Can India Start-up Its Startups?

Two years have elapsed under Indian Prime Minister Modi’s administration.  This anniversary has been greeted by a flurry of commentary – on many aspects of legislative strategy, muscular diplomacy, and its penchant for branded programs – and of course by the administration’s own celebratory interim-victory-lap.

But I’ll concern myself only with an important centerpiece of the Modi government’s policies, a desire to empower individuals to make their own economic decisions.  This in turn has many dimensions, for example, the launch of Jan Dhan Yojana for financial inclusion, addressing the challenges of the education sector, and firing up entrepreneurship.

In fact, in a short post, I’ll comment only on this last piece, that is, on whether we’re on the right path to startup startups.  Are we adequately creating the "infrastructure" that will enable creativity by individuals?  I’m informed by my own startup efforts as well as by a ringside view as Chair of Niti Aayog’s Expert Committee on Innovation and Entrepreneurship.

The committee’s report provided structure to the Atal Innovation Mission (AIM), which Finance Minister Jaitley had first mentioned in the 2015 budget speech. AIM is now overseen by the recently-appointed CEO of Niti Aayog, Amitabh Kant, a senior bureaucrat with an impeccable track record. It has been capitalized with adequate money to begin its tasks, and has made its first announcements on incubators, so-called tinkering labs (places attached to high schools or universities where one get one’s hands dirty making things), and Grand Challenges (big prize money offered to inventors who make ambitious and pre-specified technical advances most effectively).  Over time, these need to be elaborated and linked together, but, at least for now, we’re off to the races!

Of course, the country is blessed with lots of other efforts pursuing entrepreneurship-related activities, publicly and privately orchestrated networks of startups, and by myriad state government and ministry-led efforts to similarly propel entrepreneurship in particular states or sectors of the economy.  AIM will seek to complement these, not replace them.  I’m of the view that while the policies sometimes seem duplicative (e.g., there are many efforts to use “challenge” prize money to induce effort in particular directions), there is room for many such experiments at creating infrastructure for startups. The more effective ones should be allowed to persist, and they should all inform one another.

There are also legacy efforts, for example, in building incubators over past two or more decades. A textbook approach would shut down the poorly-run ones immediately. But this is a contested process, as these incubators are inevitably quite entrenched in their local economies, and it seems to be easier to address these pockets-of-inefficiency by creating competition through new structures.   Let the new incubators out-compete the poorly run ones, rather than expend scarce energy in first shutting down poor structures and then launching new ones.

So far, so good.  There is, however, one area where there is limited progress having to do with science and startups.  Remember that Finance Minister Jaitley intended AIM to support innovation through science. This is a hydra-headed issue again, not just having to do with startups. For example, we’d need to invest significantly in publicly funded science in India, address the governance of our universities, address issues related to the protection of intellectual property and so on. But, back to startups first.

Our existing labs need to be plugged into the industrial and commercial environment, so that there is so-called translational research.  As a template of what we should be doing much more, take the example of the life-sciences industry (Indian startups are disproportionately in IT and mobile commerce, but attention is desperately needed in other sectors).  Here, Department of Biotechnology (DBT), the reputable academic institutions (NCBS, National Center for Biological Research; and IISc, Indian Institute of Science), and the newly setup innovation hub and incubator (Centre for Cellular and Molecular Platforms, C-CAMP) are forming exactly the right kind of cluster, feeding into the life-sciences industry burgeoning in Bangalore.  Imagine what we could do if we took all the state-funded laboratories and helped connect them to industry?  To get a sense of this potential, look at the reach of the dozens of laboratories and research institutes run under the Center for Scientific and Industrial Research (CSIR), and imagine plugging them considerably more into industry.

These are primarily comments on public good investments in the underlying infrastructure to start-up startups. It’s wishful thinking to expect that these will change startup activity immediately. But some aspects can bear fruit in just a few years, through better run incubator networks and tinkering labs in the country.  The science will deliver over the next decade, but we have to get cracking now.

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