India's tech startup boom

Are policy tweaks needed?

- AJIT BALAKRISHNAN

“We have to be careful that we don’t blow things up,” said my stumbling, white-haired friend, long retired from the civil service but who had served in almost all our government’s top industrial-policy entities. Though he can barely speak and almost cannot walk without stumbling, I often tap his fertile brain when policy issues confound me.

I asked him: “Do you think the super-enthusiasm our central and state governments are displaying about start-ups will result in something big for us as a country?” I posed this question to him because I remember back in the 1990s, when I was passionately running my internet startup, Rediff.com, Indian government policymakers greeted me with polite but disbelieving faces.

“Of course, tech startups are terrific for the Indian economy,” he said, warming my heart, but then his face started looking grim, “but I hope it’s not like the ‘import substitution’ fever, which turned out to be a disaster.” He was referring to a period up to the 1990s, when the government heavily promoted policies aimed at replacing imported goods with domestically produced ones, often through high tariffs and other protectionist measures. This was blamed for India’s slow growth in that period compared to the rest of the world and was abolished as disastrous when Manmohan Singh became finance minister in 1991.

This got me thinking: Could anything trigger a disaster in our tech-startup boom and create a disaster like the import-substitution policies did?