Kerala startups want Sitharaman to support deep-tech innovators in a big way

Kochi: The startup sector in Kerala is eagerly waiting to see how the Narendra Modi-led central government is going to support innovative ventures in its Budget 2020.

The startup ecosystem in the southern states wants more support for ventures in deep technology that can help improve the health of fundamental sectors like agriculture, healthcare, water management and energy.

Only policies that support ventures in basic sectors can help the economy overcome the current slowdown, according to experts in the field of startups.

“Agriculture sector has to be transformed into a prime mover. Economy can grow only when the productivity as well as the purchasing power of those in agriculture sector are increased. If you want to have such a change, you need to have policies to support the deep-tech startups who work in these social sectors,” Saji Gopinath, CEO of Kerala government's Startup Mission, told Onmanorama.

He said the support could be in multiple ways. “It could be physical support or as innovation funds,” he said.

Deep tech is defined as the set of cutting-edge and disruptive technologies based on scientific discoveries, engineering, mathematics, physics and medicine. Its applications are said to have a profound impact on people’s and society’s lives.

Sectors such as life science, computing, food and agri tech, aerospace, artificial intelligence, energy and clean-tech, industrial technologies, telecom, new materials and chemistry are said to be the most fertile grounds for the application of deep tech.

India is gradually picking up. The National Association of Software and Services Companies (NASSCOM) report on the country’s tech start-up ecosystem shows that over 18 per cent of all start-ups are now leveraging deep tech, up from 8 per cent in 2014. In other words, there are over 1,600 such companies in India engaged in high-end engineering.


Saji also stressed the need to support more innovative ventures that go beyond service aggregators.

“If we need to realise the dream of $5 trillion economy, we need to bring innovations in many sectors. Startups can do a lot in this regard. But today there's a lack of system to scale up startups in our ecosystem. Even though we speak about a lot of venture capital funding and all, more than 90 per cent of it is done by foreign investors. And they are mainly looking for companies with more valuation,” he said.

Saji said the present tax system is not favourable for those work in innovative sectors, especially electronics and hardware. “They expect some tax relaxations too,” he said.

Government as market place

Echoing the concerns of Saji, Prasad Balakrishnan Nair, CEO of Maker Village, said the biggest challenge before the startups in deep tech sector is to find out who is their first customer.

As a solution, Prasad said the government has to act as a market place. He said the Kerala government has already started implementing such a policy.

"The central government has to bring in a policy where all its departments and other autonomous bodies should procure at least the first product of a startup without compromising on quality. This can bring a huge change in the ecosystem of hardware product startups," he said.

He said industry support to startups in terms of mentoring, designing, development and technical expertise should be brought under the purview corporate social responsibility (CSR) so that it would be an incentive for the industries to do more help. "For this, a value should be fixed for the industry support and consider it as part of CSR," he said.

He also said that hardware product startups are facing difficulty to import several components due to tax burden. "Tax incentives should be provided after fixing a value ceiling for such imports," he said.

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