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India Currents gave me a voice in days I was very lost. Having my articles selected for publishing was very validating – Shailaja Dixit, Executive Director, Narika, Fremont

Supporting Entrepreneurs for Transformation And Upskilling

At a Bay Area event, India’s Minister for Commerce and Industry Piyush Goyal launched a bid to connect US-based investors and Silicon Valley business leaders with startups in India, through the SETU (Supporting Entrepreneurs for Transformation And Upskilling) initiative.  The reception, co-hosted by TiE (Silicon Valley) was held at the India Community Center in Milpitas on Tuesday, September 6.

Goyal invited investors from the Indian-American diaspora to take advantage of the huge domestic market and conducive business environment in the country, by partnering with startups.

The Indo-American partnerships will receive support from MAARG (Mentorship, Advisory, Assistance, Resilience, and Growth), via the mentorship portal of Startup India.

Indian Commerce and Industry Minister Piyush Goyal arrives at India Community Center (ICC) in Milpitas, greeted by Raj Desai, CEO of ICC and AGK Karunakaran, President of TiE Silicon Valley on Sep. 6, 2022. Photo: Sree Sripathy for India Currents/CatchLight Local.

India Becoming A Start-Up Destination

In his pitch, Goyal said India is now home to 75,000 startups. The country aspires to become the world’s number one start-up destination, and is set to become a $5 trillion economy by 2025. The Indian government has liberalized several sectors including defense, agriculture, coal, mining, and space technology and is seeking private investment in these sectors. 

SETU’s goal is to encourage domestic incorporations by startups that will set up India to become the top startup ecosystem in the world.

Start Ups Fail Without Investment

However, a major roadblock for success is that “90% of the startups and more than half of the well-funded startups fail in their early days,” said Goyal.

SETU could help fledgling startups to survive, by funneling mentorship and assistance for funding, market access, and commercialization from US -based investors, towards them.

Indian Minister Piyush Goyal responds to a question from the audience at India Community Center on Sep 6, 2022. Photo: Sree Sripathy for India Currents/CatchLight Local.

How Silicon Valley Can Support Indian Start Ups

Goyal chairs the Startup Advisory Council of India (NSAC) which advises the Indian government on building a startup ecosystem to nurture innovation, drive sustainable economic growth, and generate large scale employment opportunities.

At the reception, he urged venture capitalists, entrepreneurs and policy research organizations to consider investment opportunities in India’s startup ecosystem.

“The Valley can help India’s startups raise finances, sign MoUs and get angel investments for startups in tier 2 or 3 cities, as well as remote places, villages, small towns, northeastern India and other regions,” said Goyal.

However, several participants voiced concerns about the initiative.

Indian Minister Piyush Goyal (center) meets attendees at India Community Center on Sep 6, 2022. Photo: Sree Sripathy for India Currents/CatchLight Local.

Silicon Business Leaders Concern About Indian Start Ups

Bay Area entrepreneur Venktesh Shukla (ex-President of TiE Silicon Valley), and a NSAC member, told India Currents that the Prime-Ministerial level of commitment to the startup cause was not reflected equally across other government agencies. 

“Each government department optimizes for their own good. Whether it is the Reserve Bank of India (RBI), the Ministry of Corporate Affairs, or the tax department, there is no shared commitment to nurture the startup ecosystem.”

Shukla explained that each agency operated in its own silo without a shared understanding of the outcome. Each devised their own set of rules and regulations to enforce laws given to them, resulting in actions that were not conducive to nurturing the startup ecosystem.

Venktesh Shukla listens to Indian Minister Piyush Goyal at India Community Center on Sep. 6, 2022. Photo: Sree Sripathy for India Currents/CatchLight Local.

RBI Rules Create Start Up Roadblocks

“We go two steps forward and one step backward.  It does not reflect on the commitment of the ministers. They don’t control everything. Each minister controls his/her own department. They can only plead with the other agencies. RBI has cumbersome procedures about anything involving foreign exchange.”

Investors fear the RBI will surprise them with new rules, unlike the Securities and Exchange Commission (SEC) in the US which shares proposed changes in the public domain and asks for input.

For example, said Shukla, one investor paid for shares in his overseas subsidiary with a credit card and forgot to report it. He had a two year wait to get his money once the company was sold.

“One mistake – you are done for,” said Shukla.

Investors Prefer Incorporating StartUps Outside India

So investors prefer to incorporate companies outside India. “Every unicorn in India in SAS, that is targeting global markets, is incorporated outside India, ” Shukla added.

Investors suggested that the Indian government simplify startup processes with tax incentives, raising and structuring funding, direct investment in the stock market and capital gains tax.

IIT Startups Chair Arjun Malhotra, asked why an arbitrary half percent reduction of commission was paid to indigenous investors or VCs, while an overseas investor still got the industry standard  2% commission fee.

Indian Minister Piyush Goyal presented with a tie at the India Community Center on Sep. 6, 2022. Photo: Sree Sripathy for India Currents/CatchLight Local.
Kanwal Rekhi at the reception for Indian Minister Piyush Goyal at India Community Center on Sep. 6, 2022. Photo: Sree Sripathy for India Currents/CatchLight Local.

Advice For India’s Startup Ecosystem

Shukla advised Goyal to remove silos, set up cross agency cooperation across departments, and “create an environment where companies incorporate in India and stay there.” 

“The Indian government could leverage capital and entrepreneurial zeal if they could incentivize investors to incorporate in India,” he said.

A large crowd gathers to meet Indian Minister Piyush Goyal at India Community Center on Sep 6, 2022. Photo: Sree Sripathy for India Currents/CatchLight Local.

ITTians Ready To Build Global Startup Bridges

Silicon Valley investor Raju Reddy, founder and former CEO of Sierra Atlantic, thinks India offers promising opportunities.

“I am very bullish on the opportunity for India startups and believe it is the only ecosystem that can look like the US in the next decade – substantial companies addressing large domestic and global markets.”

IIT Startup founder, Monishi Sanyal reiterated a commitment by IITians to create a global bridge between IIT alumnae in the two countries.  With over 15,000 IITians in Silicon Valley, “IIT was the fourth largest unicorn builder after Harvard, Stanford and Berkeley in 2017 but that changed in 2019 when we were number 3 and now we may be in number 2 position,” said Sanyal.

“We want to enrich startup founders in order to repay our debt to India.”

This story was produced in partnership with CatchLight as part of the CatchLight Local Visual Storytelling Initiative. To learn more about this collaborative model for local visual journalism, sign up for CatchLight’s newsletter.

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Ritu Marwah

Ritu Marwah is an award-winning author ✍️ and a recognized Bay Area leader in the field of 🏛 art and literature. A California reporting and engagement fellow at USC Annenberg’s Center for Health...