Delhi Startup Policy to Be Notified Soon, Attempt to Turbocharge Existing Ecosystem: Jasmine Shah

The Delhi Startup Policy was approved by the state cabinet on May 5, aiming to create an enabling ecosystem for people to start businesses and take advantage of a variety of support services such as fiscal and non-fiscal incentives, collateral-free loans, and free consultation from experts, lawyers, and chartered accountants, among other things. In an exclusive interview with CNN-News18, Jasmine Shah, vice chairperson of the Dialogue and Development Commission—which is a premier think tank of the Delhi government—clarified a number of things about the scheme, including the intent, the focus areas, the targets, the nitty-gritty, transparency, and accountability. Edited excerpts:

Is the startup policy of the Delhi government inspired by ‘Startup India’ of the Modi government?

Not at all. I think this is something that has come out quite organically. In general, if you look at it, Delhi is already…In fact, this is something that was discussed in the economic survey of India…Delhi is already the startup capital of India… The sheer numbers of startups that are coming out of Delhi…We are right now beating Bengaluru which earlier used to be the startup hub of India. This is because of multiple reasons— the government is focused on ease of doing business, a lot of licences and approvals we have done away with. 465 licences and approvals have been either simplified or done away with in Delhi. This is all the cumulative work of the last few years. What we are hearing from the industry is that there are many hurdles, things that Delhi perhaps should do if we aspire to be a global startup destination. And it is with that notion, you know, while the government of India’s effort will be to promote entrepreneurship in every nook and corner of India, our objective is very clear— that we would like Delhi to be a global startup destination hub by 2030. And for that, we started consulting with various industry leaders in the startup space and that is where you see a radically distinct policy.

No state would have come up with the kind of startup policy that Delhi has drafted. And that shows us that it is not a copy or an inspiration from something. There is nothing wrong with being inspired by someone, but in this case, this has largely been out of our own experiences as well as our own formulation and understanding of what the startup industry really needs.

How is Delhi’s startup policy radically different from what is on offer now?

So many things. Once the policy gets notified, you will notice it but I will tell you broadly what is the spirit behind the startup policy. So, our understanding of the startup space is that what prohibits the startups or people to initiate is the fact that though people are very passionate about their ideas, the entire legal work that is required— the regulatory processes, filing GST, incorporating organisations, finding a rental space, paying for your rental— all that stuff is really very time-consuming in India. To get even small approvals, trademarks for brands, copyrights, patent approvals…These are very time-consuming and what happens is that 80%-90% of any entrepreneur’s time then goes into chasing these government approvals rather than focusing on the idea. So what we have done is that we have systematically studied what are all the things that take the time and effort away from building upon their core innovation and whether the government can assist in that. So, for that, we have listed out a range of financial and non-financial incentives. What are the financial incentives? We have said that we will defray each and every cost for recognized startups. Once that policy is notified, people will be able to apply through an online portal through a due process and be recognised as an innovative startup, and once they get that — right from paying them a stipend or an honorarium for a period of one year to make available legal help, help with filing patents, filing taxes, copyright approvals— all of that will be provided as a free-of-cost service. We will empanel experts…It is 100% free of cost. We will make co-working space available for them. We will be making fabrication labs. Many of those who are in manufacturing or product-related…right? There are products and there are service companies. There are fab labs— either they go and use those spaces in fab labs or many of them have to build their own fabrication labs. We are saying that the Delhi government, if needed, will invest in creating fab labs or we will enter into PPP arrangement with existing fabrication labs so that those recognised startups, when they start to do their prototyping, they do not have to incur any expenses for using the services of a fabrication lab. Similarly, we will tie up with incubators. The government is not trying to replace the startup ecosystem that is anyway developing in the country. We are sort of turbocharging it. So with our incubators…We would rather leverage and provide the service of those incubators free of cost for our recognised startups. Similarly, if there are existing co-working spaces, the government is not going to compete with them. We will co-opt them, we will do a PPP partnership so that if these recognised startups need some desk space, you can work from there so that those costs are covered. It is good because the co-working space will also get some revenue out of it and even those startups benefit. So that is how this policy has been crafted.

