What is the one similarity between Flipkart, InMobi, Capillary Technologies, Milaap, and Grofers? They are all startups registered in Singapore, despite having founders, employees, permanent offices, and operations in India.
In fact, thousands of Indian startups are registered in Singapore, as regulatory norms are incredibly business-friendly. The island nation allows 100 percent foreign ownership of locally-incorporated companies. And according to the World Economic Forum (WEF), Singapore also has the second-best intellectual property (IP) rights protection in the world, while India is ranked 65th.
In 2018, World Bank ranked India 77 out of 190 countries surveyed in terms of ease of doing business, while Singapore is number one. Also, the corporate income tax in India is 25 to 30 percent, while it is only nine to 17 percent in Singapore. Needless to say, investors are also interested in funding the startups registered in countries where listing is easier.
Most Indian entrepreneurs would agree that they would rather register in India if the regulations were more relaxed. To make this happen in the world’s largest democracy, a bunch of entrepreneurs came together two years ago.
In 2017, IndiaTech.Org was set up by founders of India’s major startups like MakeMyTrip, Ola, Steadview Capital, and Hike, and were soon joined by UrbanClap and Policy Bazaar, among others. The non-profit organisation is a think tank working with various ministries and statutory authorities on issues concerning online businesses.
Rameesh Kailasam, a policy expert who has worked with APCO, Oracle, IBM and others earlier, joined IndiaTech as CEO a year ago.
In a recent chat with YourStory, he elaborated on how the organisation is solving various challenges faced by online businesses by bringing about major policy transformations.
Growing the network
The organisation, which currently has 14 members, has just started formally reaching out to more entrepreneurs.
“First, we wanted to establish ourselves and build credibility that the issues we have taken up have a strategic value to the founder community. In the last nine to 12 months, we have demonstrated that we are capable of making it happen. The SEBI has allowed differential voting rights as a framework, and we are working on the IPO and listing norms too,” Rameesh says, adding that all these efforts have built traction for IndiaTech within the founder community.
For new members, IndiaTech is looking at founders who are Indian nationals with companies that have operations in India. Also, the companies should have an office and permanent establishment in India.
As more entrepreneurs join IndiaTech, building consensus regarding policy recommendations to the government is crucial. Rameesh says that they are very integrated on this approach with monthly and fortnightly meetings of all the members.
“I also meet founders regularly on a one-on-one basis; even some non-members who are facing issues. Then, we come back to the table and draw consensus out of the issues. Teams below the founders (in startups) are also integrated with IndiaTech for working on policy and legal issues,” he explains.
Notably, IndiaTech is the voice of entrepreneurs and promoters of startups, and not their partners, whether it be smaller sellers, or delivery partners, or other service providers.
Building a model for India
For policy recommendations, IndiaTech has referred to the US model, Hong Kong model, and Singapore model – all of which have eased their listing and other processes. Finally, it suggested a model with checks and balances required from an India standpoint.
Rameesh elaborates, “We have only said what is not right in the Indian system, and suggested the counter check and balance we can offer to ensure that retail investors and others will continue to be protected. We are not asking to open gates for Ponzi companies to come and list in India. We are talking for genuine companies with a track record over four to five years and a significant turnover.”
For example, IndiaTech has said that there should be a threshold for companies that can list, in terms of turnover, even though there is no such requirement in other jurisdictions.
“But we believe that this threshold requirement will make you believe that this company is genuine and has reached a particular stage. For instance, we are saying Rs 500 crore as the threshold for unicorns to list,” says Rameesh.
But government always has looked at the promoters with suspicion, primarily because traditional economy always had promoters who would take your money for listing with no guarantee. Rameesh opines that it is unfair to compare the current companies with such promoters, primarily because new generation startups have already gone through multiple rounds of capital infusion and due diligence and they’re not going to the market to take the money from the retail industry.
“All we are asking is to look at these companies with a different lens because this is a particular group that is to be nurtured by India. This has been taken care of in the US and China. In India, we have buyers and sellers; these companies are the enablers using them,” Rameesh tells YourStory.
India missed the hardware bus long ago. Although we picked up on the services industry, we haven’t done great on software. Rameesh believes that India can build online businesses’ ecosystem on a much bigger scale.
“It creates employment for India and Bharat; India is the one that sits inside these offices (from the knowledge economy), and Bharat is the feet on the ground, delivering. It is a unique inclusive ecosystem that India has to nurture; it is the employment generator and livelihood creator of the future,” he concludes.