Wednesday, September 30, 2015

Why hasn’t India been able to replicate, even in in some small measure ?

Why haven't Indians been able to create a Google or Facebook in Bangalore?

If there's one thing India is known for abroad, besides poverty, it's the country's prowess in information technology. Its often said that if China is the factory of the world, India is its back office !

Then Why ?

Reasons !!!
  • Beginning in the 1980s, Indian tech companies focused on providing relatively low value-added IT services to overseas clients, rather than developing high value-added products.  
  • The choice made sense as Companies faced a tough climate for doing business in then-socialist India and a small domestic market. 
  • Red tape strangled the hardware sector, as so many others in India; 
  • archaic labor laws (presently 44 national and more than 150 state laws are in practice. These multiple laws make the things tougher, time consuming, expensive etc. Hence we need to work on that.)
  • lack of power supply.
  • Given India's nationalized banking system, financing for risky startups was slim-to-nonexistent.
  • India spends only 0.8 percent of its GDP on research and development, compared to 2.8 percent in the U.S. and 1.8 percent in China, both of which have much higher GDPs than India.
  • lack of a venture funding ecosystem in India for innovative new startup ideas.
  • collaboration between universities and corporate enterprises is still minimal in India.
  • even today, India puts out less than 3 percent of the world’s research – and little of that is translated into commercial ventures.

Certain other challenges !!
  • India’s Intellectual property rights (IPRs) has been at the clash with the West interest. Our IPRs have been adjusted with the Trade Related aspects of intellectual property right (TRIPS) Agreement. Our trade mark and Copyright have been amended according to feasibility of WTO. Still we need to work for revamping the IPRs, so that the clash with West  be minimized and trade be boosted.

What needs to be done ?
  • need to focus on improving the environment for innovation.
  • cutting regulations.
  • investing in research and education.
  • boosting growth in order to expand the domestic market. 

Lets talk positive..what did  new Government do till now ?
  • launched the Micro Units Development and Refinance Agency (MUDRA) Bank in order to furnish funds for micro, small and medium enterprises.
  • there was an attempt at loosening labor laws.

What needs to be done ..but is being opposed ( u know why ..politics ! )
  • Millions of workers went on strike recently, protesting against the proposed labor reforms. 
  • The Goods and Services Tax (GST) bill, which will facilitate the movement of goods and services across states, is still stuck in parliament.

Roadmap ?
  • India should prepare the ground to create a research-oriented start-up ecosystem, akin to Silicon Valley which could shape up our competitiveness in the global markets.
  • build a science park next to a research university, provide subsidies and incentives for startups to locate there, and create a pool of venture funding.
  • The traditional STEM (Science, Technology, Engineering, Mathematics) in academics needs to be replaced with STEAM (A for Art). 
  • India should not look at just the domestic market, but look to cater services even to developed countries that will face skilled workforce shortage by 2020. 
  • India needs to prepare to cater to the demand and aim to be a part of the global supply chain ecosystem through customer credibility.

Moral of the Story !!!

The Silicon Valley in the USA was the meeting point of the American work ethics which focuses on freedom to explore new things, cherishes creativity and sees failures as the stepping stone to success and the heady WWII days of heavy State funding on defense and the institutional support provided by the Stanford University.
To build a Silicon Valley in India the above mentioned work ethics, governmental support and institutional support is needed more than brick and mortar structures. When seen in this perspective Indian IT cities like Bangalore and Hyderabad which at their present levels are more like the backroom office for the global IT majors and therefore devoid intellectual application and original thinking.
Despite the myriad challenges, India still has the population and economy to kickstart a startup revolution. What it needs is the delivery of a long list of reforms and that change in work ethic culture to turn its traders into businessmen and graduates into entrepreneurs.

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