Many economists do not endorse the concept of startups in general; however, it is an undeniable fact that they contribute tremendously to the overall economic development in terms of innovation and employment generation. Many startups fail to succeed in the beginning or sometimes do not succeed at all. However, in reality, they are essential to promote competition in the economy. Some economies have managed to provide an ideal landscape for them to prosper. In this article, we will have a look at the growth trajectory adopted by the startup industry in India. In addition, we will also take into account the challenges faced by their economy and what lessons could we learn in order to boost the startup industry in Pakistan.
This is not the first time we’re broaching the inevitable comparison. In a feature we did last year, Why the Pakistani startup ecosystem is still lagging behind India we took into account a couple of factors where a change of scales is possible only by a little change in the mindset. However, in an ever dynamic sphere of the startup economy, it is always relevant to keep oneself abreast of the changing scenarios. So here we are again, taking a fresh take at the matter.
Startup landscape of India
India has been on its way to create an ideal entrepreneurial environment for startups to flourish as it began its Startup India initiative in full swing. This drive has made life easy for young entrepreneurs as starting a business has become very simple. They are facilitated with the help of a mobile app, a portal, reasonable legal support, and faster processing of patent examination at a much lower cost.
The government has allocated a massive sum of INR 10,000 crore for this project along with major tax exemptions for the first three years of business. These developments have encouraged the youth to execute their ideas while enhancing investors’ confidence simultaneously.
Moreover, there has been more coordination between industry players and academic institutions to transfer talent. Innovation centers have been built at many national institutes which are hosting incubation grand challenges to trigger competition.
The Indian startup market has seen significant growth during the last few years with more than 800 startups being established per annum. It is expected that by the year 2020, 11,500 startups will be established thus creating approximately 250,000 job opportunities in the country.
An Indian technology entrepreneur gave his opinion by stating:
“When the PM of the nation is directly involved in the movement as the poster person, it clearly makes an impact and builds trust across the movement. It is definitely helpful, especially in bringing more investments for us”
Another one from Mumbai said:
“One of the positive things that the Startup India initiative has done is that our parents now acknowledge and support what we are doing”
The biggest achievement of this startup program is that it has eliminated the reluctance offered by the consumer, investors and entrepreneurs. According to a research, the overall attitude towards entrepreneurship has changed for the better.
Some hurdles on the way
A few industry experts believe that the system still has some bottlenecks which need to be corrected such as lack of merit. It is definitely enabling more startups to establish but less is being done to scale young businesses to grow more. Indian experts also compare themselves to China and say that China’s impact of Silicon Valley is unimaginable.
According to a report published in The Nature stating that researchers and scientists marched in Bangalore, “lamenting their country’s low levels of funding for research and complaining about government promotion of ‘unscientific ideas’.” They were protesting and asking the government to increase the share of research in country’s GDP from 0.9 percent to 3 percent.
What can Pakistan learn from the Indian startup ecosystem?
Since majority of the population in the sub-continent share a similar socio-economic mindset thus a major initiative by the government is likely to make a huge difference in Pakistan as well. Such drive will not only attract entrepreneurs to take an initiative but also encourage institutes to take part.
Also, one cannot deny the importance of access to funds and incentives as they provide an easy platform for growth. However, such movement cannot be successful overnight as it requires the entire system to change along with the thinking process.
Startups in Pakistan
The startup culture in Pakistan is currently in its infancy stage despite the fact that many government agencies are supporting it. However, the number is still very low when compared with other countries.
We also have to applaud the efforts of Pakistani government which has announced some tax exemptions for these start-ups. These exemptions will be provided for first 3 years. However, there is a dire need for a dedicated Startup Pakistan drive.
So far, Pakistan has invested negligibly in the research and development area which hampers the growth of high profile startups. Pakistan’s expenditure on research and development in the overall economy is only 0.3 percent of GDP, way lower than 0.9 percent in India and more than 2 percent in China.
If Pakistan has to explore the true potential of its talent, a major startup drive needs to be initiated by the government so that the entire ecosystem can become conducive for growth.
Do you think startup industry in Pakistan will grow as time will go by?