Page 43 - Banking Finance May 2022

ARTICLE

Education Policy. In addition, there is a need to fill up conducted by the social media platform, only 22 per cent of
infrastructure gaps especially in rural areas, promote digital them have over 3-months runway; while 41 per cent are
literacy and help people become more knowledgeable about either out of funds or have less than one month of funds
the digital world. In this regard, the Government initiative left (10). Therefore, they propose to reduce advertisements
of Saksharta Abhiya Digitalization is a step in the right and new marketing initiatives, and also look at reducing
direction. Regarding Agri-startups, since the majority of operational costs. Further, 60 per cent expect to scale down,
Indian workforce is employed in agriculture, there is a need or shut operations. Thus, startups and SMEs are struggling
to clear roadblocks and promote them in a large number. for survival, especially since the onset of the covid-19 since
2020. While RBI has introduced several measures including
Fortunately, the new Farm Laws are expected to give a debt restructuring -1&2 to reduce the burden of loan
greater choice to farmers and incentivize start-ups to repayment during the pandemic, much is expected from
transform the agriculture value chain in storage, finance, banks to yet to come forward and offer the need based and
transportation, aggregation, and marketing. Further, in timely finance.
respect of the Startups in High-end Technology, the recently
released Draft Space Communication Policy states that Regarding workers, many job applicants are not sufficiently
"Indian entities in private sector shall as well undertake skilled. Thus, startups see a gap between the knowledge
design, development and realization of satellites and taught to students in colleges and the knowledge needed
associated communication systems. They can establish for the jobs, especially in sectors in which technologies
satellite systems through their own or procured satellite". change at a fast pace. At the same time, startups can not
When this happens, there are possibilities for startups to afford to attract highly skilled workers due to their weak
come up in a big way. financial position. Lastly, risk associated with the business
of startups is high due to higher rate of mortality though
Similarly, with the introduction of the Startup India scheme, the Government is supporting them in all possible ways.
there has been a change in approach and mindset from job
seekers to job providers. This would create a pool of new In particular, despite several business opportunities for
entrepreneurs to make Startups to become the backbone startups in the coming years, it is observed that most of
of New India. The present Government is also promoting them fail and wind up their business right at the initial stage.
Make in India policy which would encourage the startups In this regard, IBM Institute for Business Value conducted a
to take up production of import substitutes. Thus, startups survey of startups to find out reasons for them to fail at the
are likely to witness brighter days ahead to benefit from initial stage itself (11). Such reasons include:
emerging business opportunities to generate more i) Lack of Initiative - Indian startups are also known for
employment and become society friendly. replicating global startups, rather than creating their
own startup models. In this regard, it is suggested that
Indian startups should try to avoid emulating existing
Issues and Suggestions:
successful global startup ideas in India without proper
India is a highly diverse country with a plethora of cultures, research and understanding of the Indian market.
languages, ethnicities and religions. Due to this, the startups'
understanding of people at large is often limited to certain ii) Lack of funds - As discussed earlier, most of the startups
regions. Hence, comparative advantages are linked to raise funds from friends & relatives which are not
specific regions only and not Pan India. (9). Further, as nearly sustainable and cheaper. Therefore, it is suggested that
70 per cent of the Indian population lives in rural areas and, lending institutions have to be more friendly to startups
by simplifying procedures and provide loans on soft
therefore, customers of the mass market tend to come from
terms.
low-income backgrounds in villages. This often discourages
many startups to come up with high value product/services. iii) Lack of focus - The failure is certain when too many
More importantly, the current pandemic-induced lockdowns items of products /services are taken up right at the
and curfews by states have brought along uncertainty, beginning itself. In this context, it is suggested to focus
struggles and challenges for smaller startups and MSMEs. on only one item of product/service to start with and,
after gaining sufficient experience in the line, the other
According to a recent survey of 2140 startups and SMEs products/services shall be thought of.

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