Government must Focus on Favorable Ecosystem in COVID-19 Crisis: Manu Rekhi

The coronavirus pandemic has affected economy not only in India but all over the world. COVID-19 has already resulted into lay-offs which led to increasing unemployment. IMF predicts that India's economy will contract by 4.5% in FY21. However to accommodate the growing need of jobs, the Government needs to implement good and fair policies. Thus, Manu Rekhi, Director at Inventus Capital Partners, speaks on why the Indian government needs to create a business-friendly ecosystem and what entrepreneurs need to focus on.

Manu Rekhi of Inventus Capital Partners believes that the government should not finance startups or venture capitalists. Instead, it should focus on providing an ecosystem favorable for the startups by carrying out effective policies and practices. India needs to create jobs for 12 million graduates entering the workforce every year. Startups absorb nearly 57% of fresh graduates in the country.


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Lobbying by big firms and Brain Drain

Acknowledging the startup initiative and commenting in the greater influence held by the big companies, Manu Rekhi said,

When the startup policy was being drafted, Startup Bridge India along with a consortium of organisations (TiE, Nasscom, FICCI, iSpirit and more) made 129 recommendations to make it easier for startups to grow in India, but only 10 percent of the recommendations were accepted. The policy has not created a level playing field for small companies and investors. There is too much lobbying by large firms who have a vested interest to limit competition.
If this is the case, there will be a continued brain drain from India and startups will eventually move to places of efficiency. This is why we see a continued increase in company registrations in Singapore and Delaware from Indian startup founders. Patchwork like POEM just convince startups to pack up their bags and move to the west. It’s not unpatriotic to leave India, rather it is unpatriotic to not strive towards having the best environment for startups and encourage healthy competition in India.

Unnecessary business regulations and taxes need to be done away with to let the startups breathe and survive.

Calling out on the hostile business ecosystem, Manu Rekhi asserted

The other important thing is that if a country is not business-friendly, startups have to change their origin of operations. You have to be ready to move to a market that supports your business ideas. Any country keen to create a great startup ecosystem should make it friendly to smaller businesses.

Startups during their initial phase are vulnerable. Hence, government policies in India should provide a similar playing field. Burdensome and ineffective policies can lead startups to die a premature death.

Earlier, Deep Kalra, chairman and CEO of MakeMyTrip, had warned about the global rivals taking over the Indian startup system. Home-grown companies are struggling to achieve share in the domestic market. Large foreign companies after merging with the local company create a stressful environment for the other potential local players.


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Policies should be implemented to accommodate the capital requirement by small firms from foreign conglomerates but market security provisions should be rendered to make the local players competent enough to take on big firms. This can only be achieved by the putting place effective startup orientated regulations, thus promoting growth and enhancing the startup space in the country.