When the Delhi chief minister spoke, he emphasised on young innovators, including kids while in college…

So, that is the non-financial incentive. The non-financial incentive is how to inculcate and encourage this idea of being an entrepreneur right from early on. You are already aware that the Delhi government has started the Business Blasters initiative in government schools. And, it has been a huge success. I mean, we are seeing thousands of government school children for the first time in any state in the country who are dreaming about building their own companies, and on a similar scale, we will be starting these programmes in colleges where there will be proper incubation labs. There will be a curriculum on entrepreneurship that will be introduced in the colleges of Delhi and if any college student wants to focus, like wants to take a break, and there is an investor who wants to invest, we are saying that you can take a break. The Delhi government will make the arrangement so that the student can come back and finish the course. So, there are a lot of non-financial incentives in terms of mentoring support for children who are part of Delhi government institutions. You have academic flexibility.

When will the policy be notified? What is the gestation period that you are looking at for startups? Will there be a uniform gestation period?

The policy will be notified within a few days. The cabinet has granted its approval, so it is going through its due process of notification. The moment it is notified, the website will be up and people can start applying and availing of the benefits of the policy. See, our target is that by 2030, 15,000 innovative startups should take birth and should be initiated in Delhi. There is nothing like gestation, right; you incorporate your company and then it grows. Some of them grow to be unicorns, some of them take less time and some of them become mid-sized companies, but still, they provide employment, they provide useful product, value to the society. So that’s the idea. We will provide whatever support we can as a government and then each startup will take its own path.

What is the budgetary allocation per annum?

So when the government makes a commitment, we stand by it. If the number goes beyond 15,000 and it becomes 30,000, we will support it. The budget every year is reflective of the take-up. Now we will have to see how the market responds. Similarly, with our EV policy…The EV policy also said that we are going to give an array of incentives and benefits. Slowly, the market responds, because in the first year we have to spread awareness among the people that they have to apply and that these are the benefits. No government has offered the wide range of benefits that we are going to provide. For this year, we have budgeted Rs 60 crore and it is part of the Delhi government’s budget. In the coming years, if it has to be enhanced, we will suitably enhance it, there is no doubt.

How did you reach a target of 15,000 startups by the year 2030?

Well, it is ambitious but also doable. As I said, we had close to about two years of discussions with the industry and we are trying to see the rate of growth of startups. Obviously, if you look at everything, even a small shop being opened is a startup. But no, we are talking of innovative startups and we have identified certain sectors. See, the idea is to make Delhi an innovation economy, given the kind of sunrise sectors that the Indian economy will see over the course of the next few years. By the way, this policy is for ten years and it will go on till 2032. So we have done some estimation. If it does really take off as we expect, I think 15,000 is a realistic number. But the idea is to be ambitious. If the government itself is not ambitious, what is the point of introducing a policy?

I will give you a parallel. When we came up with our EV policy we were the first state anywhere in India where we said that 25% of our new vehicles shall be EV. That was the time when pan-India, the EV sales were like 0.5% and Delhi was at 1.2%. So, of the 100 vehicles sold, one vehicle was being sold as an EV. That was just two years ago. And we said that by 2024, we will reach 25%. So, everybody was like this is not doable, how did you guys arrive at it? But within 1.5 years, we have reached the 12.5%, we have reached the halfway target. So, you know, there is a certain basis by which we know what can be done. So, if we equally push all the right buttons and we have really analysed what are the challenges that entrepreneurs face and if we equally want to make Delhi not a national startup hub which we are today, but a global startup hub…Then, accordingly, we have learnt from the best practices all over the world and we have done something fairly unique, I would say.

Is there any role model that you have kept in mind? Any other startup hub that you are looking at?

