Sarkari Meltdown At Startup Mahakumbh: Uninformed, Petulant & Boomer Logic
Startups don’t need sermons—they need the government to get out of the way.
“Kisi ko itna bhi mat darao ki darr hi khatam ho jaaye (Don't scare someone so much that they stop being afraid altogether)," said Priyanka Chopra in the film Mary Kom, where she portrays the titular boxer and confronts an official from the Boxing Federation of India. The dialogue carries gravity for its evocativeness and applicability across many different contexts. It didn’t make much of an impact then because, overall, the film didn’t do enough justice to Kom’s powerful story.
I got reminded of this dialogue again last week after Union Minister for Commerce and Industry Piyush Goyal’s diatribe against Indian startups at the Startup Mahakumbh did something neither the Minister, nor his team, and certainly not his colleagues in the Modi Government, would have hoped for. It angered a few of India’s entrepreneurs to the extent that they lost all fear of a government that demands obedience and timidity. They lashed out in a way few from their fraternity have before. The Minister buckled and said his comments—wherein he essentially accused Indian startups of being un-innovative, exploitative of cheap labour, and not on par with China—had been misrepresented and that the Congress was creating a false narrative about his views on the subject.
The fact is, Indian entrepreneurs and the larger startup ecosystem had heard Goyal loud and clear. Many of them were present at the venue. To convene a gathering touted as the world’s largest startup event, saunter in like the headmaster and chide the very founders and investors whom the event is meant to encourage and empower, while absolving the government of any responsibility, was emblematic of the politician’s proclivity for striking fear to draw out obedience from his subjects. The startup folks, drawing on the breadth of their experiences of doing business in India, simply heard the hypocrisy and were having none of it.
The Minister was lambasting private folks for doing unimaginative dukaandari, such as selling sugar-free ice creams or delivering groceries, and not thinking of deep-tech; this, even as the Indian government’s annual expenditure on research and development (R&D) stands at just 0.64% of our GDP, compared to China (2.41 per cent), the US (3.47 per cent), and Israel (5.71 per cent). This low spending on R&D must also be understood in the context of what this government tends to ‘research’ about. In early 2020, as the world was bracing for a bruising battle with Covid-19, India’s Department of Science and Technology invited research proposals for studying the "uniqueness" of indigenous cows and the curative properties of cow urine, dung, and milk, including potential cancer treatments. A collective of 500 Indian scientists rightly called it an exercise in ‘faith-based pseudoscience’ and urged the government to withdraw that call for proposals.
Back in 2017, IIT Delhi received at least 50 research proposals for studying the benefits of cow derivatives, including milk and urine, as funding for the same had been made available under a government programme. Compared to this baloney, I’d say quick commerce is immensely deep-tech, until Blinkit and Zepto start stocking my sugar-free ice cream alongside cow urine sachets (perhaps the cow urine evangelists will, at some point, claim their elixir doesn’t even need refrigeration).
The point is that R&D by the private sector doesn’t happen in a vacuum. It must be presented with the right incentives and an ecosystem willing to bet on painstaking research that may take years before it reaps a saleable product. The capital for such potential deep-tech innovations must come from the government first, given its greater stake in the nation's growth and scientific advancement. The private ecosystem will follow once there’s enough of a precedent for it to be inspired by. The viral Reddit rant by a semiconductor startup founder, in response to Piyush Goyal, highlights the depth of the government’s ineptitude here.
Far from being a responsible buyer for startups investing their own money and sweat in R&D, the government often falters even on basic measures of ease of doing business. For instance, India is a serious contender for the title of the tariff king of the world—and has been so for much of the last decade, as noted by former Reserve Bank of India Deputy Governor Viral Acharya. This hurts our startups and MSMEs trying to make in India for the world, as certain components can only be imported and not produced locally yet. Tariffs artificially inflate the prices of those components, rendering the prices of finished Indian exports uncompetitive in international markets. Moreover, businesses that manufacture stuff must deal with excessive compliances, all overseen by a bureaucracy that will demand rent/tax at the drop of a hat.
“Buddy, instead of blaming others, focus on your job (Good governance) and get out of our way; we entrepreneurs have the capability to build world-class products,” the founder ended his rant, instructive in underscoring why building in India is so difficult. If this kind of a system has tilted the commercial incentives in favour of building consumer internet companies that provide services such as grocery/food delivery, stock trading or online poker, and cater to a predominantly domestic clientele, can we really blame our entrepreneurs?
A second-order opinion here is that consumer internet companies must not be seen as anything ‘lesser’. Rather, the government and civil society should avoid thinking in binaries that divide startups and entrepreneurship based on what is supposedly innovative and what is not. Zomato, Swiggy, Blinkit, Zepto, et al. have built systems that have unlocked greater opportunities for a multitude of stakeholders. One need only remember the dearth of options for ordering in or dining out a decade ago and how the present crowd of internet firms have made our lives substantially easier. Restaurants and fast-moving consumer goods or FMCG companies can now find and reach their customers more efficiently, unlocking greater value for their many employees. Goyal, who’s in the past showered hate on foreign ecommerce firms such as Amazon for flouting Indian laws and competing unfairly with smaller retailers, shouldn’t be so harsh on the ecommerce companies born in and solving for India.
All of this combines well to say something about the government’s inherently paternalistic attitude towards its people and, by extension, their business ventures. The larger mass of India is used to it and, dare I say, pays little attention to uninformed netas who opine on anything and everything. Startups—their founders and investors—were the brash blokes who weren’t used to taking uninformed criticism on the chin. They’ve previously indulged in political niceties, all in the hope of salvaging some form of regulatory immunity for their fledgling sectors. The result? Crypto and online gaming startups were buried in tax liabilities so huge, some of them upped and left India altogether. Flight of capital! Those operating in relatively unproblematic spaces such as online grocery or food delivery are also routinely subjected to tax terrorism. They are now being accused by a Union Minister of making their consumers lazy.
Minister Sahab—time is money! If I’m being saved a trip to the grocery store and can instead spend that time building a semiconductor chip, or recharging for work tomorrow, or doing nothing at all, why are you being a boomer about it? As the startup founder wrote on Reddit, the Minister should focus on good governance and GET OUT OF THE WAY! The days of striking fear in the hearts and minds of India Inc. are long gone.