(L to R) Iceland’s Prime Minister Katrin Jakobsdottir, Danish Prime Minister Lars Lokke Rasmussen, … [+]
India’s government has been expanding its collaboration with other countries to add further impetus to its startup ecosystem. Since 2015, Prime Minister Modi’s numerous international visits have incorporated the startup community as a key focus of the bilateral talks with other nations, with a particular focus on the government’s prominent policy endeavors, such as Make in India, Skill India, Smart Cities and Digital India, etc.
In January this year, the Startup India International Summit attracted representatives from more than 25 countries. It was the largest startup confluence organized by the government of India since the launch of the Startup India initiative, according to a press release from the Prime Minister’s Office. The event was followed by Netherlands, Finland, Sweden and Canada executing a myriad of programs intended to expand their presence in India’s startup ecosystem in March 2021.
Each country organized events based on their values, and competitive advantages. For example, the Sweden-India Hackathon was aimed at designing, testing and executing ideas for the future course of mobility solutions. Anna Lekvall, Consul General of Sweden in Mumbai, highlighted the collaborative efforts between the two countries.
“Innovation is at the heart of the Sweden-India relationship,” she said “and startups, especially in safe and sustainable transport, have grown immensely as a vital area of cooperation.”
In addition to collaborations via the short duration technology programs, the government of India has established more than a handful of startup hubs to cement its relations with other nations to solve problems of safety, sustainability, pollution control, effective health care, and renewable energy sources, which have proved to be India’s Achilles heel in the past few years.
Through these international hubs, the state is incentivizing joint ventures, inspiring entrepreneurs, and attracting investors from other countries to make substantial investments in India’s startup ecosystem. And by diversifying their stakeholders, vulnerable small enterprises can be shielded from changes in India’s foreign affairs.
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Last year, funds from Chinese investors fell by 66% due to India’s change in its FDI policy, following clashes with its northern neighbor on the Doklam Plateau. Investors from these non-Chinese regions, which also make up the hub list below, stepped up to fill the gap, thereby enabling India’s startups to raise a respectable $9.3 billion, compared with the previous year’s $14.5 billion in 2019.
Collaborative Startup Hubs with other nations in India.
Other than proving to be vital sources of capital, these investments are also solving problems faced in collaborating countries’ home turf. For instance, one of the hub countries, Japan has been experiencing limited demand for seed funding, with a preference for IPOs over late-stage funding, aging demographic, a shrinking consumer market, fewer number of startups and smaller number of funding deals.
As India possesses all of these factors in more abundance, according to a report by DataLabs the Japanese investor participation in investment rounds of Indian startups have more than doubled, and SoftBank has emerged as the biggest investor from Nippon, after investing over $10 billion in the Indian startup ecosystem.
To discover and execute due diligence of these viable startup targets, countries’ embassies, and business associations, such as the Japan External Trade Organization (JETRO), Business Sweden, Business Finland, Canada India Business Council (CIBC) and US-India Business Council (USIBC), are executing the groundwork of policy arrangements with the Indian government; by carrying out match making between investors and ventures on both sides and acting as a bridge for Indian entrepreneurs to expand their ventures abroad.
Along with this, the Indian state machinery is working closely with these intermediaries for the transfer of overseas technology in heavily regulated beach head markets. At the US-India Business Council (USIBC) organized event, Lockheed Martin’s India CEO William L. Blair, reiterated the importance of fledgling companies when he stated that “startups are at the heart of growth in India’s space domain, and mobilizing these startups to accelerate their technology can help India leap ahead.”
As India’s startup ecosystem has finally realized its potential as a vital piece in its foreign policy jigsaw puzzle with other countries in 2021. To maintain this momentum, the Indian government has been performing a delicate balancing act between all the stakeholders. While transforming these international policy tie-ups into concrete structures from merely announcements on paper, the state is effectively addressing concerns amongst sections within the entrepreneurial community who view the foreign capital as a threat in that ownership would be transferred abroad and bypass India’s regulations and taxes.
The government’s aim is to enable local players to profit from higher ranked innovative partner countries, and create crucial momentum for India to be amongst the top 20 startup countries in the world in the forthcoming months.
