority in the policy. There is a need to frame an easy exit policy for start-ups. Other key policy concerns that have been raised by the start-up ecosystem, such as the Angel Investor Tax, abolition of MAT, support for the e-commerce business, need to be addressed immediately. Over and above the initiatives from the government, it is interesting to assess the external environment for start-ups in India. India has the third-highest number of start-up incubators and accelerators in the world, after China and the US. The number of start-ups and incubators haven grown by 40 per cent in 2016-17. Of these, 30 academic incubators were established under the government's 'Start-up India, Stand-up India' initiative. This has resulted in the nurturing of innovative ideas into sustainable business models. Tier-II and Tier-III cities have also fast emerged as hubs for start-ups to flourish. This is majorly due to the availability of talent, state government initiatives, local investor confidence and infrastructure support. These cities have also been enabling micro-entrepreneurship in rural areas surrounding them, which in turn has led to value creation. Technologies like artificial intelligence and machine learning, blockchain, storage and computing as a service and robotics have been major enablers for innovators to get into product development, which in turn has shortened the gestation period for start-ups. The Indian start-up ecosystem is quite dynamic and is adjusting fast to the changing environment, which is enabling start-ups to produce unmatched products and services for not only the Indian market but for global markets.
Dr Param Shah is Director - United Kingdom, Federation of Indian Chambers of Commerce & Industry (FICCI).