No, not really. There are things we learn from everywhere. There is New York, Tokyo, Singapore, Hong Kong — these are all thriving global cities…London obviously is there. London has emerged as a huge financial hub. So, we learn from experts. There is not one city after which we have modelled because the reality in India is quite unique. We had to build the policy to address the challenges that entrepreneurs face in India.

Is the government going to rope in proven leaders in the field in order to advise it and mentor young people?

Absolutely, absolutely. There are two important committees that we will set up— one is a startup task force and then there is a startup policy-monitoring committee. And, especially the task force is the one that will be tasked with the job of approaching whenever a startup applies, an innovator applies, or an incubator applies to be recognised and receive benefits. It will be this task force that will give the approvals. And we have already stated in the policy which we spoke about that only 5% of the task force will be government officials. Typically, you see the reverse. You know, 90% are government officials and 10% are token participants from outside. In our case, we have said that 50% is that of the government, 15% academics, and 80% will be recognised sort of players or individuals in the startup ecosystem. You know, those sort of people who are leaders in the space, who can mentor and who can help the Delhi government implement the policy in its true spirit. That is the idea.

And what are the risks involved?

I don’t see a risk per se, there is a fairly active ecosystem in India, in Delhi per se. So the point is what can the government do? If the industry can do ‘x’, can the government do more and increase the pace to 3x, or 5x? I mean, that was the entire idea. We are aware that governments sometimes move slowly. So it will be something that we will focus on to make sure that the implementation of the policy is smooth. The purpose will be defeated if the entrepreneur has to run around the government to avail of the incentive. That is something about which we are very clear. Those processes have to fall in place and that is precisely how we are approaching it. One thing has to be understood. I mean, the entire purpose, the entire motivation behind this policy is the CM’s vision behind entrepreneurs. I mean this is how the Rozgar Budget has been framed this year. You see, the entire focus has been on creating new jobs, right? 20,00,000 jobs in five years. Where are these new jobs going to come from? A large number of these are going to come from completely new innovations and new ideas. The CM feels very strongly about how entrepreneurs need to be promoted and this is something which is reflected in how ambitious the policy is. So, it will be monitored. No doubt, it will be monitored by the CM’s office and the entire government will put its efforts into ensuring that the policy becomes a success.

What is the timeline for the two panels that the government plans to set up?

Immediately. The moment the policy gets notified, the startup portal becomes active, people will start applying. Obviously, you need a team to process these applications and approve them which is the startup task force. And then, there will be a periodic review by the startup monitoring committee which will have the finance minister, which will have the industries minister, and more. So, this entire setup is already part of the policy. And once the policy is notified, all the processes will kick in immediately.

Self-help groups are also startups in a way. The government puts a lot of resources into them. Yet, the success of these is extremely uneven. What is the Delhi government doing in order to ensure that its startup policy succeeds?

We need to understand that self-help groups are a completely different idea from the startups that we are looking to promote. We are looking to promote innovative startups in the private sector, startups by individuals, not startups by governments. So, typically, when SHGs are created, you also say what kind of business— local weaving or animal husbandry or farmers’ cooperatives or milk cooperatives — so there is a complete government determination about what self-help groups can do. In our case, it is not that. We are looking to build an innovation economy in Delhi for the 21st century. And therefore, we are talking about startups being AI. We are talking about startups in the automotive sector, EVs, we are talking about startups in robotics, waste management solutions, and greener startups. These are more advanced, more innovative. And here, the government is not telling you to go invest in so and so space. We are no one to decide. The market will decide where the opportunity is, where the innovation is and when somebody comes up with an innovative idea, the government will support them at every step of the journey. But the leadership will be taken by the private sector. So again SHGs are very different. It is a more employment-led sort of exercise. It is all in the livelihood space again. But the kind of startups we are looking to promote is completely in the innovation space where the government cannot come up with ideas. In this sense, we are not intervening to set the course for startups but as startups and entrepreneurs respond to market needs, they will find the Delhi government is there to assist them every step of the way.

What if a particular startup failed? What would be the liability on the company?

