<img class="gwt-Image" src="/photo/50075403.cms" />India is a rich admixture of some of the world’s most brilliant, creative and technical minds, who have all the capabilities and potential to create the next Google or the next biggest innovation driven global company. 
 
India is a battery of venture capital firms, which are making a beeline to capitalize on the growth story but will creating a Google in India be a reality? May be, or maybe not. 
 
An eternal optimist would always search for the light at the end of the tunnel. An inveterate pessimist would see that as the light of an on-coming engine, while an unassuming realist would search for his torch light to make his way through the darkness. 
 
Sunny Side up 
 
Keen observers of the startup space in India fall under these three categories. As someone who heads a startup in the fin-tech space and serves as a mentor to upcoming startups, I am bound to don the hat of someone who sees developments in this space ‘Sunny side up’. The numbers justify optimism. With more than 4,200 new-age companies, India has overtaken Israel to grab the third position among global startup ecosystems, behind US and the UK. A report by NASSCOM, startups have created more than 80,000 jobs so far and can create 2,50,000 jobs if their number balloons to 11,500 by 2020. 
 
There has been no dearth of funding with VCCEdge data revealing the tripling of angel and seed investments from $30 million in Q3 CY2014 to $94 million in Q3 CY2015. Add to it, the ‘Startup India, Standup India’ slogan coined by Prime Minister Narendra Modi has led to States like Telangana, Rajasthan, Uttar Pradesh and Karnataka competing to develop startup policies and offer infrastructural support like that of incubators and co-working spaces. 
 
But the reality is… 
A study conducted by Kauffman Foundation in 2012-13 observed that 33.2% of co-founders of tech firms founded by immigrants in the US were Indians. While we take pride in the fact that the CEOs of global behemoths such as Google, Microsoft and MasterCard, among many others, are Indians who migrated to the US, we should really be asking ourselves if they would have reached the pinnacle of their career had they stayed in India and started something of their own. 
 
India is being ranked 130 out of 189 countries in the ease of doing business index which validates the quote by Chairman Google Eric Schmidt “Problem is not with Indians, but with India.” What are the ground hurdles that are resulting in a prospective Indian Google being nipped in the bud and a possible Brain Drain 2.0? 
 
The need for an Innovation Ecosystem 
It all starts with the education system, which has given birth to technical geniuses albeit via rote learning. It is a system that does not encourage failure which then seeps into societal norms of measuring success on the parameters of the education degrees one holds and the monthly salary that gets credited. Innovation needs minds that are receptive to knowledge and are unhindered by socio-economic constraints. 
 
Till the time this change in mindset comes about, college drop outs or those who sit out of B-school placements who venture into entrepreneurship to set up the Indian Google will continue to be seen as failures and this places a very high emotional burden if there is no family backing. 
 
Difficulties in setting up shop 
If an Indian Google were to open shop in India, the bureaucratic procedures from getting the company name registered, to the tax regulations, every procedure will take weeks when compared to a few hours in developed markets. All this administrative hassle is bound to consume at least 20% of founders’ time and efforts. 
 
Regulatory hurdles while raising money and doing business 
To raise various rounds of funding, co-founders of India’s Google would first need to get a Chartered Accountant or a Merchant Banker to issue a valuation certificate. The equity premium will be considered as income in the company and hence be made liable to pay income tax. And there is a clause that makes the promoter(s) liable to pay a fine of a minimum of Rs 2 crore or the investment amount; whichever is higher in the event of any inadvertent mistake is something that merits urgent attention. 
 
If venture capital is raised from investors abroad, the promoters have to contend with a host of RBI compliances, FEMA regulations besides the ROC regulations. They will not be allowed to communicate to the RBI directly, but go through authorized dealer bank. The RBI, however, can send them direct notices. 
 
For international sales, the company may opt for a set up in a Special Economic Zone (SEZ) or Software Technology Park (STPI). If it chooses operations in an SEZ, every single foreign invoice will need to be reported to the SEZ along with full detailed paper work. For their domestic sales, the company runs the risk of being asked to invoice domestic clients in dollars, thereby throwing a spanner in the works and forcing it to either consider moving out of the SEZ or opening another unit for domestic sales. 
 
