Should Government Play the Role of a Watchdog or Police for Start­ups?

29-Jun-2016 07:39 am 0

Startups are new things. The declining number of jobs is prompting youngsters to become entrepreneurs. They don’t shy away from experimenting and making the most of their own thing considering the economy slowdown that has been prevalent.

The start-up sector in India is still at a nascent stage. Start-ups can create jobs that India needs. Our start-up sector has the potential to be 10x the size of that of US market. Yet the real position of India in global start-up market should be first as compared to the third position as of last year.

The current start-up ecosystem in India is much vibrant as compared to what it was in the UPA-2 era. The government has taken proactive steps in promoting entrepreneurship in the country. Yet the dark truth is that getting funded for an idea and kick-starting a start-up is TOUGH!

Gone are the days of I have an idea and I will be funded. The lack of support of the government in many spheres is making it a tough nut to crack. This has resulted in a clan of entrepreneurs calls Shadow Entrepreneurs and India has second highest of them in the world. They are the ones that do not rely on the government for any kind of help.

The government should not play police in any way for the start-ups. This is never going to favor the bussing entrepreneurs. Instead, being a watchdog will help to set things right for the start-up ecosystem.

What needs to be done by the government to guard the start-up ecosystem?

  • The government needs to encourage the culture on which start-up depends and that is – Investors. There is a dire need to encourage investors and fund raising. That would happen if the government will back the investment matching programs for the benefits of investors and start-ups equally. The government can act as a watchdog by implementing favorable angel funding laws and guard the investors. Govt. can cues from Singapore or Chile government for that matter.
  • The government should enable easy taxation and infrastructure. Enable the enablers.
  • The government needs to let go of its ‘police play’ and step back a little. Instead of getting into the scene, it should guard by moving behind the scene. Enable the start-ups and become their backbone by creating a favorable environment for them.
  • The government needs to ease the whole start-up process by facilitating zero compliance until they achieve something substantial. Making sure that capital, debt and infrastructure needs are met for the start-up will be appreciable.
  • Our country has weird rules for start-ups. They get only equity and not debt. Our banking system doesn’t lend to start-ups. This has to change!
  • The banking system needs to involve and become the support of the start-ups. The government can amend the old banking laws by creating a new association which recognizes the worth of a start-up and provide loans.
  • The local and political pressures should be lifted. This is something the govt. needs to make sure not by being police but a sincere watchdog.
  • It is high time that clarity in taxation laws needed.

What next?

The start-up ecosystem breeds new innovation and solutions and can take risks, unlike large businesses. All they need is the support from government to take them seriously. It is the time that government should stop acting like a police and start protecting the interests of start-ups with feasible laws and growing environment.

Summary
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Should Government Play the Role of a Watchdog or Police for Start­ups?
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Startups are new things. The declining number of jobs is prompting youngsters to become entrepreneurs. They don’t shy away from experimenting and making the most of their own thing considering the economy slowdown that has been prevalent.
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