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5 reasons why start-ups fail in India

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New Delhi: Prime Minister Narendra Modi’s highly publicised venture “Make in India” ushered in a new era in the Indian industrial sector with more and more start-ups sprouting up and contributing towards the development of the Indian economy.

While some of the start-ups flourished and went to the extent of challenging global giants like Microsoft, others perished or were limping towards an untimely death.

Despite the aspiration and the tenacity that the start-ups promise, they have some common flaws which trigger their downfall.

Lack of efficient workforce: Despite the presence of a pool of talent, selecting the exact fit becomes cumbersome for the start-ups. Fear of failure and uncertainty associated with the small companies deter talents. At the initial stage, the companies do not have the financial resources to rope in qualified people. The compromise that the companies make during talent acquisition later proves to be a thorn in their path of success.

Lack of training: Most employees learn tricks of the trade while working and being mentored properly. Since start-ups are lacking in resources the way big fish have, proper mentoring of the workers does not happen. This leads to a stagnancy and affect the productivity of the company. Most of the new small time organizations are brilliant with their ideas but have minimal professional experience. As a result, a gap is created which add to the woes of the organization.

Lack of marketing strategy: Constraints in the financial resources keep the start-ups away from spending too much on branding and marketing. As a result, even if the product is good it fails to reach the target customers. Hiring a marketing guy is also not possible for them. Moreover, the start-ups focus too much on the productivity and neglect their branding and marketing activities. The product, as a result, fails to get marketed.

The problem of copying: Most start-ups follow the models developed in the Western countries. In the process, they forget the environment they are working in. Instead of formulating a strategy focussed on the local needs, start-ups try to emulate companies of USA. This leads to a massive set back as what works in the US does not always work in India.

Strategic work plan, regular mentoring and adapting to the local situation might assist in the flourishing of the start-ups. But the government must formulate a policy and support them for developing a sustained economy.

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Make in India Most Beneficial For Mobile Manufacturers

How mobile manufacturing made the most of 'Make in India'

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Mobile manufacturers
India is today the second-largest mobile phone manufacturer in the world after China. Pixabay

From just two mobile phone manufacturing units in 2014 to 268 mobile handset and accessories manufacturing units in 2019 which has led to 95 per cent of mobile phones sold in the country being produced domestically, the star in India’s “Make in India” story is indeed shining.

In fact, India is today the second-largest mobile phone manufacturer in the world after China. “India has achieved tremendous success in mobile phone and component manufacturing in the last four years with more than 95 per cent of domestic consumption now being produced in India,” Pankaj Mohindroo, Chairman, India Cellular and Electronics Association (ICEA), told IANS.

“Our domestic market viz-a-viz domestic manufacturing is saturated and we have set our sights on a target of Rs 7.7 lakh crore of exports by 2025,” he added. According to a survey conducted by mobile industry body ICEA, the 268 mobile handset and accessories manufacturing units employ about 6.7 lakh people.

Mobile manufacturer
In India, 268 mobile handset and accessories manufacturing units employ about 6.7 lakh people. Pixabay

So today the phones that most Indians hold in their hands are made in India, thanks mainly to schemes such as Modified Special Incentive Package Scheme (M-SIPS) to provide financial incentives across the ESDM value chain to compensate for cost disability in manufacturing and Electronics Manufacturing Clusters (EMC).

Launched in 2012, the M-SIPS, provides capital subsidy of 25 per cent for electronics industry located in non-SEZ (Special Economic Zone) areas and 20 per cent for those in SEZ areas.

The Electronics Manufacturing Clusters (EMC) scheme, which was also launched in 2012, encouraged entities, including state governments, to provide good quality infrastructure within a cluster.

mobile manufacturer
Uttar Pradesh has emerged as the new hub of mobile manufacturing in the country over the past few years. Pixabay

Under the scheme, 50 per cent of the project cost for Greenfield Electronics Manufacturing Clusters and 75 per cent for Brownfield Electronics Manufacturing Clusters is given as grant. Due to the focus on “Make in India” and “Digital India” programmes, Uttar Pradesh has emerged as the new hub of mobile manufacturing in the country over the past few years.

In July 2018, Samsung launched the world’s largest mobile factory in Noida. The new facility was set up with the aim of doubling its capacity for mobile phones in Noida from 68 million units a year to 120 million units a year, in a phase-wise expansion to be completed by 2020.

Besides Samsung, most Chinese smartphone makers which now dominate the Indian market – Xiaomi, Oppo and Vivo — also produce their phones in the country. Apple has already started the assembling of iPhone 7 at its supplier Wistron’s facility in Bengaluru. Production of cellular mobile handsets in volume terms reached 225 million units in 2017-18, as compared to production of 60 million units in 2014-15.

Also Read: Why PM Modi Acted Now on Kashmir?

The National Policy on Electronics 2019 has set the aim of promoting domestic manufacturing and export in the entire value-chain of ESDM (Electronics System Design and Manufacturing) for economic development to achieve a turnover of Rs 26 lakh crore by 2025. This will include targeted production of one billion mobile handsets by 2025, valued at Rs 13 lakh crore, including 600 million mobile handsets valued at Rs 7 lakh crore for export.

India currently has over 450 million smartphone users. The number of smartphone users in the country is expected to reach 859 million by 2022, according to an ASSOCHAM-PwC joint study. (IANS)