Difficulties in scaling up 
Like most early stage businesses, India’s Google will have to start with smaller clients who will ask for free trials, customizations and white labeling/exclusivity. It will be made to negotiate contracts at the lowest price until its differentiation is truly innovative and not replicated by fellow competitors. Failing which, it would take years for it to break even and step up to larger clients with a higher ticket size. 
 
No company can scale up without a pool of talented human resources. While it is easy to get cost efficient talent in India, it is a colossal task to hire and retain the best talent. While 12 million people join the workforce every year in India, a FICCI-E&amp;Y Survey (2011) revealed that it is only 25% who are considered “employable”, and possibly less than 1% may have what it takes to be at Google. 
 
With high rates of attrition in the technology space, India’s Google will need to ensure no employee takes away the company’s IP to a competitor. Given that such breaches are not very well defined in the legal system and that securing patents is a challenge (About 2.46 lakh patent applications and 5.32 lakh trademark registrations are pending with the government due to shortage of manpower), this is another loophole needs to be plugged. 
 
During the scale up of operations and businesses, the directors of growth stage firms are highly likely to be summoned by various authorities (Income Tax, etc.) for explanations of their profits, losses, which are likely to be all clean banking transactions. Such harassment is common and disheartening for most Indian entrepreneurs. 
 
Startup Act 
In an attempt to improve the ease of doing business for startups, there is talk of a 2-page Startup Act that will distill and simplify 22 different laws together. 
 
While I sincerely hope it works, I wonder why we have distinct 22 laws in the first place. Why don’t we simplify and rationalize the business environment for all? Is it even possible to distill 22 laws into 2 pages? 
 
In a nutshell 
All the above highlighted issues are a few examples of a complicated working environment in India. While our government campaigns worldwide for companies to come and “Make in India”, we are seeing many startups goaded by VCs to move their setup outside India to a country with a more predictable regulatory regime in order to parry the problems discussed above (example Flipkart, Grofers etc.). This coupled with public listings of Indian companies in foreign exchanges had led to a loss to India’s exchequer (example MakeMyTrip). 
 
The pessimist in me believes that even after 20 years, the search for India’s Google will not be successful. The optimist in me does sees the potential and promise in the regulatory reforms which are afoot, while the realist in me makes me see every day as an opportunity to ideate and create something new – with a bit of Jugaad, a step to create something cutting edge. 
 
As the saying goes, “it’s never as good as you want it to be, but never as bad as it seems”. 
 
(Kunal Nandwani is the Founder and CEO of uTrade Solutions)

Why a Google may never be founded in India

<img class="gwt-Image" src="/photo/49563328.cms" />India improved its ranking in <a href="http://www.businessinsider.in/searchresult.cms?query=ease+of+doing+business" target="_BLANK￿￿￿￿">ease of doing business index</a> and jumped 12 ranks to 130th spot, the <a href="http://www.businessinsider.in/searchresult.cms?query=world+bank" target="_BLANK￿￿￿￿">World Bank</a> said it is not impossible for the country to be in the top 100. 
 <keyword id="6354424" type="ORGANIZATION" weightage="20" keywordseo="World-Bank">World Bank</keyword> Chief Economist and Senior Vice President Kaushik Basu said if India continues with its economic reforms, like the <a href="http://www.businessinsider.in/searchresult.cms?query=goods+and+services+tax" target="_BLANK￿￿￿￿">Goods and Services Tax</a>, and erases bureaucratic cost of doing business, it would not be impossible for India to rank in top 100. 
 
"There are countries which have moved 30-40 places at one go, but usually these are small countries. For a big economy like India, it is difficult, but from what we have seen thus far, it is not impossible," Basu. 
 
While Basu lauded the reforms in India and said India had a reasonably substantial movement in the first year itself, he felt the country has a long way to go. 
 
"There is a lot of serious interest in India to cut down bureaucratic costs of doing business for small and medium-sized firms. It is important however to recognise that this is just a start. There is still a long way to go," he said. 
 
So what are the areas where India needs improvement? 
1. According to Basu, India needs to trim transactions costs and the bureaucratic hurdles it places on individuals and small enterprises. 
2. The top economist said India required better infrastructure-roadways, railways and ports and the improvement, which has begun, should be continued. 
3. Basu says India needs inclusiveness as it is a diverse society and policies should be there so that all groups feel included. "In the World Bank's table of growth projections for major economies in the world India is topping the list for this the next year. Something similar is true of IMF projections. I do not think this has happened before. The <keyword id="6356076" type="UNKNOWN" weightage="20" keywordseo="indian-economy">Indian economy</keyword> has some deep strengths and must continue to build on them," he said. 
 
