The government has to be commended for prioritising digital technologies. A host of exponential technologies creates opportunities for entrepreneurs to start businesses in every industry sector. It is the combination of technology with a reimagined business model that will transform each sector.
In e-commerce, Flipkart and Snapdeal have largely focused on consumer products for the well-to-do. The real opportunity is to address the needs of people who will soon be coming online. New marketplaces need to be built. Apps are needed by which sweet shops and restaurants can showcase their products and take orders from neighbourhood customers. Local merchants need the tools to provide the same types of one-hour delivery service that Amazon and Google are launching in US cities.
The golden bottom of pyramid
Sharing economy: Uber showed Indian entrepreneurs that app-based ride-sharing was practical even in India’s chaotic cities. But Uber, too, targeted high-end customers. The bigger opportunities will be to share rides in three-wheelers, cycle rickshaws and buses. Technology can also facilitate the hiring of workers in the informal economy through automation. Also needed are apps for tractor-sharing, home rentals, bike-sharing and seed swaps.
Health apps and devices: Inexpensive sensors can be connected to smartphones and tablets to provide accurate medical devices. That is what Kanav Kohol did with the Swasthya Slate, a R40,000 ($650) device with 33 sensors for blood pressure, blood sugar, heart rate, haemoglobin, urine protein, and diseases such as HIV, syphilis, dengue fever and malaria. Using the artificial intelligence-based apps that come with it, health workers are providing life-saving medical care to 2.5 million people.
App-based public services: Whether for booking railway tickets and monitoring train arrival times, or for analysing government productivity and efficiency data, virtually every aspect of government services can be improved through measurement, monitoring and automation. Entrepreneurs can take a key role in modernising governance and use technology to stem corruption.
Smart cities: Small, inexpensive, internet-connected sensors monitoring traffic patterns, air quality, noise, radiation levels and water quality can be used to manage pollution and waste, parking, traffic congestion, security and so on. Entrepreneurs can start building smart neighbourhoods and then smart cities.
Education: The government alone cannot fix India’s public schools. The only solution for them rests in using technology. XPrize Foundation has launched a $15m global competition to develop software to enable children to teach themselves basic reading, writing and arithmetic. Already there are tens of thousands of apps that can teach subjects. These need customisation for regional languages. Adaptive learning platforms also need to be built to serve the needs of individual students.
Agriculture: Smartphones can be used to educate farmers on how to improve crop yields and minimise use of chemicals. Social media can connect them to share experiences. Sensors can help monitor soil humidity and optimise watering. Supply chains can be optimised and on-farm diagnostic technologies can increase efficiency.
In all this, there is one area of significant concern – many successful startups are no longer Indian businesses. Even when venture capital (VC) funding arrives, the VC firms prefer the company to be registered outside India, for a number of reasons. Between central and state governments, it can take 30 to 60 days to start a business, much longer to set up a manufacturing facility. We can use the ease-of-business ranking to improve ourselves. In addition, many startups fail, yet it takes up to two years to close a business in India. We need a simple mechanism to close a failed business. We also need bankruptcy laws to allow failed businesses to restart in a safe mode.
Tax following premium
As startups move from round to round of funding, the valuation increases. This may allow some investors in earlier rounds to exit, especially angel investors. As the premium may be taxed at company level, the company does not benefit from higher valuation. This needs addressing.
As various funding rounds take place there must be flexibility for new investors. Government regulation limits foreign ownership of Indian companies and this severely curtails the flexibility for new investors to come in and existing investors to cash out. As capital flows have become global, we need to look at foreign direct investment rules and allow such investment into all sectors. The key is to keep the registered office in India.
We need to remove uncertainties about income tax and services tax. We need to simplify labour laws, including laws on contract employment. Temporary work is the norm, but we recognise only the higher-end jobs as legal temporary work. We need to provide physical infrastructure for new businesses. In the startup phase, companies have limited funding and want to spend on the product’s research and development, and on hiring and training people. Government must support the creation of incubators in city centres or prime locations where public transport is available.
We hope many of these issues will be addressed in the year ahead so that India truly becomes the best place to start a business and scale it.
This article was first published by Economic Times of India.