Start-ups and India Inc: Collaboration key to growth
Tax incentives for revenue from such tie-ups & earmarking some of the profit to fund start-ups can be a game changer India is no exception to these global trends. Even in highly industrialised states, like Gujarat, jobs have expanded in the informal sector.
The world stands at the cusp of disruption with the onset of Industry 4.0, and India is no exception. Fuelled by internet connectivity and proliferation of emerging technologies, this phenomenon will impact all major sectors of the economy. India is expected to be among the frontrunners of this revolution due to her demographic dividend. With over 50% of its population under the age of 27, India can play a pivotal role in shaping the Fourth Industrial Revolution in a responsible, scalable and inclusive manner. The transient nature of the phenomenon underscores the need to build dynamic models to optimise its impact.
Corporate innovation can be a key ingredient in this process. Covid-19 has reinforced the need for agility and out-of-the-box thinking to navigate through these times. Start-up-corporate collaboration to foster corporate innovation will be integral if India is to leapfrog the traditional phase of development and become a $5-trillion economy by 2025.
As of March 1, 2020, the DPIIT has recognised 28,979 start-ups that employ over 3.37 lakh people. Bolstered by initiatives such as Start-up India and Make in India, Indian start-ups are the hotbeds of innovation and embody the tool-set, agility as well as entrepreneurial passion. On the other hand, large corporations possess capital, resources and distribution models to scale up innovation.
However, innovation and new business models might not be intrinsic to their DNA due to structural barriers. Hence, the start-up-corporate collaboration will lead to a win-win situation for both the stakeholders. Partnering with start-ups will enable corporate to unlock the potential of new products and technologies, while start-ups, under the guidance of corporates, can scale up their products as well as gain better insights into consumer needs.
The open innovation model and the goal of shared tangible outcomes will be the bedrock of this partnership. Corporates need to devise maturity frameworks for ideation, co-creation, impact and optimisation. Both sides should focus on potential areas of collaboration and demonstrate values through a deep understanding of one another’s key trouble spots as well as motivational aspects. There is a need to balance agility with standardisation. Further, an ‘employee’ will be a crucial bridge in this journey. This calls for a need to hire dynamic, tech-enabled and creative youth who can adopt non-linear approaches to co-build, co-innovate and sustain this partnership.
The benefits of such a partnership extend beyond financial returns and entail new perspectives, access to a shared pool of talent and resources, and new opportunities. Ensuring that this collaboration aligns with the overall vision of both the partners, finding common ground and leveraging the appropriate toolset will not only sustain this partnership in the long run, but also lead to economic development.
Taking cognisance of India’s potential in shaping Industry 4.0, the government, in collaboration with the World Economic Forum, has established the Centre for the Fourth Industrial Revolution in Mumbai. By bringing stakeholders such as civil society, international organisations, and central and state governments on a common platform, this initiative will shape the application of emerging technologies, refine policy framework to amplify benefits and mitigate risks of Industry 4.0.
Government policies can usher in an innovative ecosystem and equip India to tackle Industry 4.0 effectively. There is, however, a need for the policies to tackle demand-side issues. Introducing tax incentives for products developed by start-ups and revenue incurred from the partnership, and allocating a portion of profits to fund start-ups can be a game changer in the shift towards corporate innovation.
By bringing start-ups and corporates together, corporate innovation will lead to sustainable and equitable growth of the Indian economy to reap the benefits of Industry 4.0. With enablers such as regulatory framework, government initiatives and skilled resources, India can spearhead the Fourth Industrial Revolution while ushering in equitable and sustainable growth.
The author is director general, Software Technology Parks of India