Basu also weighed on the importance of GST. 
 
"If, India can move so that by next year, after the budget, you have a GST in place, which can make a very big difference. It will not be a perfect GST to start with but it should be possible to make amendments and improve it over time," he said. 
 
(Image: Thinkstock)

Here’s why World Bank thinks India can make it in top 100 of ease of doing business index

<img class="gwt-Image" src="/photo/49566910.cms" /> Small steps taken by the <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> government to improve <keyword id="6354423" type="UNKNOWN" weightage="20" keywordseo="Ease-of-Doing-Business">ease of doing business</keyword> in the country seem to be paying off. India has jumped 12 positions in <a href="http://www.businessinsider.in/Heres-why-World-Bank-thinks-India-can-make-it-in-top-100-of-ease-of-doing-business-index/articleshow/49563300.cms">World Bank’s this year’s list </a>in which countries are ranked on their ease of doing businesses. 
 
From last year’s 142 slot, India has jumped to 130 this year. Singapore, New Zealand and Denmark have occupied the first three spots in the list. 
 <keyword id="6391107" type="ORGANIZATION" weightage="20" keywordseo="DIPP">DIPP</keyword> secretary <keyword id="6358887" type="PERSON" weightage="20" keywordseo="Amitabh-Kant">Amitabh Kant</keyword> said that he is hopeful of being named into top 50 in the coming three years. Kant further added, "We have reversed the trend by moving up and no country has moved 12 spots in a year. Major reforms are going to kick in from next year which will further improve our position.” 
 State Bank of India’s chief economic officer, <keyword id="6448502" type="PERSON" weightage="20" keywordseo="Soumya-Kanti-Ghosh">Soumya Kanti Ghosh</keyword> said, "Government has taken a lot of micro steps in the last one year and some reforms have been politically sensitive. States have also got into action...if we continue moving up the ranks at this pace we can break into the top 100 very soon." 
 
The <a href="http://www.businessinsider.in/searchresult.cms?query=World+Bank">World Bank</a> report also says that among all other countries, India is the one that have made maximum improvements. "India is the South Asian economy recording the biggest increase in the distance to frontier score since 2004," mentioned the report. It also took note of India’s move to cut down days take to start business. 
 
As per the report, the biggest advancement into the Indian set-up of doing business was to give power to businesses which has taken India's ranking from 99 in 2015 to 70 in 2016. 
 
Prime Minister Narendra Modi has set a target of breaking into top 50 in this ranking. Based on the business environment in the cities, the ranking has given 53 and 47 weightage to Delhi and Mumbai respectively. 
 
The report also mentioned India’s move of eliminating the minimum capital requirement and the need to obtain a certificate to commence business operations. 
 
"The utility in Delhi made the process for getting an electricity connection simpler and faster by eliminating the internal wiring inspection by the Electrical Inspectorate. The utility in Mumbai reduced the procedures and time required to connect to electricity by improving internal work processes and coordination," the report noted flagging two areas of improvement. 
Image: indiatimes

Ease of doing business: India ranks 130 in World Bank report

<img class="gwt-Image" src="/photo/50244886.cms" /> The Goods and <keyword id="645517" type="COMPANY" weightage="100" keywordseo="services-tax">Services Tax</keyword> (<keyword id="6354679" type="ORGANIZATION" weightage="100" keywordseo="GST">GST</keyword>) Bill may not go through in the current sessions of Parliament, indicated Finance Minister <keyword id="42575" type="PERSON" weightage="100" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>, explaining that it is being delayed for collateral reasons. 

	"A delayed GST is better than a flawed GST," he said.
 

	However, the Minister added that the government will push for other reform bills in the Rajya Sabha in the remaining three days of the Winter Session, which ends on Wednesday.
 

	The bills include amendment to the Arbitration and Conciliation Act, a legislation to set up commercial courts and bankruptcy code.
 

	Politics should not become a hurdle to larger interest of the country, he said, adding that it would not be possible for the government to accept Congress party's demand of prescribing GST tariff in the Constitution itself.
 

