Announcing Schemes Not Enough, Implementation Crucial for Startup Ecosystem: Expert

The government has sanctioned a new Electronics Manufacturing Cluster (EMC) at Dharwad in Karnataka which is expected to catalyze investments to the tune of over Rs 1,500 crore soon including from the startups too. 

Going by what the industry experts say, proper implementation of various schemes at root level is the need of the hour to sustain or boost the startup ecosystem in these clusters.

India, the next electronics manufacturing hub

Government is trying to make India an electronics manufacturing hub. According to the Ministry of Electronics and IT, the project, which is being set up at Kotur-Balur Industrial Area in the Dharwad District of Karnataka under EMC 2.0 scheme, is expected to catalyze investments to the tune of over Rs 1,500 crore soon. 

Nine companies, including start-ups, have already committed to making investments of Rs 340 crore and create over 18,000 jobs. This new EMC has a strategic locational advantage and well connected with NH-48 (1 Km), Hubli Domestic Airport (33 Km), which will reduce the logistics/ transportation cost of the industry in the EMC.

Lack of Implementation Of Schemes At  Root Level 

In a conversation with TICE News, R Raju, Managing Director of Ven-Rack Enclosures cum Past President on Karnataka Small Scale Industries Association (KASSIA) opines implementation of schemes at the root level is a major area that needs to be worked upon.

The startups are definitely bringing a revolution in the technology sector in India through their innovative breakthrough ideas and products. There is a need to encourage people with innovative ideas to set up their own startups. For this the entire ecosystem a startup needs to work in has to be conducive and supportive.

Availability, spending and investment of money are crucial to a startup and it is the capital that decides the scalability of a business. According to a study by Research Gate in most of the case the first choice for startup entrepreneurs is bank loans. 

The paper highlights that one of the most desirable sources of finance for startup enterprises is  bank loan,  and  many startup enterprises look forward to avail this facility to full fill their capital need from time to time. Government has also framed different policies to provide a platform for providing finance to startup enterprises through commercial banks. But the problem still exists and most of the startup promoters have to either put in their own money or find other sources to get fund for their startup.  Such kind of acts not only discourages startup promoters but also force future startup entrepreneurs to rethink on their decision for starting their  startups.

Not All Announcements Are Materializing

“Everything is being announced but not much is materializing. They are announcing startup funds and all but when the startups approach the banks, the bankers are not ready to help with the startup funds and ask for two years balance sheets or collaterals,” Raju, the Past President of industry body KASSIA says. 

A startup venture could be defined as a new business that is in the initial stages of operation, beginning to grow and is typically financed by an individual or a group of few individuals. 

At this level, it is one of the major task for government and commercial banks  is to bring on  new reforms by  which existing startups can be  motivated as  well as future  startups will  be attracted to start new ventures.

Funding Not So Easy For Startups

On this, Raju says, “What do you mean by a startup? A Startup means any new company or any experienced person who start can start an industry. But when you go to the banks, they will ask for minimum three years of balance sheet. Or a collateral security. If they want to fund Rs 50 lakh for a business they will ask for Rs 2 crore worth property as collateral. There are a lot of schemes but proper implementation of the schemes is lagging behind. In other words, fixed implementation is not there in any announcement.”

Raju further says that skilled people want to start their own business but they finally end up with nothing because of lack of support. They end up going for jobs in other industries. A startup can be started or expanded only on the basis of funds.

Talking about the electronics manufacturing cluster, Raju says lots of electronic units including startups are coming up. Another area we need control over is raw materials. For the past 10 years, government is asking to Make in India. But till date we are importing around 67% to 70% materials. From China alone we are importing around 67% materials in terms of either machinery, raw material or electronics.”

“We are not manufacturing indigenously. We are dependent on imports a lot. Practical implementation of schemes at root level is required to boost indigenous manufacturing,” Raju adds.

The entrepreneurs pointed that startups do open but they have to shut down because of lack of support, delayed payments, lower margins and more. 

Govt Committed to Make Bharat Atmanirbhar

Union Minister of State for Skill Development & Entrepreneurship and Electronics & IT, Rajeev Chandrasekhar while announcing the approval of cluster in Bengaluru said Karnataka is emerging as a global electronics manufacturing hub for the world, just as it is already a telecom hub with Apple plants in Kolar (Wistron) and Devanahalli (Foxconn). 

The Minister said that these new investments are creating jobs and development. The Narendra Modi government is committed to build India as a manufacturing hub as part of its ‘Atmanirbhar Bharat’ policies.

The Centre has already approved a common facility centre (CFC) for the development of an advanced testing facility in Mysore, Karnataka that will meet the various testing requirement of the industry.

The Modified Electronics Manufacturing Cluster (EMC 2.0) scheme was introduced on 1st April 2020 with an objective to create world class infrastructure along with common testing facilities, including ready built factory sheds/plug and play infrastructure for attracting anchor unit along with their supply chain to set up their manufacturing/production facility in the country. Under the Scheme, three electronics manufacturing clusters over an area of 1,337 acres with the project cost of Rs 1,903 crore, including Central financial assistance of Rs 889 crore have been approved with a projected investment target of Rs 20,910 crore.