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Why doesn’t India have its own Silicon Valley?

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Why doesn’t India have its own Silicon Valley?
DHIRAJ NAYYAR — UPDATED SEP 25, 2015 10:15AM

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CEOs of Indian origin: Google’s Sundar Pichai (left) and Microsoft’s Satya Nadella.

WHEN India’s Prime Minister Narendra Modi visits Silicon Valley this weekend, he’ll meet some of the most influential, innovative and wealthy Indians in the world. Two of the planet’s most powerful technology companies have CEOs of Indian origin: Microsoft’s Satya Nadella and Google’s Sundar Pichai. Indeed, one study found that 15 per cent of all Silicon Valley start-ups in 2012 were led by Indians, even though they comprised only 6 per cent of the area’s population.

The question Modi should ask himself is this: why hasn’t India been able to replicate, even in some small measure, Silicon Valley’s top-end technology ecosystem? Why haven’t Indians been able to create a Google or Facebook in Bangalore?

The question may sound counter-intuitive. If there’s one thing India is known for abroad, besides poverty, it’s the country’s prowess in information technology. How often have you heard the assertion that if China is the factory of the world, India is its back office? Modi has repeated the boast; so has China’s President Xi Jinping.

In that claim, though, lies a partial explanation for why India’s technology scene remains underdeveloped. 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. 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 labour laws and a lack of power discouraged new factories. Given India’s nationalised banking system, financing for risky start-ups was slim-to-non-existent.

By contrast, the tech services sector was virtually unregulated. While not as well-trained and innovative as in the US, India’s pool of engineers was large, low-cost and English-speaking. Companies such as Infosys and Wipro could set up private generators to power their Bangalore campuses and could grow far away from the watchful eyes of Delhi bureaucrats.



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FLIPKART office in Bangalore.


India’s IT giants may be victims of their own success. At least until the global economic crisis hit in 2008, Infosys, Tata Consultancy Services, HCL and Wipro were hugely profitable and globally respected. They never had to develop the risk appetite to branch out into higher-end services, let alone product development.

At the same time, the hype over the Bangalore boom obscured the fact that India hadn’t really created a true start-up ecosystem. Silicon Valley, for instance, benefits greatly from the presence of several top-notch universities; academic research is translated quickly into the real world, while feedback travels in the other direction. Yet despite setting up 14 new Indian Institutes of Technology since the 1990s, successive Indian governments haven’t seen fit to locate one in Bangalore itself. (Modi’s proposed putting one in Dharwad, a town more than 400 kilometres away.) Meanwhile, India spends only 0.8 per cent of its GDP on research and development, compared to 2.8 per cent in the U.S. and 1.8 per cent in China, both of which have much higher GDPs than India. Until relatively recently, Indian start-ups attracted limited venture capital and private equity funding compared to their Chinese counterparts. Intellectual property protections were weak.

After the financial crisis dried up demand, companies such as Infosys and HCL responded by seeking to move up the value chain. Infosys, which appointed Vishal Sikka, a high-ranking executive at Germany’s SAP as CEO in 2014, is now pursuing advances in automation, artificial intelligence and design.

Still, any true tech pioneer is more likely to emerge from outside the circle of Bangalore’s giants. In the last few years, a clutch of internet-based start-ups has begun to take advantage of a sector that is today as lightly regulated as IT services were three decades ago. Their young entrepreneurs have shown a greater appetite for risk than their predecessors. Perhaps more importantly, they’ve benefited from the emergence of a new set of VC and private equity investors willing to stake capital and nurture businesses over the long-term. New e-commerce players such as Flipkart and Snapdeal have attracted investments valuing them at $15.5 billion and $4.8 billion in 2015, respectively. Zomato, a restaurant search-and-discovery service founded in 2008, has received over $200 million in funding and now has a presence in over 20 countries.

Flipkart and Snapdeal are still small companies by the standards of world leader Amazon and China’s Alibaba, of course. And for now, they’re focused on expanding their Indian footprint rather than expanding globally. But the fact that they enjoy a huge domestic market (today’s India is much richer than India in 1985) means that they’ve got a good shot at developing products and technology that could have much wider appeal.

Modi intends to showcase this new start-up culture while in Silicon Valley. If he really wants India to produce an Apple or Amazon, though, he needs to focus on improving the environment for innovation at home — cutting regulations, investing in research and education, and boosting growth in order to expand the domestic market. Indians abroad are obviously talented and nimble enough to innovate. The question is whether India is, too.

