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4 August 2015, Gateway House

India-U.S. $1 trillion: Silicon Swadesh

The following is an excerpt from the book 'India-U.S:$1 trillion by 2030' by Nish Acharya, Visiting Fellow at Gateway House

Visiting Fellow, India-U.S. Studies

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In the book, Nish Acharya introduces the concept of Silicon Swadesh – the creation of Silicon Valleys in multiple cities across India. A Silicon Swadesh would nurture an ecosystem which generates ideas, turns those ideas into companies and non-profits, provides mentorship and capital for business leaders, and offers middle management and capacity to grow these companies.

Excerpt

The government has set aside Rs. 200 crores for incubation centres, Rs. 7,060 crores for smart city development,which will include wireless and broadband access, smart grid energy usage, smart transit, and other improvements in major metros that can be driven by technology and entrepreneurs.

As with the other opportunities for collaboration between India and the U.S., the creation of a Silicon Swadesh requires several steps by Indian companies and organisations before American investment, management, and expertise can be maximised.

The first is a larger philanthropic investment in entrepreneurship and the steps to nurture it more broadly.   A good model here is the microfinance sector.  Long before multinational banks entered the field and Indian micro financiers became publicly traded companies, the industry was funded by philanthropists and run by NGOs.

These NGOs built relationships in villages (marketing), managed loans (operations), and provided financial education to borrowers.  Philanthropists provided the capital for the loans as patient capital—officially an investment, but treated as a grant to build the credit and economy of rural India.

The same philanthropic investment must be made around high-growth entrepreneurship across India.  We highlight two models in this paper—the Deshpande Foundation and the Wadhwani Foundation.  The Deshpande Foundation’s Hubli Sandbox is training over 10,000 young people in entrepreneurship, and has launched several urban and rural incubators to support high growth entrepreneurship in north Karnataka.  The Wadhwani Foundation’s National Entrepreneurship Network (NEN) has created entrepreneurship at over 550 universities in India.

These programmes offer entrepreneurship education, training, office space, access to mentors, the opportunity to pitch to investors, and access to a network of other startups and professional service providers.  The Indus Entrepreneurs (TiE) are doing the same for high-growth tech startups.

Because Indian entrepreneurs require education related to entrepreneurship—business plan development, marketing, and financial management—and need mentoring from other entrepreneurs and industry experts, many of the entrepreneurs in these accelerators and incubators are likely to drop out or fail.  This makes accelerators and entrepreneurship training programmes better suited for philanthropy to support than as for-profit investments.

However, once philanthropy has invested in entrepreneurship education, accelerators, and community organisations to connect entrepreneurs, then the private sector will find multiple opportunities.  And as a nation, India should celebrate entrepreneurship across sectors and not emphasise just IT.  Various Indian cities, large and small, have different assets and industries that can nurture entrepreneurship.  The universities in the NEN reach every corner of India.  India’s industry clusters stretch from shipping and trade in western Gujarat, to medical device entrepreneurs in Vellore.

Secondly, India must build out the organisational infrastructure for entrepreneurship to more cities.  Every one of the 35 major Indian cities with over 1 million people should have an accelerator, shared working space, events to connect entrepreneurs, seed funds to provide very small grants to entrepreneurs, and networking organisations like TiE and NEN that entrepreneurs can join.

As India develops this infrastructure, there will be even more U.S. engagement than before.  Already, most American venture capital firms have offices in India.  TiE has 17 chapters across India. American entrepreneurs often set up their India operations soon after receiving their first or second round of funding.  So the relationships already run deep in India.

Yet, most of those relationships are with the IT industry.  TiE entrepreneurs and investors tend to leverage India for the same reasons multinationals do—back office operations and technology support, rather than innovation and research.

As India develops a research infrastructure and more entrepreneurs launch companies across the country, American institutions will look to conduct more joint research and investment in scientific equipment for their Indian counterparts.  In addition, given the glut of academic researchers in the U.S., it can send many of its PhD candidates to India to teach at new IITs, IIMs and AIIMSs campuses.  These new faculty members, with deep ties to the U.S., are more likely to promote research with the U.S. than elsewhere. And while both governments have launched small programmes to boost academic collaboration, this really looks to be a bigger opportunity for philanthropy.

The Book ‘U.S.-India: $1 trillion by 2030’ will be published by Oxford University Press in 2016. You can read an executive summary of the book, here.

Nish Acharya is a senior advisor to Northeastern University, a senior fellow for the Center for American Progress, an entrepreneurship strategy consultant and a columnist for Forbes media.

This excerpt was exclusively published on Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

For interview requests with the author, or for permission to republish, please contact outreach@gatewayhouse.in.

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