The Politics of Performance: The Case of Incubation Policy for Student Enterprises

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When different states start competing with each other to make the policies for student led enterprises more and more attractive, then one can be sure that renaissance is not far away.  Andhra Pradesh has taken cue from Kerala and has gone a few steps forward. Aiming to have a million sq. ft. of incubation space by 2019, it is going to create enormous restlessness among the youth for setting up innovative enterprises.

 

imagesIt has provided five per cent grace mark, 20 per cent relaxation in attendance, leave up to one year during their studies provided one of the founders is woman. Every college can set up its own incubator recognised by NSTEDB. Ninety-year lease on land besides all other clearances are provided for setting up co-creation workspaces. The government will provide space on cloud server at a very nominal cost.  Karnataka has provided upto `. 40 lacs to each college to map unsolved local problems and develop upto 10 students projects addressing the same.  What are the lessons that states like Gujarat, Rajasthan, Maharashtra, etc., can learn from various initiatives taken in South India.

 

The definition of the MSME cannot be based on investment in plant and machinery or other such consideration. Much talked about single point clearance has to be made operational. Eligibility conditions for assistance to young startups should not require staying in or operating from incubators only.  Virtual affiliation should be provided. The in situ incubation model should become the watchword for future. The implication is that if some students or those who have just graduated want to set up an economic or social enterprise near their home, they should be encouraged to do so, so long as they are affiliated to a physical incubator or virtual sanctuary of innovation such as techpedia.in.

 

Horizontal learning among incubators as well as entrepreneurs should be encouraged through periodic meetings as well as SMS networks and other purposive social media platforms. For a small enterprise wanting to try new innovations for diversification, their presence inside an industrial cluster should not be obligatory.

 

Given the technology intensity of many start-ups, the norms regarding custom duty and other taxes should be extremely favourable. When components are imported for developing a new device, total exemption should be given on the basis of the certificate from the concerned incubator coordinator. All such exemptions can be shared quarterly on the web so that transparency and accountability are maintained. In several countries like Chile, the policy for start-ups allows liberal visa for expat partners and employees. Upto 20 lakh rupees debt/grant financing is done.

 

Despite bold announcements in the budget, nothing much has moved in terms of early stage financing of student projects, many of which have the potential to become enterprises. Financing ten thousand student start-up and viable projects is not a big deal, given announcement of Rs 10,000 Cr. fund in the budget besides, 200 Cr. for district level innovation incubation fund. What is lacking is an empathy towards the youth and an institutional impatience to match that of the youth. The recent decision of the Government to enhance scholarship amount for doctoral students in science and technology by 60 per cent is a very welcome and long overdue step. A similar bold decision is required for investing in the ideas of young students.

 

I am not in favour of creating lot of physical infrastructure because even existing infrastructure is very sub-optimally utilized. Making existing workshops and labs accessible to the start-ups in the evening and night can immediately resolve physical constraints. When Gujarat was industrializing in the seventies, there was a huge demand for technically skilled people. Making technical institutions work in double shift, the constraint was relaxed in the short run. The private enterprises were given incentives for giving apprenticeship to the youth.

 

We need to encourage private sector to setup co-creation spaces for start-ups in their domain with some of their professionals mentoring the innovators and entrepreneurs in these spaces.

 

I hope that many more virtual and physical incubation spaces will be created in different academic institutions, industries, clusters, voluntary organizations.  The public procurement policy must be biased in favour of startups and requirement of minimum prior business should be relaxed.  Else, new technologies and enterprises will never get a fair chance.  The new company law needs to be overhauled from the point of view of startups and small enterprises.  We need a special watchdog body at national level to listen to the woes of startups and innovators and coordinate with various ministries to provide monthly status of rules changed, procedures modified and enterprises facilitated.  The earlier culture of meetings and councils without many results will have to give way to more result-oriented culture.   We are planning a national consultation in collaboration with NABARD, SVNIT, Surat and other stakeholders to discuss national policy for promoting innovation-based enterprises by the youth for inclusive rural, urban and social development in December  at IIM-Ahmedabad.  We hope that different state secretaries of finance, industry, technology and education will participate besides directors of NITs, Vice Chancellors of Central and Technical Universities and other private sector promoters of young entrepreneurs.

 

 About the Author: Prof.Anil K Gupta is a Professor at Indian Institute of Management, Ahmedabad and Coordinator,SRISTI and Honey Bee Network. He is theExecutive Vice Chair, National Innovation Foundation, Fellow(NAAS). Fellow, The World Academy of Art and Science,California 2001Distinguished visiting Faculty at Tianjin University of Finance and Economics, China Visiting Professor of Innovation Management in Emerging Markets, EBS, Berlin