	The GST Bill is stuck in the Rajya Sabha where the ruling NDA government does not have a majority as well as stiff opposition by the Congress.
 

	The government had planned to roll out GST from April 1, 2016.
 

	The Bill that is being touted as the biggest reform in indirect taxation since Independence is unlikely to be taken in the remaining three days of the Winter Session.
 The <keyword id="6355187" type="ORGANIZATION" weightage="100" keywordseo="Lok-Sabha">Lok Sabha</keyword> has already passed the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill and Arbitration and Conciliation (Amendment) Bill. 

	These are likely to be taken up in the Rajya Sabha next week.
 

	Regretting that some people get sadistic pleasure in seeing India slowing down, Jaitley said, "but then it's a sadistic pleasure at a very severe national cost. We cannot allow that. 
 

	"There is no point saying that 'GST is good and we brought in the GST proposal, but', I think this 'but' is a terrible phrase as far as Indian politics is concerned." 
 

	The biggest challenge at the moment is to get the Indian politics to support the economic reforms in the midst of the global slowdown, he said, adding that the endeavour should be to overcome political obstacles coming in the way of growth. 
 "Is the Indian politics going to be a support in this adverse global situation, to add the extra per cent or two to our current level of <keyword id="35050" type="CITY" weightage="100" keywordseo="gdp">GDP</keyword> or is it going to be an obstacle?" Jaitley said. 

	The Minister added that he would "still urge and persuade them (Opposition) to give up their rigidity on Constitutionally prescribed tariffs (for GST). 
 

	"Constitution prescribed tariffs actually can be an albatross around the neck of the future generation. And we owe it to them not to create situations of this kind." 
 

	Jaitley further said "we have three days of Parliament left. (They) are extremely crucial and I am going to try and push some of these (reforms). 
 

	"These are important pieces of reforms which we are going to try and I hope nobody tries to hurt the country's interest by again invoking the word 'but'." 
 

	Referring to the Arbitration and Conciliation Bill, which will go to the Rajya Sabha for approval, the Minister said "in terms of ease of doing business, India has almost ceased to be a centre for dispute adjudication and arbitration and we have to bring it back.
 

	"The Arbitration Act, which provides for a fast-track mechanism with a single member and an outer time period of 6 months to compete adjudication, was passed by Lok Sabha and will come up in these 3 days before the Parliament."
 

	Regarding the Commercial Disputes Resolution Bill, he said it seeks to expedite resolution of such disputes which remain pending in courts for years and decades.

	 
	 
	(Image credits: indiatimes)

Delayed GST better than flawed GST: FM Arun Jaitley

<img class="gwt-Image" src="/photo/30662093.cms" />This month’s announcement of Indian-born <keyword id="276564" type="PERSON" weightage="40" keywordseo="Satya-Nadella">Satya Nadella</keyword>’s elevation to the top job at <keyword id="10387" type="CITY" weightage="40" keywordseo="Microsoft">Microsoft</keyword> has triggered some soul-searching among the Indian intelligentsia about how the best and the brightest from India tend to leave for foreign shores in search of better opportunities, instead of investing their intellectual capital at home. 
 A country of 1.2 billion with some crucial problems like poverty, illiteracy, <keyword id="6358907" type="ORGANIZATION" weightage="40" keywordseo="unemployment">unemployment</keyword> and lack of public health facilities, India needs innovation at the grassroots, and as a corollary, an ecosystem that supports such innovation where it is needed most. 
 
Partnerships, not prescriptions 
In the past, India would have looked for aid from developed countries, which would be willing to provide it, along with a lengthy list of prescriptions on how and where that money should be used. 
 Happily, that model has given way to a new range of partnerships between leading Indian and foreign organisations, where Indians are innovating right here at home. One such partnership is the Stanford-India Biodesign Program (SIB), which was set up in 2001. Since its inception, it has focused on developing medical devices that solve specific challenges seen in the Indian scenario. A three-way collaboration of Stanford University, IIT-Delhi and the <keyword id="6365231" type="ORGANIZATION" weightage="40" keywordseo="All-India-Institute-of-Medical-Sciences">All India Institute of Medical Sciences</keyword> (AIIMS), this programme stands out due to shared technological expertise and joint <keyword id="6357455" type="EVENT" weightage="40" keywordseo="Funding">funding</keyword> that comes from the <keyword id="44734" type="ORGANIZATION" weightage="40" keywordseo="Indian-Government">Indian government</keyword> and US sources. 
 But the SIB programme, supported by Indo-US governmental efforts, is not the most revolutionary aspect of India’s changing innovation ecosystem. Some of the current developments are even more encouraging. For instance, there is <keyword id="6355629" type="CITY" weightage="40" keywordseo="Google">Google</keyword>’s Impact Challenge and last year, the Internet giant funded a few social innovations in the country for the first time. 
 