—By arrangement with Bloomberg-The Washington Post

Published in Dawn, September 25th, 2015

Why doesn’t India have its own Silicon Valley? - Newspaper - DAWN.COM
 
India ranks third globally in number of startups: Nasscom report - Times of India

India is third globally with the number of startups crossing 4,200, says industry body Nasscom's latest report.

The report, titled 'Start-up India -- Momentous Rise of the Indian Start-up Ecosystem,' says the Indian technology startups landscape has seen a tremendous growth in the emergence of innovative start-ups and creative entrepreneurs.

In terms of providing a conducive ecosystem for the startups to thrive, India has emerged as the fastest growing base of startups worldwide. India is one among the first five largest start-up communities in the world with the number of startups crossing 4,200

R Chandrashekhar, president, Nasscom, said, "The maturing Indian start-up ecosystem is now contributing to the Indian economy in many ways. Apart from positively impacting the lifestyles of citizens involved, startups are now creating innovative technology solutions that are addressing the key social problems that India is facing and creating significant growth opportunities for every stakeholders."

The report has stated that with 100% growth in number of private equity, venture capitalists, angel investors along with a 125% growth in funding over last year, Indian start-up ecosystem has risen to the next level.

The total funding in the India based startups is estimated to be nearly $5 billion by 2015. India is the world's youngest start-up nation with 72% founders less than 35 years.




The report also states ways and means to make starting up easy in India. Nasscom has recommended ease in rules and regulations for registration of a business in India, funding, and simplifying compliance procedures by minimizing licenses/permits/approvals/tax for startups.



Removal of angel tax, simplifying norms for capital raising, enabling easier exit for entrepreneurs and requisite changes in the credit guarantee for loans to start-ups are a few recommendations that will further enhance a smoother functioning of the startups in India, according to the report.
 
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Quality rather than Quantity is the measure...we all know how stats are fudged in India. Show us whats the next big thing the world is going to go after and how did it come out of India.

Lets talk facts !

:chilli:

Dude, why don't you admit your *** got burned. And what's your obsession with India or whether or not it has a Silicon Valley? Just move on.
 
Your only further proving my point that you have no solid facts on actual IT progress other than backoffice work.

Why you shooting the messenger ?? ..That article above is written by an Indian.

Dude, why don't you admit your *** got burned. And what's your obsession with India or whether or not it has a Silicon Valley? Just move on.
 
Startup India: 19 key points of PM Modi's action plan : India, News - India Today

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Prime Minister Narendra Modi had announced the 'Startup India, Standup India' initiative in his Independence Day address last year. On Saturday, PM Modi unveiled the action plan for startups in the country. He announced a self-certification scheme in respect of nine labour and environment laws and said there will be no inspection during the first three years of launch of the venture. Addressing the first conference of start-up entrepreneurs, Modi announced an action plan to boost such ventures which are seen as key to employment generation and wealth creation.

Here are the top takeaways from the prime minister's speech.

1. Compliance regime based on self certification


The objective of compliance regime based on self certification is to reduce the regulatory burden on startups. This self-certification will apply to laws like payment of gratuity, contract labour, employees provident fund, water and air pollution acts.

2. Startup India hub

A startup India hub will be created as a single point of contact for the entire startup ecosystem to enable knowledge exchange and access to funding.

3. Simplifying the startup process

A startup will be to able to set up by just filling up a short form through a mobile app and online portal. A mobile app will be launched on April 1 through which startups can be registered in a day. There will also be a portal for clearances, approvals and registrations

4. Patent protection

The government is also working on a legal support for fast-tracking patent examination at lower costs. It will promote awareness and adoption of Intellectual Property Rights (IPRs) by startups and help them protect and commercialise IPRs.

5. Funds of funds with a corpus of Rs 10,000 crore

In order to provide funding support to startups, the government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over four years. The fund would be managed by private professionals drawn from the industry while LIC will be a co-investor in the fund. The credit guarantee fund for start-ups would help flow of venture debt from the banking system to start-ups by standing guarantee against risks.

6. Credit Guarantee Fund

A National Credit Guarantee Trust Company is being envisaged with a budgetary allocation of Rs 500 crore per year for the next four years.

7. Exemption from Capital Gains Tax

Currently, investments by venture capital funds in startups are exempt from this law. Now, the same is being extended to investments made by incubators in startups.

