It has already been well recognized and acknowledged globally that India is a land of opportunities. The start-ups have primarily catered to consumer internet businesses such as e-commerce, and apps for daily consumption in transport, food, travel, education and media consumption. But with the emergence of India as one of the global service leaders, the traditional manufacturing sector’s growth has become sluggish. This is proportionately reflected in the start-ups culture here as well.
Can the Make in India and digital economy campaign boost start-ups in hardware and manufacturing domain?
The deficiency of an enabled ecosystem, labs and market testing facilities are bottlenecks to founders and investors alike in India. To add to this, manufacturing hardware is capital intensive making it even harder to enter or scale up. Hence these sectors are predominantly skewed towards gizmo geeks rather than as an enabler for creation of hardware business.
Unicorn India Ventures are concentrating on industrial and B2B businesses – hence start-ups dealing in medical devices, Industrial IOT and industrial automation interest them. The emphasis on the India tag has led some specialized Government agencies to seek funding for Electronics System Design and Manufacturing (ESDM) projects, and this has brought about nascent change in the past couple of years.
For manufacturing start-ups, product design, an understanding of engineering and production, and domain expertise in middleware and software is needed to structure a product. Hence, this often turns out to be another hindrance in scaling up start-ups in this particular sector. There is now a new market for hardware experts, ranging from accelerators to supply chain experts to consultants, who are acting as facilitators for the manufacturing. They can be seen as future mentors for those who wants to start a venture in this field.
Funding as a challenge
Although funding used to be a major drawback, a few funding success stories have begun to emerge recently. Ather Energy is one such example, it developed an electric scooter called the S340 which can charge as quickly as a smartphone. Teewee, which brought us media streaming dongle for televisions, and Grey Orange Robotics are other success stories.
Investors have started betting on businesses with hardware and cloud-based data services. People believe that once a hardware has been installed within an industrial system or within a business, the stickiness factor is higher and client relationship has more depth. There has been investments in media devices business with cloud-based data services, and investors are actively looking to invest in industrial IOT.
There is domestic demand for manufacturing, especially in critical sectors such as healthcare and education. The uptake in these sectors will encourage a boom in other sectors. The grooming of a skilled workforce and an enabling infrastructure will take at least 3-4 years to turn around the trend, but let’s be optimistic about the sector in 2018 and the interest of VCs in the hardware start-ups space.
So the question – ‘Can startups give boost to the manufacturing sector in India?’
The answer to that is a resounding YES – infact it is already doing so!
