Startup sectors are the next big thing in the Indian economy. Every other day one sees a new unicorn emerge in the country and another IPO being up for grabs. All of this begs the question: why do we not see startups emerge and go on to become unicorns from and in Assam? The state is doing well in industries, despite being an agriculturally oriented economy, with data for 2021-22 highlighting the fact that the services and manufacturing sectors contributed to 40.61% and 39.72% of the Gross State Value Added in comparison to the 19.66% contribution of agriculture.
Despite such stupendous results in these sectors and the state’s continued dominance in the tea industry, the fact remains that Assam lags significantly behind in cutting-edge sectors. The pattern can be observed when one considers the failed and semi-successful attempts of the government at developing a startup culture evident from the lukewarm reception received by Assam Startup Nest, which was set up with the sole purpose of providing an incubation setup for the development of a startup ecosystem in the state.
Reports show that the third stage of startup incubation by Assam Startup Nest had only 128 startups signed up and when the progress of these startups was looked into, it was found that 100 of these remain as basic incubators meaning that they are merely in the ideating stage while only 28 are advanced incubators which are capable of generating commercial viability.
Eye opening data from the Lok Sabha shows that throughout these three phases of incubation under Assam Startup Nest and since the launch of Startup India Initiative in January 2016, Assam has had only 879 recognised startups while states with similar levels of population like Kerala and Telangana have had 4,251 and 5,157 recognised startups as of 2023.
There exist several problems for these; and one can understand this when one takes a glance at the numbers, a state like Assam offers Computer Science Engineering, the branch that has historically produced the most startup founders, in merely around 15 private and public colleges while the same number stands at 471 for a technologically and economically advanced state like Tamil Nadu and 35 for a state like Chhattisgarh with similar levels of Gross State Domestic Product (GSDP) just by the sheer volume of difference, one clearly understands the point as to how states like Karnataka and Tamil Nadu have set up 10 and 8 startup incubators centres under Technology Incubation and Development of Entrepreneurs Schemes 1.0 and 2.0 while Assam has set up only 2 such centres.
Source: Ministry of Electronics and Information Technology
The second major issue that exists out there is the problem of regulations. The Startup Policy of Assam, launched by the erstwhile BJP state government in 2017, specifies that startups in Assam seeking funds from the government need to mandatorily have registration in Assam or need to have more than 50% of their non-contractual staff from Assam. Rules and laws like these have also been tried in other states but with horrendous repercussions and protests, case in point Haryana. Before proceeding further, the government needs to scrap this clause off from the policy document to make the startup ecosystem in Assam work.
Last but not least, there must be an imperative to set up a proper network of venture capitalists and angel investors in the state. Data from 2022 show that Bangalore, Delhi NCR and Mumbai have accounted for 82% of all VC money with the rest of the country scrambling for the rest of the 18% of the $25.7B.
In such a situation, the failure of conclaves such as Advantage Assam speak poorly for the state and it becomes essential that this concept of venture capital and startups which cater to local as well as global issues pick up in cities and towns outside Guwahati as well. To overcome such challenges, it would be imperative to devise means and methods to induce and inject a corporate culture into the state and make the investors more risk-prone in believing in the ideas of the state. This can be achieved through legislation of policies which provide an incentive to businesses and HNIs to shift their businesses here.
It is high time that the government make use of the untapped potential of the demographics of the state through greater focus on technical education, something which needs focus in terms of both qualitative as well as quantitative improvements; a set of clear and transparent guidelines and regulations making the ease of business better in the state; and lastly, build institutions and industries of repute through the means of infrastructural development and Public Private Partnerships.
(The author is a sitting Member of Parliament in the Lok Sabha and a three-time Cabinet Minister from Assam. He received assistance from Kritartha Boruah, a research intern, for this piece.)
(The views expressed in the article are those of the authors and do not reflect in any way his affiliation to any organization or institution)