How 2015 Can Change India

By Kris Gopalakrishnan and Vivek Wadhwa

On 25th December, many of us received an email from Shri Ravi Shankar Prasad, Minister for Communications and Information Technology. The government has to be commended on giving priority for digital technologies in promoting good governance. Government has released several citizen and business services on Internet and low-cost cell phones. The implementation of Aadhar has provided identity to hundreds of millions of people who lacked any documentation and this provides a simple way to authenticate and provide these services to anyone in India. A host of exponential technologies – mobile telephony, ubiquitous connectivity, collaboration using social networks, analytics and artificial intelligence, sensor technologies, and low-cost cloud computing infrastructure providing almost infinite computing and storage – create opportunities for entrepreneurs to start businesses in every industry sector since we believe that every sector will transform itself in the next 10 years. In each case, it is the combination of the technology with a reimagined business model that will transform the sector.

Electronic Commerce. Flipkart and Snapdeal have largely focused on consumer products for the well-to-do. The real market opportunity is to address the needs of the people who will soon be coming online. New marketplaces need to be built for artisans in villages so they can design and create custom crafts for customers worldwide; apps are needed by which fruit sellers, sweet shops, and restaurants can showcase their products and take orders from neighbourhood customers; local merchants need the tools to provide the same types of one-hour delivery services that Amazon and Google are launching in American cities.

Sharing economy. Uber showed Indian entrepreneurs that app-based ride-sharing was practical even in India’s chaotic cities. But Uber, too, targeted elite, high-end customers. The bigger opportunities will be to share rides in three-wheelers, bicycle rickshaws and buses. Technology can also facilitate the hiring of workers in the informal economy — labourers, technicians, maids, and painters — through automation. Also needed are apps for tractor-sharing on farms, jhuggi rentals, bike sharing, and seed swaps.

Health apps and devices. Inexpensive sensors can be connected to smartphones and tablets to result in medical devices that are as accurate as those that western hospitals use. That is what Kanav Kohol did with the Swastaya Slate, a health device with 33 sensors, for blood pressure, blood sugar, heart rate, blood haemoglobin, urine protein, and diseases such as HIV, syphilis, dengue, and malaria. Using this Rs. 40,000 device and the A.I.-based apps that come with it, health workers in Jammu and Kashmir are providing life-saving medical care to a population of 2.5 million people. Telemedicine can also connect people in remote villages with medical experts.

There are endless possibilities for entrepreneurs to transform India’s health-care system to provide medical care to billions of people in need, in India and abroad.

App-based automation of public services. Whether it be for booking railway tickets and monitoring train arrival times or for analysing government productivity and efficiency data, virtually every aspect of government services could be improved through measurement, monitoring and automation. Entrepreneurs can take a key role in modernizing governance and to use technology and data to stem corruption.

Smart cities. Small, inexpensive, Internet-connected sensors, monitoring things such as traffic patterns, air quality, noise, radiation levels, and water quality, can be used to manage pollution and waste, parking, traffic congestion, security, and almost every other aspect of a city’s functioning. Entrepreneurs can start building smart neighborhoods and then smart cities.

Education. No matter how hard the government tries, it will not be able to fix India’s public schools in time to educate the more than 100 million children in towns and villages with sub-standard educational facilities. The only solution for them rests in using technology.

XPRIZE Foundation has launched a $15 million global competition to develop software that will enable children to teach themselves basic reading, writing and arithmetic. Already, there are tens of thousands of apps that can teach subjects such as history, geography, music, mathematics and science. These need customization for regions and local languages. Adaptive learning platforms also need to be built to tailor education to the needs of the student.

Agriculture. At the most basic level, Internet-connected smartphones can be used to educate farmers on how to improve crop yields and minimize chemical usage. Social media can also connect them with each other so that they can share experiences. As well, sensors can help monitor soil humidity and optimize watering. Supply chains can be optimized and on-farm diagnostic technologies can increase efficiency.

India has a large pool of I.T. talent with experience in technology, global best practices and business acumen. The number of start-ups are increasing in places like Bangalore, New Delhi Capital Region, Chennai, Hyderabad and Pune. Valuations of some of these have already crossed USD 1 billion and this will further encourage others. There is one area of significant concern – many of the successful start-ups are no longer Indian businesses. Even when the venture capital funding happens, the VCs prefer the company to be registered outside India.

These arise from concerns regarding:

• Ease of starting a business in India: Between the federal and state governments, it can take anywhere from 30 days to 60 days to start a business. For setting up a manufacturing facility, it can take much longer since many other clearances related to setting up factory must be obtained. We can use the ease of business ranking to improve ourselves as well as for branding in future.
• Many start-ups fail. It takes up to 2 years to close a business in India. We need a simple mechanism to close down a failed business. We also need bankruptcy laws to allow failed businesses to restart in safe and protected mode.
• As start-ups move from round to next round of funding, the valuation increases. This may allow some of the investors in prior rounds to exit; especially, the angel investors will want early exits. Given that the premium may be taxed at the hands of the company, the company does not benefit from higher valuations. This needs addressing so that we can make angel and VC funding more attractive.
• As various rounds of funding happen, there must be flexibility for new investors to come in. Foreign Direct Investment (FDI) rules limit foreign ownership of Indian companies and this severely curtails the flexibility for new investors to come in and existing investors to cash out. As capital flows have become global, we need to look at FDI rules and allow FDI into all sectors. The key is to keep the registered office in India.
• We need to remove any uncertainty regarding income tax and services tax.
• We need to simplify labour laws including laws regarding contract employees. Temporary work is the norm and there are large businesses that provide temporary workers on demand. These firms provide full-time benefits since these are full-time employees of this firm, training and re-skilling, security checks, medical benefits etc. Providing security personnel, facilities management, IT services, consulting, legal, accounting etc. are all examples of temporary workers, but we recognize only the higher end jobs as legal temporary work.

We also need to provide physical infrastructure where new businesses can be housed. In the start-up phase, companies have limited funding and they want to spend this on research, development of the product and on hiring and training people. Government must support the creation of incubators in city centres or in prime locations where public transportation is available.

We have a new government in place at the centre and there are new governments in several states. All governments are realizing that large number of jobs will be created by new businesses, especially in the first 5 years of operation. Hence it is important to address the policies and laws that govern new business formation and start-ups. We hope that governments will address many of these in 2015 such that India truly becomes the best place to start a business and scale it.