If India needs to be a global economic power, the success of MSME is critical – Rajesh Mehta


The Dialogue recently interviewed Mr. Rajesh Mehta, Founder/President of Entry-India and Mehta Software Services (P) Ltd.  He is India Partner to Red Fort Strategies. He specializes in setting up new companies and organizations, building on core management competence, and advising international organizations like Tekes, Finnode, Finpro, European Business Technology Center through his network, contacts and skills. Mr. Mehta has over 20 years of experience in the Industry and has strengths like Public Policy, Advocacy,  Crisis Management,Strategy Formulation/Implementation and Government Relations.

We spoke about startups, technology, entrepreneurship and the India growth story for future and beyond.

Excerpts from the interview are mentioned below:

1. What in your opinion are the challenges and opportunities for startups in India?

India is truly emerging as a global startup destination but we need to go a long way if we want to compete with countries like Israel, Finland, Sweden, Canada, Singapore and Australia. There are several challenges which need to be addressed, namely, lack of an educational system that encourages innovation and imparts problem-solving skills; the procurement policy of governments, State and Central, with an inherent bias towards large corporates; problems in attracting and retaining talent due to infrastructural hurdles and suitable work attitude; difficulties in securing adequate funding for innovative ideas that may bear fruition only after a longish waiting period; hurdles in obtaining and enforcing IPRs; and the lack of an internationalization vision and strategy.

In higher education, we need to foster institutions of learning that teach our students skills and knowledge relevant for the fourth industrial revolution, including in deep learning, IoT, blockchain, smart energy etc. Our technical institutions need more collaboration with industry, as well as a sound training focus in vocational skills. One of the biggest problems our startups face is the lack of funds, stopping them from scaling both domestically and globally at the right time and leading to more competitors entering the arena. Though the Govt. of India began the Startup India program in right earnest, we have not seen any visible impact because most Indian startups are not eligible for the benefits therein due to the cumbersome processes involved in getting certified as innovative businesses.

The major opportunity for startups in India is that around 75% of our population is below the age of 35. The Digital revolution has connected villages to the internet. Also, some of the government schemes like startup India, MUDRA etc. though not very successful, have been able to spread awareness about startups in a positive way.

2. How do you see the growth of MSME and SME sectors in India in the coming years?

If India needs to be a global economic power, the success of MSME is critical. Indian MSMEs have faced several rough patches in the last couple of years. MSMEs are the backbone of the Indian economy and should be nurtured by the government. We have many committees on these sectors which are headed by CEOs of large companies, or senior bureaucrats, who fail to see first-hand the problems MSMEs face. MSMEs need a direct voice on the table, and more involvement in the decision-making process. Finally, big industry chambers are not really doing much for the promotion of MSMEs.

3. What kind of policy reforms do we need to promote entrepreneurship in India?

To promote entrepreneurship and growth, there needs to be a substantial increase in public expenditure and infrastructure. Access to proper education, skills, transportation and energy are important drivers for growth. For promoting entrepreneurship, we need to have simpler tax laws and a climate where entrepreneurs are not harassed by various departments. The legal system also needs to be simpler, efficient and fast. The funding should be easily available with collateral to promote entrepreneurship. There should be more incentives for women, dalit, and financially underprivileged, entrepreneurs.

4. What should the government do to enhance India’s global trade footprint?

It is good to see that Prime Minister Modi has visited several countries and is trying to build relationships with the Indian diaspora. He once said, ” There are over 30 million overseas Indians living abroad…their footprint are all over the world…Indians abroad are valued not for their strength in numbers …they are respected for their contributions to India and societies where they live. In foreign lands and communities across the globe, the Indian diaspora represents for their values. They are hardworking, law abiding and peace loving, and are role models for other communities.” The Indian diaspora needs to be engaged in more productive ways if we need to get investments or if we have to enhance our global trade footprint. Several organizations, like Indiaspora founded by M R Rangaswami to name a prominent one, are putting in great effort in this direction. Indian embassies should also be more trade and business oriented if we need to enhance our global trade footprint.

5. What measures should India take to raise its emphasis on research and development?

India’s track record of spending on Research and Development (R&D) needs to be enhanced significantly. One of the documents underscoring the challenge is the recent annual Economic Survey 2018 prepared by Chief Economic Adviser Dr. Arvind Subramanian and team. He has pointed out correctly that India under-spends on R&D “even relative to its level of development” and calls for doubling of spending on R&D with preponderance of the increase coming from private sector and universities. It proposes a road map to reform the way R&D is conducted, to engage the private sector and the Indian diaspora, and a more mission-driven approach in areas such as dark matter, genomics, energy storage, agriculture, and mathematics and cyber physical systems. The Survey outlines steps like improving math and cognitive skills at the school level. It also recommends a gradual shift towards an investigator-driven model for funding scientific research, by setting up bodies such as Science and Engineering Research Board (SERB) which have sanctioned about 3500 new R&D projects to individual scientists. The survey also underlines the need for States to invest in application-oriented research aimed at problems specific to their economies and demography. It emphasizes leveraging the knowledge base of thousands of scientists born in India who now work abroad, and recommends improvements in the research culture through less hierarchical governance systems in Indian research institutes that are less beholden to science administrators.