Zero liability. That is the cost of trying something. Clearly, if there is no failure, you are not trying. So obviously, that is the nature of the industry, right? Not everybody is going to become a unicorn. And as long as they are able to play a role, and add value to their industry, it should be good enough. Some startups may reach a scale of 10 jobs, some startups may reach a scale of 10,000 jobs which may become massive— a unicorn. Normally, when venture capitalists think of investing in new startups, even when Warren Buffet funds 100 startups, he does not expect that each of the 100 will go on to become a billion-dollar company. Maybe 10% will. The idea is not to say that if a startup fails, the government will go chasing and ask for the money, the incentive to be returned. Absolutely not. The idea is to encourage the youth to take risks. Think about it. No government in the country would dare to think of giving Rs 2,000 to every student in class 11 and in class 12 and tell them, “use that as seed money and set up any business you like and if we lose that money, so be it. That’s fine.” Otherwise, no kid is ever going to start thinking about a business idea.

What would be the focus areas of these startups?

At the very early stage, we have identified ten focus areas where we see innovations heading for the next 10-15 years. But we also say that this is not exhaustive and that if need be, we will also expand on these areas. There is waste management, health innovation, education innovation, we talked about automotive, we talked about electric vehicles, e-commerce is a big space…

Did you keep in mind the success of the entrepreneurship curriculum in Delhi government schools when you decided on this policy? Or are they completely separate from each other?

No, no. They are not completely separate. As I said, there is a financial incentive and there is a non-financial incentive. The non-financial incentive is that we will promote the idea and encourage students at an early age to think about startups. The entrepreneurship curriculum and the Business Blasters programme where we give Rs 2,000 to every child in classes 11th and 12th, which adds up to Rs 60 crore a year was launched a year back. This startup policy is an additional Rs 60 crore. In that sense, that was our pilot. If you promote an idea at an early age, do children respond? Can they think about innovative ideas? I think the kind of energy, the kind of creativity that it has unleashed, nobody could have imagined that school kids can come up with such ideas. If you look at the ideas in the Business Blasters programme, in a sense it is a vindication that, yes, the government can encourage and push children at an early age to be creative and to become entrepreneurs. The entrepreneurship curriculum is a fixed course and that is complemented by the Business Blasters programme where around three lakh children receive about Rs 60 crore every year.

There is a fear of the government when it comes to getting clearances that the government itself becomes the hurdle. Plus there are issues of openness and transparency. What are you going to do to address those?

We are aware of the hurdles that entrepreneurs face and that is why our policy talks a lot about the intention and leaves out the implementation, the entire policy framework, incentives, and all of that. In the implementation process, the startup task force will play a crucial role and 80% of the startup task force are existing entrepreneurs— successful entrepreneurs who dreamt and created their business from scratch. We have also said that as per our policy, we will set up a single window-clearance system for the startups that do get recognised. The unfortunate part about being in Delhi is that there are multiple levels of government and you know, under different jurisdictions. So that is where sometimes things get stuck. It will be the startup task force in Delhi that will be aiding in every way.

It is an open process in the sense that everything will happen through an online portal, the startup portal of the Delhi government. When everything is done within the government, it leads to opacity. In our case, 95% of the startup task force which shoulders the responsibility of crucial decisions and approvals will be outside of the government. So, I don’t think there can be any bigger commitment to transparency and objectivity by the government saying that here is the budget and startup task force— you decide who is the most deserving star up and who will receive the benefit.

Is there a way of fixing accountability on the task force?

Two things— there is a startup task force and there is a startup policy-monitoring committee aided by the deputy chief minister and the finance minister and which will have the industries minister. Eventually, given how passionate our chief minister is about promoting entrepreneurship in Delhi, there also will be regular monitoring that will happen at that level. In government, that is how accountability gets established. As long as the key ministers and the chief minister are in the know of things, then obviously, the entire chain— be it officers or people outside of government, people who are supposed to do certain things— will be held accountable…whether we are going on the right track or not.

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