This is India’s new soft power. An open letter to Prime Minister Narendra Modi

14th Aug 2017
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Nations do not work on hard power alone. They need to harness the soft power to propel the nation forward in the international pecking order, and few people have understood this as well as Narendra Modi.

Ever since he came to power in 2014, the country has made concerted efforts to grow its soft power, whether through the internationalisation of yoga, expanding markets for Bollywood’s prodigious output, or propagating India’s rich architecture, cuisine or art.

You don’t have to be a Modi supporter to understand that soft power is beginning to show results, including in the arena of international diplomacy, where the Indian diaspora has been leveraged to act as a force multiplier to push India’s causes.

‘Soft power’ is a concept developed by Joseph Nye of Harvard University to describe the ability to attract and persuade. Hard power – the ability to coerce – grows out of a country’s military or economic might, but soft power arises from the attractiveness of a country’s culture, political ideals, and policies.

But there is one underleveraged soft power that India should focus on more. Modi would do well to emphasise the power of entrepreneurship and startups, not only for projecting India outside, but for the good, it will do inside India too. India, with its millions of entrepreneurs, should be the world capital for entrepreneurship, especially in this age of technology-driven change.

Put simply, startups can be the newest tool of diplomacy in this new world order that is massively impacted by technology. This is the soft power India has to leverage, build and talk about at the top of her voice.

Given the pace of disruption in the world economy, future global leaders will be decided on the basis of how they innovate and solve their problems. And India should find a place right at the top.

Here’s why innovation and entrepreneurship should be the soft power of choice both within the country and outside.

India’s per capita Gross National Product (GNP) in 2016 was at $1,680 as per the World Bank Atas method and $6,490 in terms of purchasing power parity (or PPP, a way of adjusting dollar GNP based on the relative prices of commonly used goods and services in India and the US).

Compare this to the world average of $10,300, China’s $8260, the US’s $56,180, and India is clearly still some distance away from our Sabka Saath, Sabka Vikas mission.

While it might take a few decades to increase our per capita income to comparable levels, can disruptive entrepreneurship help us get more bang for the buck?

That is, push down the costs of living so that we can achieve a better lifestyle on lower incomes? That’s the question policymakers, media and entrepreneurs need to answer. And this has to come in a collaborative way.

It is not possible for policymakers to come up with answers to our problems all by themselves. What we also need to ask is, can entrepreneurship and innovation make a severe dent in the basic living standards of people of this country?

Based on the weightages in the consumer price index (CPI), inflation has grown by about 32 percent over the last five years, with food, fuel, housing and clothing and footwear being major components, but the question to ask is whether innovation can dent the costs of these key consumption categories.

On the other side of the equation are income and jobs. Can entrepreneurship and innovation solve the nagging problem of job stagnation that we are witnessing today?

As per the 2017 World Employment and Social Outlook Report by the United Nations International Labour Organisation (ILO)
Year201620172018
Unemployment in India(in million)17.717.818(projected)

And here is what I propose on the eve of 70 years of Indian Independence to Prime Minister Modi and the policymakers:

Product nation

India has to become a product nation. And while economists and finance gurus continue to pontificate on why we continue to be a ‘service-oriented’ nation rather than a ‘product nation’, the answers run deep.

The conversion of a nation from service to product orientation needs large investments in startups. I propose the setting up of a big Research & Development fund, in the form of joint ventures between government and the top corporates of India, with an initial corpus of Rs 2,000 crore.

This will enable the youth of India, specifically students, and young scientists to seek around 1,000 grants in sectors ranging from medicine (moving from generics to building patented products), to biotechnology, to manufacturing, IoT (internet of things), AI (artificial intelligence), VR (virtual reality), healthtech, and agritech among other areas.

And the government must encourage Indian corporates to actively participate in this Startup India movement and R&D investment fund. It's shocking that MNCs in India have opened their doors to startups but Indian companies lag far, far behind.

Some people assume that startups here tend to be copycats and only produce non-impactful web products. Mostly, I disagree. But if we go deep and look at this question – why are startups only embracing consumer tech instead of investing their skills in other sectors – the answer seems to be this: the cost of creation in consumer tech is low.

How will a young bright student who has the load of an education loan on her head, look at building products, which need an investment of not just time, but loads of money? She has to worry about job security and the repayment of the loan. They are thus forced to take up jobs outside their areas of interest. It is necessary to empower them to embrace research.

Global collaboration

While we have been inward-looking as a country especially with entrepreneurship, the government should facilitate young entrepreneurs to set up shop outside the country also.

Post-Brexit, Germany, France, Austria, Switzerland and so many more countries are looking at collaborating with India. Countries with less/aging populations are looking at India for energising their own ecosystems. There is a huge possibility of the two very different worlds coming together for energising their eco-systems and the government should encourage it as a topmost priority.

A side note: one felt sad that it needed an Amazon to take Titan watches to the US, but clearly not just Titan, even garments and upholstery from the likes of FabIndia could easily make it to the global markets.

The government does have a StartUp India programme, but the definition has to change. We cannot have a very short view of who startups are.

Why should we borrow the Silicon Valley model, when anyone who is able to create a substantive number of jobs should be given the privilege of being called a startup?

Ease of starting up

While some improvements have been made on compliance requirements and in terms of ease of doing business in the country, there should be a special category called ease of creating startups in India. In simple terms, what this means is that the amount of paperwork and hassle involved in a startup should be minimised immediately.

If Indian startups want to attract talent from outside the country, they should do away with the high fees.

The fund that has been created under Startup India should itself work like a startup and Rs 10,000 crore should be deployed without further delay. This cannot happen if only policymakers are to take a decision on who will be funded; entrepreneurship participation is imperative to figure out what is required.

In this regard, I would like to thank Modi for inviting young entrepreneurs in policymaking. Startup India should see more participation from industries and venture capitalists operating out of India. We need more real practitioners and entrepreneurs, who are basically 'doers', as part of the roll out.

Data power

India should market itself as a rich data nation; it's our strength and we should talk more and more about it globally. We should also leverage startups to build great solutions using this data.

Former Infosys and Unique ID Authority of India Chairman Nandan Nilekani has this to say: “The fact that we are talking of using big data is not just some technical mumbo-jumbo, it is actually creating a cycle of investment and growth for India's small businesses, which will lead to economic growth and jobs.” He said this at an event organised by the Confederation of Indian Industries (CII) in Bengaluru.

“With companies becoming data rich due to the availability of digital footprints through GST, some eight million small businesses in GST will start getting loans. When they start getting loans, they will grow and when they grow, it will create jobs,” he added.

The problem is our knee-jerk reaction to tech innovation when things go wrong. Like every citizen of this country and the world, I was most shocked, angered and felt violated by the Uber cab rape incident in Delhi. Having said, I would add that a blanket ban on Uber would not be the optimal solution. The ban affected thousands of drivers whose households were running on their daily earnings, and they had taken loans to buy cars on which EMIs had to be paid.

Startups cannot live under the fear of knee-jerk policy reactions. Decisions that affect startups and tech innovators have to be thought through for their larger implications. Ride-sharing is a fledgling industry in India right now and a little more love will help this space a lot.

Mr Modi, you are an entrepreneur to me for your far-sightedness. No one has understood the 'great power of the soft-power' like you. On the eve of India's 70th Independence, when we write India's new story, I hope startups find themselves in the first chapter.
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