Northern states among the laggards

Vijay C Roy in Chandigarh

In December last year, the Department of Industrial Policy and Promotion (DIPP) released the first-ever state start-up rankings on the basis of the start-up policy framework formulated by the Central Government.

The ranking framework measured and compared the results of the start-up initiatives and exercises undertaken by various state governments.

The ranking was based on over three dozen action points divided across seven broad categories, including the states’ start-up policy and its implementation, incubation support, seed funding, angel and venture funding, simplification of regulations, easing public procurement, and awareness and outreach. On the basis of their performance in these categories, the states have been recognised as the best performer, top performers, leaders, aspiring leaders, emerging states, and beginners. A total of 27 states and three union territories participated in the exercise.

Gujarat topped the list as the best performer. The ‘top performers’ include Karnataka, Kerala, Odisha and Rajasthan, while states such as Andhra Pradesh, Bihar, Chhattisgarh, Madhya Pradesh and Telangana were put in the ‘leaders’ category.

States identified as ‘aspiring leaders’include Haryana, Himachal Pradesh, Jharkhand, Uttar Pradesh and West Bengal, while the ‘emerging states’ category includes Assam, Delhi, Goa, Jammu and Kashmir, Maharashtra, Punjab, Tamil Nadu and Uttarakhand.

Chandigarh, Manipur, Mizoram, Nagaland, Puducherry, Sikkim and Tripura are at the bottom of the pile under the ‘beginners’ category.

Considering the rankings, except Rajasthan, none of the northern states were among the top performers. According to a government official, the objective of the rankings was to encourage the states and union territories to take proactive steps towards strengthening their respective start-up ecosystems. 

Experts cite lack of start-up ecosystems in the northern region as one of the prime reasons why these states are among the laggards. Punjab, which is known for entrepreneurship, is a notch above north-eastern states such as Manipur, Mizoram, Nagaland, Sikkim and Tripura, which are ranked at the bottom as per the State Start-up Ranking Report.

 “The government needs to play a proactive role in nurturing start-ups. While South India took the lead by launching the start-up policy, it was only in 2017 that the northern states realised its importance. Now, they have to create a congenial atmosphere so that new start-ups come up. So far, most of the incentives or benefits offered by the northern states are on paper only,” said Pumpkart founder KS Bhatia.

In the region, Himachal Pradesh took the lead by introducing the start-up policy in 2017. Later, Haryana unveiled its policy, followed by Punjab. Jammu & Kashmir introduced its start-up policy in September last year. 

Is a policy enough to promote start-ups? No. The start-ups are contending with a host of issues, including implementation of the policy. 

“The lone Entrepreneur Development Cell in the region is not effective. Initially, we have to cope with hefty real estate rentals and lack of qualified manpower in this part of the country. Even if we overcome these odds, getting funding is a Herculean task in the region,” said an entrepreneur who did not wish to be quoted.

Punjab Additional Chief Secretary, Industries & Commerce, Vini Mahajan told The Tribune recently that having received feedback, the state government was going to intensify its efforts to boost the start-up ecosystem in the state. 

“We are working with the industry, academia and industry bodies to develop the ecosystem and foster new ventures and help them grow. Taking a step forward, we have already signed an MoU for setting up a start-up hub in the Software Technology Park of India (STPI) incubation centre in Mohali. We are also supporting the Union Government in setting up a start-up centre in Amritsar,” she added.

In terms of start-ups registered with the DIPP, Punjab occupies the 20th place. Over 100 start-ups from Punjab are registered. Jammu & Kashmir has 63 start-ups, followed by Chandigarh (52). In Himachal Pradesh, there are 27 start-ups registered with the DIPP. At the number seven position nationwide, Haryana leads in the northern region with 710 start-ups as it enjoys the NCR advantage. Young entrepreneurs get start-ups registered with the Department of Industrial Policy & Promotion to avail incentives offered by the Central Government.

Over 60 per cent of the 14,500-odd start-ups in India are concentrated in five states — Maharashtra (2,587), Karnataka (1,973), Delhi (1,833), Uttar Pradesh (1,129) and Telangana (748). These startups are from various sectors, including IT (information technology) services, healthcare, education, food, agriculture, renewable energy, and technology hardware. 

The Central Government launched the Start-up India Action Plan in January last year to promote budding entrepreneurs. The plan aims to give incentives such as tax holiday, an ‘inspector raj-free’ regime and capital gains tax exemption. However, operators of start-ups complain that despite various measures taken by the Centre, the lackadaisical attitude of the authorities concerned, especially in small cities, is a major stumbling block.

State-wise start-up rankings

Best performer: Gujarat

Top performers: Karnataka, Kerala, Odisha, Rajasthan 

Leaders: Andhra Pradesh, Bihar, Chhattisgarh, MP, Telangana

Aspiring leaders: Haryana, HP, Jharkhand, UP, West Bengal

Emerging states: Assam, Delhi, Goa, Punjab, J&K