When big stars of India’s startup world—MakeMyTrip founder Deep Kalra, Ola co-founder Bhavish Aggarwal, Hike founder Kavin Bharti Mittal, and Steadview Capital managing director Ravi Mehta—meet once a month to discuss what they expect from policymakers, there’s a fifth person in the room: Rameesh Kailasam.
In August 2018, Kailasam, a reform and policy strategist, was appointed as the chief executive officer of IndiaTech.org, a think-tank that was conceived by Flipkart founder Sachin Bansal and Ola’s Aggarwal in September 2017 and initially made headlines for its seemingly protectionist stance.
Ironically, Flipkart is now owned by American retail giant Walmart. Meanwhile, Indiatech.org has redefined its vision.
“Sachin conceptualised the idea but he was never a member. There was never an official release from Indiatech on protectionist policies. It is unfortunate the media hangover that came from that continues to take us in the same breath,” Kailasam was quick to clarify to Quartz. “We (Indian companies) do not seek something extra, nor do we say ‘stop someone else.’ Our ask is that if five laws apply to me, let them apply to my competition as well. And if my competition is exempt, I should also be exempt.”
In conversation with Quartz, Kailasam shared what Indiatech.org’s plans are. Edited excerpts below:
What or who does Indiatech.org represent?
All startups that use the internet as a medium to deliver their product or service like an UrbanClap (now called Urban Company) or an InShorts. We have four core members and close to 15 associate members by now. However, we are currently working with 30-40 companies irrespective of whether they’ve signed up or not. Our intent is to build a larger ecosystem.
What are some of the key issues you are working on?
I’ve met over 60 entrepreneurs to understand their issues in setting up a startup in India vis-a-vis another country.
First, listing and the ability to run a company even after dilution was a key concern. Listing in India needs a minimum of 20% promoter requirement of equity, it requires profitability for three years, and it also had certain thresholds on the position of net fixed assets, which asset-light companies in the internet space won’t have. Most of the startups are consumer internet companies, which are in a constant customer acquisition mode and therefore may not show profitability in the near future. In other countries, they don’t have these clauses.
The second bucket is the ease of doing business and level playing field. This includes any compliance issue that increases your cost or is needlessly being retrofitted to your sector. A simple example is in the GST (goods and services tax) domain. For example, a travel operator today would have to open offices in 37 cities to give you hotels in those 37 locations in India. I have to have 37 GST registrations. But if I take the business and set it up outside India and still serve the same markets, I’m not bound by any of these regulations.
The third vertical is opening up the government marketplace to startup ecosystem. We’ve managed to get fixed price engagements going. Now, we’re working with technical team as well as government of India on dynamic priced products, where prices change by the hour or by the day.
How exactly are you lobbying?
We do specific roundtables only when sought by the government, and if members are also of the opinion that we need to engage directly on certain issues. Otherwise, we don’t do events or publish reports. All our submissions are to the government on what a policy should ideally look like.
India already has trade bodies like Nasscom and iSPIRT. Is there really a need for Indiatech.org?
Each organisation has a role to play. The reason for a Nasscom to exist is because the huge back office and IT and IT-enabled services industry in India needed a voice. Plus, they work on issues like visas and market enablement in international markets. That’s their core competence. Now, startups are an add-on to them and may not receive the same focus they give to their core constituents. Now, the founder community in consumer internet space was starting to feel the void. iSPIRT also came as a breakout from Nasscom because they realised the Indian software product industry wasn’t getting the visibility that ideally they should have.
What are the startups you represent expecting from this year’s budget?
Today, 90% of my issues are with GST. Ease of taxation needs to be considered. We have also written the ministry on unblocking certain areas to open up the sector further. For example, if you take a furnished house on rent, you may have housing rent allowance (HRA) factored into your salary. However, if you take a barebones house and furnish it yourself by leasing out furniture and light goods from a startup like RentoMojo or Furlenco, you get HRA benefits for the barebones house but don’t get the benefit for what you leased out.
Is the economic slump a concern among startups?
We haven’t really felt it. The young generation is getting more comfortable with internet startups. Most young people are happy to get into a ride-hailing cab than owning a car.
And if you’ve seen the news on various investments happening, millions of dollars are getting invested, which shows there is confidence in the sector.
Some argue startups are contributing to India’s unemployment crisis with massive layoffs. Your take?
This is a disruptive market. When you build a product, you may require a certain kind of manpower and as the journey progresses, you may require a different kind of manpower. Or when the company reboots from version 1 to version 2, you may see rejigs happening. That churn is bound to happen because these are all at pretty early stages of establishment. Bottom line is today a lot of people have options of self-employment and being part of the gig economy. I’m being told people have even stopped hiring software developers full-time because they are available on hire part-time. People code on the cloud and you can see them work. There are business model changes where conventional thought processes are going away and new ones are coming in.