8. Tax exemption for startups

Income tax exemption to startups announced for three years

9. Tax exemption on investments above Fair Market Value

10. Startup fests

Innovation core programs for students in 5 lakh schools. There will also be an annual incubator grand challenge to create world class incubators

11. Launch of Atal Innovation Mission

Atal Innovation Mission started to give an impetus to innovation and encourage the talent among the people

12. Setting up of 35 new incubators in institutions

PPP model being considered for 35 new incubators, 31 innovation centres at national institutes

13. Setting up of 7 new research parks

Government shall set up seven new research parks - six in IITs, one in IISc with an initial investment of Rs 100 crore each.

14. Promote entrepreneurship in biotechnology

Five new bio clusters, 50 new bio incubators, 150 technology transfer offices and 20 bio connect offices will be established.

15. Innovation focused programmes for students

There will be innovation core programs for students in 5 lakh schools.

16. Panel of facilitators to provide legal support and assist in filing of patent application

17. 80 per cent rebate on filing patent applications by startups

18. Relaxed norms of public procurement for startups

19. Faster exits for startups
 
Your only further proving my point that you have no solid facts on actual IT progress other than backoffice work.

Why you shooting the messenger ?? ..That article above is written by an Indian.

What was the point of posting the article? Why don't you worry less about India and worry about Pakistan. Stop your Indian obsession.
 
The point was to discuss why hasnt a silicon valley style dot com boom come to India. Also, your questioning MY obsession because i posted an INDIAN ARTICLE posted in a PAKISTANI DAILY as Indian obsession and what would you term your presence on a Pakistani forum as ??

Listen, buddy you got something constructive to add then do so, otherwise their are many other threads where you can go to and I can assure you that you wont be missed :)

What was the point of posting the article? Why don't you worry less about India and worry about Pakistan. Stop your Indian obsession.
 
The point was to discuss why hasnt a silicon valley style dot com boom come to India. Also, your questioning MY obsession because i posted an INDIAN ARTICLE posted in a PAKISTANI DAILY as Indian obsession and what would you term your presence on a Pakistani forum as ??

Listen, buddy you got something constructive to add then do so, otherwise their are many other threads where you can go to and I can assure you that you wont be missed :)

You are correct, sir. I made some immature remarks. Happens in a forum like this. Will you accept my apology?
 
The education sector needs an overhaul, especially in undergraduate courses. But it would be good if it starts from schools first.
 
The education sector needs an overhaul, especially in undergraduate courses. But it would be good if it starts from schools first.

Many Indian students go to US for graduate studies, especially in STEM subjects. The best of brightest often end up staying there as they are offered lucrative positions. US also has a vibrant start-up culture that lures these students. India must do more to bring these kids back. India should invest more in R&D
 
you dont have to apologise.

You are correct, sir. I made some immature remarks. Happens in a forum like this. Will you accept my apology?

actually what i really like about India is the true effort in training graduates in the latest IT technologies. Their are some real good IT training institutes that train people for a fraction of the cost compared to other countries.

Many Indian students go to US for graduate studies, especially in STEM subjects. The best of brightest often end up staying there as they are offered lucrative positions. US also has a vibrant start-up culture that lures these students. India must do more to bring these kids back. India should invest more in R&D
 
The eco system is developing slowly. Its not something that can be copied easily per se.

Bangalore already has an IIM (and a very good IIM at that) along with IISC.
It now needs an IIT as well.

Govt has also now finally started supporting start ups, is cutting regulations and making ease of doing business a priority. In the next few years India will jump from 142 position(till 2014) to under 50(2019) in EoDB rankings globally.

All these factors put together will go a long way.

While GoI is on the job on this, the only thing that surprises me is that an IIT for Bangalore has not been declared. Which means its not on the cards right now. Why?
 
The eco system is developing slowly. Its not something that can be copied easily per se.

Bangalore already has an IIM (and a very good IIM at that) along with IISC.
It now needs an IIT as well.

Govt has also now finally started supporting start ups, is cutting regulations and making ease of doing business a priority. In the next few years India will jump from 142 position(till 2014) to under 50(2019) in EoDB rankings globally.

All these factors put together will go a long way.

While GoI is on the job on this, the only thing that surprises me is that an IIT for Bangalore has not been declared. Which means its not on the cards right now. Why?

One major factor to R&D based startups in India would Indian employees from local R&D centers of International corporations like Intel etc, eventually setting up their own firms. These people have the business know-how and R&D skill set as well.

This was secret behind Isreal's success.

Govt should make an effort of projecting India as R&D hub for major international corporations.
 
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