'Every Indian must be given a cell phone just like LPG stoves,' says Mohandas Pai

20th Nov 2017
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There may be challenges, but Mohandas Pai is bullish on India’s startup ecosystem and believes that entrepreneurship will drive growth for India.

Is India working towards the potential the people of this large country hold? The wave of positive changes and major reforms seems to be boosting investor sentiment and India’s outlook across the world.

The 'Make in India' initiative aims to transform India into a hub for design, innovation, and manufacturing. The 'Swachh Bharat Abhiyan' focuses on making India a clean nation while the 'Startup India' initiative will lead the way to make India a nation of job creators instead of job seekers.

Karnataka, with its innovative ecosystem, and Bengaluru, which has transformed from IT capital to startup capital, are leading the change.

At the recently concluded Bengaluru Tech Summit organised by the Government of Karnataka, T V Mohandas Pai, Chairman of Manipal Global Education, captivated the audience by explaining how innovation and entrepreneurship can drive growth for India.

Information Technology - the transformer

The global IT and ITeS market (excluding hardware) reached US$ 1.2 trillion in 2016-17, while the global sourcing market increased by 1.7 times to reach US$ 173-178 billion. India remained the world’s top sourcing destination in 2016-17 with a share of 55 percent. Indian IT and ITeS companies have set up over 1,000 global delivery centres in over 200 cities around the world.

More importantly, the industry has led the economic transformation of the country and altered the perception of India in the global economy. India's cost competitiveness in providing IT services, approximately three to four times cheaper than the US, continues to be the mainstay of its USP in the global sourcing market. However, India is also gaining prominence in terms of intellectual capital with several global IT firms setting up their innovation centres in India.

Mohandas Pai said, “We have a danger of this country becoming a digital colony. All unicorns are substantially owned by foreigners, as of now. We have to draw companies to India. I believe by 2025, India will have about 100 thousand active startup creating 500 billion dollars of value and they will employ 3-3.25 million people. This kind of an expert entrepreneurship is going to come on top of the established software service companies, which will be very large.”

Mohandas Pai delivering a talk at the Bengaluru Tech Summit

Solving India’s problem

The software service companies of India are solving the world’s problems with many foreign IT services companies based out of India, but Mohandas Pai believes that startups are going to solve India’s problems in the future.

He spoke about how easy it was to access content in education and healthcare sectors but said supply chain remained a challenge in India.

“The supply chain cost is 14 percent of the GDP in India, China’s is six and America’s is five percent. This means if one manufactures in Nagpur and sends to Mumbai, it will be more expensive than importing from China. We have to solve this problem of supply chain through technology,” he said.

However, he expressed optimism about the kind of impact edtech companies like Byju’s and many healthtech companies are having on the lives of Indians. His recommendations to the government included providing every student of class six and above with a smart tablet with internet access so that they can also drive and be a part of the change.

“Every facet of the industry is going to change with startups. What India requires is an improvement in productivity. The wealth of the country is dependent on two factors: human resource productivity and financial productivity,” he said.

While financial productivity will be taken care of, he said: “Our productivity in terms of human capital is one-fifth that of Germany and half of China. If we can improve the productivity of people using technology, we will be a very productive country. I think startups are going to make it happen.”

Suggesting a solution, he added,

“Every Indian must be given a cell phone just like how the government gave LPG stoves to five crore women. All of us can then be on the same platform and India can be a first virtual virtuous country.”

The way forward

With the increase in the number of startups, Mohandas Pai spoke about the need for funds and the various initiatives taken by the government, including the Rs 10,000 crore seed fund and the Elevate 100 programme.

He said, “I also sit in on the seed fund committee, and we have allocated Rs 2,600 crore to about 53 funds and will disburse the funds in the next two years. In the next five years, about Rs 50,000 crore will be pumped into the system. We are also funding Series B and C funds.”

Mohandas Pai acknowledged that India is two years behind Silicon Valley when it comes to technology, a gap that used to be about five years a few years ago. As research and development are crucial for any innovation and startups, he said,

“There is a spurt of innovation and even though we don't have a critical mass in certain things, we had 500 AI and Ml-based startups in the last one year. I don't know if they are actually using it, but at least they are talking about it. It is becoming a building block.”

He stated the need for research centres in schools and colleges. “ We need 50 universities in Karnataka where the government will give funding to set up labs in robotics, AI, and Machine Learning.”

While the ease of starting business is the talk of the town, Mohandas Pai focused on the ease in business processes. He said,

“Today, it is easy to start a company but not kill a company. I want a fund to take over all failed companies and, if possible, kill them over a period of time. So that exit becomes easy for everybody.”

He also spoke about how important it is to celebrate startup entrepreneurs as heroes who built large companies from scratch and whom people can look up to.

Bengaluru - leading from the front

Bengaluru encompasses 35 percent of the startup ecosystem with 7,000 companies and over 100 funds.

Talking about how Bengaluru can drive growth, Mohandas Pai said, “We need to create a community that is much larger with more funds and entrepreneurs, build an environment that celebrates success and forge linkages with the government. We need a process change so more startups in the areas of healthcare, education, financial services, and others can be created.”

(Disclaimer: Mohandas Pai is an investor in YourStory)

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