India has rightly embarked upon a very vibrant and supportive plan for encouraging startup enterprises to generate jobs and achieve socio economic growth.  However, our analytic lenses are still biased towards IT based enterprises.  Not that these are not important, but for them a reasonably robust ecosystem already exists.  It is the manufacturing technology as well as the agricultural technology where there is a serious gap in entrepreneurial upsurge.   Many agricultural universities have set up incubators of the classical kind in which a few enterprises have come up but a major drive remains to be developed.  Food processing sector is an extremely dynamic and upcoming sector in which there is a tremendous scope for encouraging innovation based enterprises.  Let me suggest some specific measures which can stimulate the entrepreneur process in agri and food sector.  Next week, I will look at some of the other manufacturing sectors.

With increasing consumer awareness about functional foods, neutraceauticals and herbal supplements, a large number of enterprises have sprung up in the last few years, in spite of a weak policy.   Very few people would have anticipated ten years ago that flax seed would sell so well as an important nutritional supplement from a position of complete historical neglect.  Likewise, there are many other seeds and oils which are gaining traction.  However, science and technology based enterprises in this sector are still much lesser.  One good example of the seriousness of the situation is the extreme lack of value addition even in those crops in which we have near monopoly, e.g., psyllium [isabgul husk].  I have been tracking Indian patents in US in five major commercial crops of Gujarat for last 15 years.  We have not moved beyond the number countable on fingers.

The disconnect between primary production and in-situ value addition cannot be allowed to continue for too long.   Indian farmers will never get good price if they do not move up the value chain.  Distributed manufacturing is imperative.  A whole range of policies need to be changed with regard to targeted research, postgraduate fellowships for product development, grants for early stage product testing, design and certification, etc.,  liberal and extremely concessional access to lab facilities of public sector R&D institutions.  Dharwad University of Agricultural Sciences had pioneered a very promising model of enterprise development  by offering the facilities including access to university labs at a very nominal cost.  The advantage was that entrepreneur got students workforce without much cost to fast track product development.  And the students got real life experience of working in a startup and learn about agility in decision-making and persistence in deep research.   Dr. Patil, then Vice Chancellor saw the advantage for the education and research by getting well trained professionals to locate their enterprises in the university premises.   We need to go several steps forward.  If graduates trained abroad want to come back and set up their enterprises, they should be provided concessional facilities along with grants to take up risky projects.  Similarly Indian students should have similar facilities.   Professors should be encouraged to hold equity in the students’ enterprises if mutually acceptable.  The IP of university-funded research should be licensed to entrepreneurs for three years without any cost.  If the enterprise does not go forward, the IP reverts to the institute or the university.   If it does become viable, then university takes 10 to 15 per cent stake.

Ideally, students should be encouraged to have their own IP with no restriction from the concerned technical institution.  There is hardly any scheme of investing in the students projects which have an entrepreneurial promise.  A group of eminent scholars and entrepreneurs can process all requests for such support in a monthly meeting at state and in some cases even district level.  It is possible that some of the students  may not continue with the enterprise in which case the 90 per cent IP right will be transferred to any other student of the same institution who wants to setup the same enterprise.  The concerned student can keep ten per cent equity.  One can have many more flexible possibilities to encourage entrepreneurship development at the student stage itself.  Given the opportunity costs of secured job and insecure returns from enterprises, it is not surprising that so few students pursue entrepreneurial path.   We have to make it not only attractive but also less risky to start enterprises.   Early start at students stage involves minimal risks and less stigma on failure.  Ultimately, the entrepreneurial failure should invoke no stigma at all.   In fact, entrepreneurial experience should qualify such once-failed students to get preference in second or third round of funding.  It is well known that public agencies like BIRAC, DBT will have to be created in agriculture and food sectors also.  With proper guidance and MOOCs, a very significant increase can take place both in filing patents but also in setting up social and economic enterprises in agri and food sectors.  Since students will not be able to afford to capital investment in the beginning, concessional access to university infrastructure is imperative.

I hope we will see a much more agile and responsive policy design and implementation support system in the forthcoming startup policy.   India has already pioneered Micro Venture Innovation Fund through NIF.  Similar fund need to be created in different academic/ developmental/ infrastructural institutions.  Railway should have its own fund to invest in new designers of containers for transportation of agri and food products and so should other ministries and institutions do so.  Food Processing and Agriculture Ministry should have innovation fund to invest in new packaging technologies using bio materials to completely eliminate plastics playing havoc with sanitation programme.  The platforms like techpedia.sristi.orgcan be created for agricultural and food processing projects as well.  The entire value chain must become attractive arena for innovation and entrepreneurship.  The unemployed rural youth should also be brought into the fold of such a policy.  Next week, I will deal with manufacturing of electrical and electronic products through distributed labs, testing facilities and manufacturing hubs.