Bengaluru: Creating local solutions for local problemslink
By Dannyelle Thompson
30 March 2021
There is no shortage of policies encouraging entrepreneurship in Karnataka, Bengaluru’s state, or indeed in India as a whole. Between federal and state policies, there is a wealth of funding, particularly seed funding, available. The government recognizes the untapped potential of its population as an avenue to growth and increasing access to funding as the stepping stone to growth. The following policies provide a glimpse of the current policy priorities.
Launched in 2013 by NASSCOM, the trade association of Indian IT BPM industry, 10,000 startups is an initiative to boost startup culture in India. The program provides incubation, funding, and support to startups, with the hopes of reaching 10,000 startups supported by 2023. To date, they have impacted 5800 startups, provided funding for over 500 startups, and have held 3500 startup events.
As a part of the Innovate Karnataka Initiative, the state government offers funding specifically for early stage funding which have not established proof of concept. This is a particularly helpful policy, as investors rarely make investments before the proof of concept is established which, particularly for fields like biotechnology, cannot not always be bootstrapped entirely. The grant allows for up to Rs. 50 Lacs ($68,500 USD) for selected ideas. Other grants available under the Karnataka Initiative include ones specialized for other verticals such as the Semiconductor Venture Fund, the Bioventure Fund and the AVGC Fund for the Animation, Visual Effects, Gaming and Comics (AVGC) sector. Our SFI currently gives Bengaluru a score of 2 for Funding by Grants.
India’s trade balance is 39.55% of the national GDP. In comparison to the global average of percent 91.55%, it’s trade activity, at least in regards to goods, is suppressed. The rise of neoliberalism and open trade has been on the rise for decades, with most of the world increasing its international trade as a means to leverage to increase comparative advantage and bring economic growth, India has seemed reluctant to embrace the same. The policy could likely be protectionist in some cases. As Ayushi noted, in the drone sector, the state allows little trade of technology for security. In other ways, the government seems to be more focused on compensating with the trade of services, leveraging its human capital. A direct and straightforward policy to balance trade and the reduction of taxes on exported goods would be a way to improve.
While Karnataka and India’s policies on its startup scene direct the most prominent pain point of an entrepreneur’s potential success, access to capital and entrepreneurial culture (score of 30 and 56 respectively), it’s worth noting that these are only two of the domains represented in our SFI. Furthermore, the index is holistic, in that uneven performance in one category can bring down the total score considerably. It’s bottom performing indicators of trade openness, GDP per capita, high equity funding, and FDI inflows, for instance, could benefit from innovative trade policies.
Dannyelle works as a Research Analyst for enpact’s Data&Research sector. Originally from Los Angeles, Dannyelle has lived and worked in Berlin, Germany for two years. Her primary work at enpact revolves around product design, policy research, and authoring SFI reports. In June 2021, she will graduate from The Hertie School with her Master of Public Policy with a concentration in Policy Analysis.