Startups in the country are “lost in the maze of existing regulations and controls that are applied to them sometimes even retrospectively”, Anand Mahindra, chairman Mahindra Group, said and called for increased ease of doing business for new enterprises.
Delivering the 4th Annual Atal Bihari Vajpayee Memorial Lecture on ‘The role of industry in building a resilient and resurgent India’, Mahindra highlighted the importance of the government and industry working in a collaborative manner to achieve scale, innovation, and global reach.
“How about making life simpler for our innovators who are pioneers and potential unicorns?” he said. “We need regulators to work as partners and proponents rather than being seen as taskmasters. We need to encourage astronomical amounts of innovation for a resurgent India and the less obstacles there are in the way, the better.”
Mahindra said he has spoken to several startups about their issues and almost all of them mentioned existing regulations and controls. Given that the government is working on increased ease of business for investors, it would help if the policies were conducive, he said.
Mahindra is the first business leader to speak at the event hosted by the Ministry of External Affairs.
His comments come against the backdrop of the recent run-ins of some of the startups with the regulators and their request to reduce the compliance burden.
Lauding the government’s production-linked incentive (PLI) schemes, Mahindra said, “The scheme has given us the courage to build capacity. I would argue it is a powerful instrument of partnership.”
He recommended that the scheme be spread wider to ensure it covers a larger section of the industry.
Drawing attention to factors that have been impacting the manufacturing sector’s competitiveness, Mahindra said, “Land costs, utility costs, logistics costs – all these contribute to our lack of competitiveness.”
He appreciated that Indian ports now have an efficiency close to the best in the world. “But logistics is such a major part of our cost structures, that ‘yeh dil maange more’. More focus on improving cost structures, more advances on the ports model, will have a multiplier effect on industry,” he said.
Mahindra also sought the government’s support on global reach. ‘Made in India’ must become a globally recognisable brand through bigger budgets and effective pitching, he said.
Another way of extending global reach, he suggested, is through international aid tied to Indian industry. “We extend substantial aid to developing countries. If this could be tied to purchasing from Indian manufacturers, it could help open doors for Indian companies in otherwise closed markets,” he said.
Mahindra also said India needs prudent FTAs (free trade agreements) to maintain a level-playing field for Indian companies even as multinationals press their policymakers to deliver them an advantage through those FTAs.
Citing an example of India seeking pole position on climate change, particularly after last year’s G20 meetings, Mahindra suggested that business be made an instrument of foreign policy. The private sector has led the way in developing many innovative measures, he said.
The private sector, Mahindra pointed out, is lagging when it comes to risk and investment and India’s recent growth has been disproportionately fuelled by government investment as the industry is averse to risk due to the country’s colonial past.
“In business, it makes us risk averse, sticking to the tried and true rather than blazing new paths. It makes us fear failure. It makes us settle for jugaad when we are capable of jhakaas (which loosely translates as wow!),” he said. “For too long have we carried this imputed sense of inferiority. It’s time to change.”
Mahindra said merely playing a catch-up game on scale and innovation would take the country too long. “To earn genuine respect, can we use a secret weapon? We, in Indian business, possess a Brahmastra, a secret weapon that few other countries have. That Brahmastra is the power of purpose driven, make profits in such a way that it impacts lives positively,” he said.
