Critical Analysis of Implementation of Start-up India Scheme

Introduction

Start-ups can have a substantial positive impact on employment, and disruptive technology can revitalize industries. By offering new knowledge-intensive products and services, start-ups can contribute to structural change, and new venture formation has been statistically related to both job creation and regional development. However, start-ups are recognized for having low survival rates, and starting a business entails a great deal of uncertainty about the future. Further the along with low survival rates a Start-up faces variety of challenges which may drastically affect its business. Some of the major challenges are as follows:

1. Financial resources:
   • Financing is important for companies, and obtaining sufficient funds is always a challenge.
   • Further as the start-up grows, the necessity of funds grows as well. Scaling a firm necessitates timely capital input. Hence for a start-up to succeed, proper cash management is essential.
   • Even though there are a variety of financing methods accessible, including family members, friends, loans, grants, angel money, venture capitalists, crowd fundraising, and so on, the Start-ups tend to fail due to lack of funds. According to a recent survey, 85 percent of new businesses are underfunded, indicating a high risk of failure.[1]
2. Supporting infrastructure
   • Incubators, science and technology parks, business development centres, and other support mechanisms play an important part in the lifespan of start-ups. The lack of such support mechanisms raises the likelihood of failure.
   • With India moving to a ‘techade’ technology is in the forefront of the Start-up industry. For tech-based start-up Internet is the necessary infrastructure.
   • Internet would not be concern in most of the states in India but the circumstances in Jammu and Kashmir are different, with constant Internet shut downs, innovative start-ups in the areas has been strangled to death. For example, Efruitmandi is an agritech start-up based out of Lassipora J & K, FastBeetle, a logistics start-up headquartered in Srinagar has been struggling to sustain in the market due to the Internet shutdowns.[2] In view of the political tensions, these start-ups are left without support.
3. Members of the team:
   • Each member in a start-up is usually trained in a specific area of operation. The first and most important prerequisite is to put up a solid team; failing to do so can occasionally lead to the startup failing.
   • Further trained team members are required for dealing with customers, and developing a market strategy since many founders have technical know-how, but lack business knowledge. Many are bootstrapped and start looking for investors to scale up their business.
4. Unclear Government Policies
   • Government processes are tedious, and they end up wasting time when regulations suddenly change. Setting up a business is also a lengthy process and to avail tax exemptions, one has to qualify under set definitions, which few start-ups fulfil. 
   • Further only 1 % of the start-ups receive the Tax Exemption benefits granted to them on account of stringent eligibility regulations.
   • Indian Private Equity and Venture Capital Association (IVCA) has recently proposed a new definition of start-ups for approval to the government. As per the proposal a company should be considered a start-up as long it is under 10 years.[3] In case such definition is accepted it will create tremendous benefits for the start-ups who have crossed the 3 years limit in India.
5. Lack of mentorship
   • One of the most serious issues in the Indian start-up environment is a lack of competent guidance and mentorship.
   • Most companies have great ideas and/or products, but lack the necessary industry, business, and market knowledge to bring them to market. It is a well-known fact that a fantastic concept can only succeed if it is implemented quickly.
   • Giving internal support through an incubator or having an accelerator’s on-site personnel assist them with practical challenges and provide support are two approaches to mentor. Seminars and workshops are also held by incubators and accelerators, where start-ups can engage and exchange their experiences.
6. Inadequate branding strategy:
   • Another factor that stops companies from growing at a faster rate is the lack of an effective branding plan.
   • Start-ups are at a disadvantage compared to big firms and customer retention becomes another challenge. Start-ups are also expected to come up with affordable solutions as customers are price-sensitive and expect discounts. 

Government Initiatives to boost Start-ups in India

In order to curb the growing difficulties and challenges to the Start-up Industry in India, the government has formulated some innovative schemes.

1. SAMRIDH Scheme: The SAMRIDH initiative aims to provide money to entrepreneurs and start-ups as well as assistance in bringing together skill sets that will help them grow successfully.
2. Startup India Seed Fund: Prime Minister Narendra Modi announced the formation of the INR 1,000 crore ‘Startup India Seed Fund’ on January 16, 2021, to assist start-ups and foster ideas from young entrepreneurs.
3. Pradhan Mantri Mudra Yojana (PMMY): Micro Units Development Refinance Agency (MUDRA) banks were established to improve lending access and encourage small business growth in rural areas.
4. Support for International Patent Protection in Electronics & Information Technology (SIP-EIT): This program helps MSMEs and technology start-ups file worldwide patents by providing financial assistance.
5. Credit Guarantee Fund Trust for Micro and Small Entreprises (CGTMSE): The CGTMSE was established to give zero-collateral business loans to micro-level firms, small-scale industries, and startups.
6. eBiz Portal : The portal was created to serve as a communication hub for Indian investors and business communities.
7. SETU: The SETU Fund (Self-Employment and Talent Use) is a non-profit organization that promotes self-employment and talent utilization.

Hence it can be noticed that, even though the government has formulated several schemes it is imminent that there is elimination of tax rules, and promotion of a more conducive atmosphere to boost employability and credibility in start-ups to provide long-term salaries for such workers are some proposals for its easy implementation.

[1] Derek ,Iwasiuk , “Key Challenges, Opportunities for Tech Startups in Emerging Markets,” Moneycontrol.com,2016, http://ventureburn.com/2016/08/key-challenges-opportunitiestech-startups-emerging-markets/.

[2] https://yourstory.com/2020/05/startup-bharat-weak-internet-infrastructure-disrupt-jammu-kashmir-startup-ecosystem/amp

[3] https://economictimes.indiatimes.com/tech/startups/startups-seek-new-definition-in-note-to-government/articleshow/89006978.cms