What Should Be The Role of Government in Promoting Entrepreneurship? Stay Away. But…

The government needs to step back and move behind (not ‘between’) the scene. And Enable it all. Like a sutradhar. Like a boss!

Startup is the new sexy! You say and they clap! It’s a populist word now (add bigdata, analytics and you have a winner!).

Right from central to state governments, there are several announcements pertaining to promoting entrepreneurship in the country.

Here is a quick recap:

Indian Entrepreneurs Marching Ahead

Telangana government wants to start an incubator for startups, is planning to make Hyderabad a WiFi city as well..

– The central government has announced the formation of MoS for Entrepreneurship. The BJP had also promised to improve the technology infrastructure in the country by setting up Wi-Fi zones and 100 Hi tech cities.

Karnataka to Setup Rs 15 cr Angel Fund: Budget 2013-14

Kerala had setup an angel fund of Rs 10 cr angel fund to invest in startups. The state government also floated options to allow students to explore entrepreneurship (with 4% grace marks).

All of this is fine and I must say, commendable.


But here is the dark truth (and no government wants to talk about it) : Doing Business in India is TOUGH. It’s almost reaching a point where most of the great technology startups are actually moving their HQ from India to Singapore or Silicon valley, for favorable tax structure and friendlier investment process.

Plus, India has second highest number of shadow entrepreneurs, i.e. the ones who do not want to have any relationship with the government.

Apart from supporting infrastructure and legal frameworks, the bigger challenge is of government not looking at this as a bottoms-up problem, but a top-down (read : populist) view. Case in point : Instead of fixing education system, the government wants to open IIT/IIM in each and every state! (no better way to kill the two great brands).

What’s the (Ideal) Role of Government in Startup Sector?

To start off, stay away.

The government needs to stay away and NOT come in-between an entrepreneur and his/her dream.

That is, be the enabler.

Enable Infrastructure.
Enable Easy Taxation.
Enable Great Talent (i.e. not kill great brands like IIT/IIM etc).
Enable Fund Raising.
Enable Research.
Enable Company Shutdowns, so that those who are sitting in the fence can get in the ring, experiment, fail and experiment more.
Bring more clarity in taxation laws (reference : challenges Nokia and Vodafone are facing in India).

The government doesn’t really need to invest in startups or setup incubators – there is a good number of activity happening over there. The government, however needs to enable favorable angel funding laws, and take a few cues from Singapore government (or for that matter, Chile too!) in attracting investments for startups and SMEs.

The government needs to enable the enablers and NOT play the role of intermediary.

The government needs to step back and move behind (not ‘between’) the scene. And Enable it all.

Like a sutradhar. Like a boss!

All these populist talks lead nowhere. Agree that the government is new, but not the country. Not the entrepreneurs. Policies last longer than government and we need more clock-builder than time-tellers.

– Ashish Sinha. [For feedback/suggestions, reach out to me : ashish@nextbigwhat.com]

Leave a Reply

Sign Up for #BigDaily Newsletter

Daily.