Assessment of Competitiveness of Food-tech Start-ups in India
| Published date | 01 March 2019 |
| Date | 01 March 2019 |
| DOI | http://doi.org/10.1177/0019556118821268 |
| Subject Matter | Articles |
Article
Indian Journal of Public
Administration
65(1) 201–224, 2019
© 2019 IIPA
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DOI: 10.1177/0019556118821268
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1 The Indian Institute of Foreign Trade (IIFT), New Delhi, India.
Corresponding author:
Angad Munshi, The Indian Institute of Foreign Trade (IIFT), Qutab Institutional Area, New Delhi,
Delhi 110016, India.
E-mail: angad_phd17@iift.edu
Assessment of
Competitiveness of
Food-tech Start-ups
in India
Angad Munshi1
Abstract
Two years ago, the central government launched the ‘Start-up India’ initiative
to nurture innovation and entrepreneurship in the country, capturing the
entrepreneurial spirit of the youth. The initiative promised to build an ecosystem
conducive to scaling up start-up companies. The Start-up India action plan of
the government is a very important step in strengthening the entrepreneurial
ecosystem in the country. This article is an endeavour to portray the start-up
ecosystem in India, which has also focused on the global best practices.
The ecosystem for successful start-ups typically starts with proper mentorship
with a mix of technological and directorial support. India has made a strong
name for itself in the global start-up community and ranks among the top five
countries in the world in terms of number of start-ups founded. It is estimated
that the job creation from these entrepreneurs is likely to reach 250,000–
300,000 by 2020. The Indian food start-ups are now playing a pivotal role in
accomplishing transformation, and trying and testing innovative technologies
and business models. The innovations in this segment have been the result of
improving technology in three segments: ordering food, food preparation and
finally delivery. To seize the opportunity for the food industry, it is important to
understand the dynamics around the start-up ecosystem. The challenges in the
space are many, but it is heartening to see the passion and ability of the young
start-ups who are working towards accomplishing their goals. The consolidation
is the new mantra for food delivery companies, while quality will be the decisive
factor, playing a catalytic role in the near future for health-conscious consumers.
Keywords
Start-ups, food and beverage segment, food business operators, food aggregators,
food safety and regulations
202 Indian Journal of Public Administration 65(1)
Background
In the words of Prime Minister Narendra Modi, the Start-up idea is ‘to convert
India into a nation of job creators from a nation of job-seekers’.
There are no fixed parameters on the type of company that can be identified as
a start-up. Those in the business and policymakers explain the concept of start-up
from being ‘a state of mind’ to ‘a culture and mentality of innovating on existing
ideas to offer solutions’. The term is more frequently used for high-tech compa-
nies that are employing cutting-edge technology to solve critical problems, as it
is commonly believed that without the essential element of ‘technology’, those
companies are just traditional businesses.
The Department of Industrial Policy and Promotion (DIPP) under the Ministry
of Commerce and Industry has defined a start-up as an entity incorporated or
registered in India:
1. Till up to 7 years from the date of incorporation1 and up to 10 years for
biotechnology start-ups;
2. If the annual turnover does not exceed `25 crore in any preceding financial
year and
3. If it is working towards innovation, development, deployment and com-
mercialisation of new products, processes or services driven by technology
or intellectual property.2
Thus, if a private limited company under the Companies Act, 2013, or a partner-
ship firm under the Partnership Act, 1932, or a limited liability partnership under
the Limited Liability Partnership Act, 2008, is seven years old, it is defined as a
start-up under the Start-up India initiative. On the contrary, it will cease to be one after
the completion of seven years from the date of its incorporation/registration or if
its turnover for any previous year exceeds `25 crore (ibid.).
The start-up culture in India has particularly gained traction in the last 3 years,
buoyed by the Narendra Modi Government’s flagship programme, Start-up
India, the objective of which is to promote India as a start-up hub, factoring in its
technology-savvy demographic dividend, with its working population projected
to grow in the next 25 years by a third. Among other initiatives unveiled along
with the programmes, `10,000-crore Fund-of-Funds for start-ups, which was
launched to invest in local venture capital funds that would ultimately commit
funding to start-ups. The objective is to help generate 1.8 million jobs and reduce
red tape. Apart from support through the Fund, fiscal benefits like tax exemption
on capital gains invested in `10,000 crore fund, and a tax exemption for start-ups
for the first three years is a good initiative taken by the government.
Last year, the Centre also decided to set up an Electronic Development Fund (EDF)
and invest `2,200 crore in it by 2019. The fund works with venture capitalists to
create funds known as ‘daughter funds’, which provide risk capital exclusively
to start-ups working on new technologies in the electronics sector, nanoelec-
tronics and the high-tech manufacturing sector to develop electronics system
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