The litmus test for the new government will be whether it can propel the country towards a manufacturing-dominant economy, bring in a new wave of semiconductor companies and enable AI development
Key startup ecosystem stakeholders believe companies and government policy need to focus on job creation even as they look to improve India’s SDG ranking
While the government has announced big budget projects for AI, industry players believe that the AI policy needs to be shaped like the Startup India policy
With India all set to get a new government with the conclusion of the 2024 Lok Sabha Elections, all eyes in the country are on what the next five years will bring.
The results of the General Elections are also material to the startup ecosystem, especially because the next five years will require a major push on economic growth engines — particularly given the larger goals of reaching a $5 Tn economy by 2030 or even higher.
Besides this, there are the sustainable development goals for 2030, under which the government is looking to have 30% private electric cars, 40% electric buses, and 80% electric two-wheelers and three wheelers on Indian roads by 2030.
These are goals that would require concerted efforts on the policy and enablement side, no matter which party is in power or which leaders are in charge of key ministries.
In all likelihood, the final results of the elections will remain consistent with lead trends which indicate another term of the incumbent ruling party.
But for the Indian economy and the startup ecosystem, the litmus test for the new government will be whether it can propel the country towards a manufacturing-dominant economy, bring in a new wave of semiconductor companies and enable AI development.
In the pursuit to become a manufacturing powerhouse, India has stepped into chip making and electric vehicle manufacturing by offering incentives to woo global players in the sectors. But what about the next five years — what are the broad expectations of the startup ecosystem in this regard?
Inc42 talked to some unicorn founders and fund managers to gauge their expectations from the new government for the next five years across sectors. While it may be too early to call for large reforms — since the key ministries are yet to be assigned — we can see a couple of major trends.
Fewer Regulatory Mazes
The first being regulatory clarity and a more predictable path for regulations going forward.
“Make regulatory agencies less coercive in nature, every small default does not indicate a fraud, with the collection process of TDS, PF, ESI, GST becoming so strict, when receivables are delayed due to genuine reasons, there should be a lenient approach of nominal fines with no future repercussions as long as the default is of a short period of time,” said Amit Prasad, founder and CEO of SatNav Technologies.
He added that at times the language of government communication is alarming. Even minor violations or routine inquiries are called show-cause notices or demand notices, which creates a lot of panic among younger founders.
Bigger Focus On Climate Resilience
Besides regulations, key ecosystem stakeholders believe companies and government policy need to focus on job creation even as they look to improve India’s SDG ranking.
Pranav Pai, founding partner of 3one4 Capital, believes that because startups are already one step ahead of traditional businesses, many startup models are aligned with commitments on sustainability and improving job opportunities.
Speaking to Inc42, Pai added, “Indian startups have unambiguously contributed to the highest economic and social priorities of the country from job creation to IP development. It has given confidence to young aspirants, and the road to 2030 will involve startups even more to help the country achieve its economic and SDG targets.”
A key part of the SDG goals will be the transition to electric vehicles. Today, India is an EV two-wheeler nation, driven by commercial usage. For instance, Zypp Electric, which recently raised funds from energy giant ENEOS, has made deep inroads into the hyperlocal delivery segment. Similar models need to be explored and developed for electric cars and heavy vehicles such as electric buses.
Akash Gupta, cofounder and CEO of Zypp Electric, told us, “With increasing governmental support, infrastructural advancements, and growing consumer awareness, the next five years hold immense potential for the electric vehicle sector.”
Making The Most Of The AI Opportunity
Finally, there’s a big focus on AI, even beyond the hype of the past year. From a long-term perspective, AI will change many key sectors such as healthcare, BFSI, education, digital commerce in a big way. And while the government has announced big budget projects for AI, many of those we spoke to believe that the AI policy needs to be shaped like the Startup India policy.
One Bengaluru-based founder told us the government needs to focus on AI as an opportunity rather than a hurdle. A policy that is opportunity-friendly will unlock major economic growth and is linked to India’s ambitions in the semiconductor and robotics industry. “If India is making chips for the world, the usage of those chips also needs to be streamlined so that India is also a customer for the Indian companies in the semiconductor space,” the founder added.
Others such as Pai believe that startups need to align on a national mission that looks to leverage the use of indigenously developed AI products to improve economic and social productivity. “If a national AI agenda is set, similar to Digital India, Startup India, and Make in India, we are sure to see Indian startups rally and make this a success,” he noted.
