Homegrown Startups Taking a Beating?

Date:   Thursday , May 07, 2009

Earlier this month we had been trekking at the highest peak of Karnataka— Mullayyanagiri. There was a police checkpost at the top
with a wireless device that relied on Line of Sight transmission, as the only channel of communication.While talking casually, the policeman in charge mentioned about the difficulties of being at such an altitude, especially when the communication gadget failed to work most of the time.

Unable to hide my curiosity, I tinkered with the device and observed that it was manufactured by an American multinational. The irony of the situation dawned at me when the policeman said that the earlier instruments,
which had been provided by Webel Electronics, a West Bengal government undertaking, had been of much superior quality and the problems were not many when it came to the transmission of signals.

The question here is why must a device be changed when it had been perfectly working, to the satisfaction of the user? An obvious answer might be that someone at the top did not renew the contract with Webel Electronics.

Or perhaps the ‘made in India’ product failed to win the tender? Over the last few months we have been talking to a number of Indian
startups, especially those who are building products for local markets. In many instances, these companies mentioned during the discussions that either they do not qualify for the tender process or if they do qualify, they
fail to win the contract because they are just two-year old startups.

Some startups also revealed, although on assurance of anonymity, that several large players, especially Indian service providers, have offered them large sums of money as bribe to withdraw altogether from the tender process! How can the homegrown startups mushroom in such a suffocating environment?

It is no-brainer that with government projects in their portfolios, startups would find it easier to penetrate the private sector and also reach out to the global markets. If the local government or the companies do not support these startups then who will?

There have been several cases wherein government tenders have put conditions that eliminate a certain section of Indian players from participating in the process. There is no transparency. Who wins the contract is perhaps decided much before and the conditions of tenders are written to suit them.

But then how does one clean up the system, and bring in transparency and create a level playing field? It is easier said than done. To start with, the government needs to believe in the competency of the homegrown startups and, like China, engage them to provide business solutions. Unless this happens, there is only a very bleak chance for these companies to gain a foothold in the industry. Having been a part of the system, I know that it will be years before anything positive comes up. But when it happens, even if in a small scale, it will change the tide in favor of the startups and save them from extinction.