There is a very welcome upsurge of entrepreneurial interest among the young people in the recent years. Several initiatives from universities, state and central governments and private sector have been taken to smoothen the journey from mind to market. There is a worldwide interest in the concept of frugal innovation which I proposed in early 2000. The time has come to align our policies, practices, institutional design, interface mechanism, educational system and business practices with the philosophy and ethics of reciprocity, responsibility and responsiveness between formal and informal sectors while dealing with frugal innovation. What are the key lessons that we can learn from the experience of various incubators so as to make a transition towards a sanctuary model of in situ incubation. The first difference is that hunger for innovations has to be increased among various stakeholders planning to support the startups. There is a very few members of the existing institutional platforms who go out and seek ideas from startups, help them take shape and then support them. The policy documents exhibit the same mindset that was evident in the previous decades where innovators and entrepreneurs are supposed to knock at the door of the government officials for getting help rather than the other way round. When GIAN was set up with the help of Gujarat government in 1997, the first operating principle was: No innovator will be asked to come to office but office will provide support at their doorstep. This is the principle worth trying to practice. The second limitation of existing incubation model is that there are not designed to harness uncertainty for unfolding creativity. They prefer to deal with more predictable, orderly incremental innovations. We need sanctuary model if disruptive innovations have to be encouraged. In sanctuary model, chaos is inside and order is outside. In incubator opposite is true. Too many rules and procedures don’t help. With best of the rules and long small print agreements, the amount of non-performing assets of medium to large companies in banking sector is more than tens of thousands of crores. Can’t we afford to spend a few thousand crores in unleashing the creative power of youth with a liberal, empathetic mind and service oriented approach. Third: The incubator model requires innovators to register and station themselves in and around the incubator. With the cloud computing and much of the online services, there is absolutely no great advantage of uprooting young people from their families in order to provide them incubation support. Hence the case for in-situincubation.
Fourth: a large number of startups face the biggest problem in converting the proof of concept to a product and a product to the utility. Unfortunately, thinking in NITI AYOG and several other platforms still is to ignore the most vulnerable stage of innovation cycle and thus let mortality happen as it did earlier. In the entire governmental system, there is practically no support for early stage journey of startups except in BIRAC and NIF. There is an urgent need for course correction here.
Fifth, if somehow startups succeed in setting up companies, the process for registering for VAT, central taxes and several other purposes require a commercial address. In this age of ICT services, it makes no sense.
Sixth: A large number of startups in the country are forced to supply their products and associated services under somebody else’s name because of the minimum turnover requirement for public bidding and procurement. There couldn’t be more perverse policy for discouraging startups, though Honey Bee Network has been flagging this issue for several years.
Seventh: Startups get no special discount, subsidy or support for testing and certification of their products. They have to pay the same fees that testing institutions may charge a small company or other users. On one hand, we are not providing early stage funding and then we are expecting startups to find their own funding, fulfill all the requirements, pay all the fees and survive in the market place. Only India can expect this. Many times, our vision is clouded by the early successes of some of the IT startups. But for the hard manufacturing technologies, the journey is extremely tough and Indian policies are not tuned to encourage them. Eighth: Even while importing the components particularly at a very low cost, startups are charged with under invoicing and made to pay higher duty and/or grease the palms (I hope to be sued for this deliberate defamation). I can understand established companies doing under-invoicing but a fledgling startup will negotiate hard and try to get the best prices from China or other countries, particularly in renewable energy space to survive. There is no incentive to be efficient in this regard.
Ninth: The mentoring for various purposes is required to blend ethics, efficiency, excellence, empathy, environment, entrepreneurship, equity and education – the eight E’s underlying the SRISTI’s philosophy.
I hope that startup ecosystems being planned by universities, state and central governments, private, public and voluntary sectors recognise the needs for very fundamental and urgent policy reforms to make India a startup nation of frugal and empathetic innovations.