From integrated water and sanitation systems for rural India to motorbike-borne science labs to get rural Indian kids excited about pursuing science and technology, Indians are being given a chance to determine their own innovation priorities and how to go about it. Consequently, an Indian Norman Borlaug may now use a homegrown innovation to benefit the entire mankind. 
 
A desi model Indians also have to be smart about innovating things the Indian way. Leveraging global benchmarks such as <keyword id="6357097" type="COMPANY" weightage="40" keywordseo="venture-capital">venture capital</keyword>, ease of doing business (India currently ranks an unenviable 134th in this area), <keyword id="388837" type="UNKNOWN" weightage="40" keywordseo="intellectual-property">intellectual property</keyword> protection and market access is important, but just copying another country’s model will also have its pitfalls. 
 So it is extremely unlikely that anyone but <keyword id="6360722" type="PERSON" weightage="40" keywordseo="ratan-tata">Ratan Tata</keyword> would have been able to realise his dream of <keyword id="28810" type="PERSON" weightage="40" keywordseo="Nano">Nano</keyword>, the super low-cost car. Tata had the capital to back such R&amp;D and the organisation to endure the legal and political battles that accompany any large industrial project in this country. There is a reason why we can’t produce another <keyword id="6355315" type="PERSON" weightage="40" keywordseo="Elon-Musk">Elon Musk</keyword> in India. But even he had to move from South Africa to the US to pursue his dreams. 
 
However, we can and have produced a Phanindra Sama, founder of redBus, an online booking site for inter-city buses that largely operate in the unorganised sector but carry millions of passengers daily. India’s large pool of IT-savvy professionals is a cliché but it took Sama’s imagination and a few millions from India’s growing VC community to create long-term value. 
 
Unlike Sama, Mansukhbhai Prajapati does not figure on VC watch lists. But that doesn’t make his invention of a clay fridge called Mitticool (it needs no electricity) is any less cool. Frugal innovation is the buzzword when it comes to grassroots innovation in India and it is being championed by its very own Vinod Khosla, Professor Anil Gupta and his Honey Bee Network. E.F. Schumacher’s ‘small is beautiful’ principle is driving a new model of Indian low-cost, but high-impact innovations. 
 
Another benefit of flying under the radar with such innovations is that they don’t run into the typical problems of red tape and special interests that seem to bedevil the ‘big bang’ approach to innovation, where scale becomes a pre-condition for success. 
 
Implementation beats intent 
India is no different from other countries when it comes to the biggest enemy of innovation – poor implementation. When the world’s cheapest tablet Aakash was announced, most of us expected a grand repeat of the success we had with Nano. The Indian government also jumped on the bandwagon but in hindsight, that was one of the reasons for failure. 
 
There is a cautionary tale here for the well-intentioned folks who advocate massive institutional support for specific innovations. That can sometimes make innovators cocky or worse, sloppy, as a lessening of the fear of failure sometimes creates the conditions for falling short. 
 
Institutions need to contribute in order to strengthen the ecosystem – it should be their dharma. Leave it to the Indian innovator to do the rest. 
 
Image: ThinkStock

You Searched For "ease of doing business India" and got 6 results

Why a Google may never be founded in India

Kunal Nandwani

Here’s why World Bank thinks India can make it in top 100 of ease of doing business index

BI India Bureau

Ease of doing business: India ranks 130 in World Bank report

BI India Bureau

Delayed GST better than flawed GST: FM Arun Jaitley

BI India Bureau

How India Can Leverage The Innovation Philosophy

Preetam Kaushik

Full text of President Ram Nath Kovind's first address to the Parliament as the 17th Lok Sabha gets underway

BI India Bureau