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Transcript of Working Paper 362 High-Skilled Labour Mobility in an Era of 2018-07-20¢  High-Skilled...

  • i

    Working Paper 362

    High-Skilled Labour Mobility in an

    Era of Protectionism:

    Foreign Startups and India

    Arpita Mukherjee Avantika Kapoor

    Angana Parashar Sarma

    July 2018

    INDIAN COUNCIL FOR RESEARCH ON INTERNATIONAL ECONOMIC RELATIONS

  • Table of Contents

    List of Abbreviations ............................................................................................................................... i

    List of Tables .......................................................................................................................................... ii

    List of Figures ......................................................................................................................................... ii

    List of Boxes ........................................................................................................................................... ii

    Acknowledgement ................................................................................................................................. iii

    Abstract .................................................................................................................................................. iv

    1. Introduction ..................................................................................................................................... 1

    2. Definition of Startups and Foreign Startups ................................................................................... 3

    3. Incentives given to Startups ............................................................................................................ 4

    3.1 Visas for Foreign Startups and/or Entrepreneurs ............................................................... 7

    4. India as a Destination for the Foreign Startups ............................................................................... 9

    4.1 Advantage India .................................................................................................................. 9

    4.2 India vis-à-vis Select Countries in Different Indicators .................................................... 10

    5. Presence of Foreign Startups in India ........................................................................................... 15

    5.1 Reasons for Entering and the Entry Process ..................................................................... 16

    5.2 Socio-Economic Impact of Foreign Startups .................................................................... 19

    6. Issues Faced by Foreign Startups in India .................................................................................... 20

    6.1 Lack of Market Entry Related Information ....................................................................... 21

    6.2 Lack of Clarity in Government Policies ............................................................................ 21

    6.3 Multiple Regulatory Bodies, Multiple Clearances and Difficulties in Interacting with the Government ......................................................................................................... 21

    6.4 High-skilled Labour Mobility Related Issues .................................................................... 22

    6.5 Lack of Availability of Right Skills .................................................................................... 23

    6.6 Issues Related to Company Incorporation and Transferring Working Capital ................ 23

    6.7 Infrastructure Bottlenecks ................................................................................................. 24

    6.8 Quality Standard ............................................................................................................... 24

    6.9 Difficulties in Establishing Global Value Chains ............................................................. 24

    6.10 Protection of Innovation .................................................................................................... 24

    6.11 Low Budget for R&D, Innovation and Marketing ............................................................. 25

    7. The Way Forward ......................................................................................................................... 25

    7.1 Design Policies to Attract and Support Startups ............................................................... 26

    7.2 Have a Startup Visa and Use it to Push High-Skilled Labour Mobility ............................ 27

    7.3 Reduce Delays in Clearances for Starting a Business and Fast Track the Response to Queries .............................................................................................................................. 28

    7.4 Strengthen Invest India and Startup India Hub Portal...................................................... 28

    References ............................................................................................................................................. 30

    Appendix A ........................................................................................................................................... 33

  • i

    List of Abbreviations

    CEO Chief Executive Officer

    DIPP Department of Industrial Policy and Promotion

    EC European Commission

    EU European Union

    FDI Foreign Direct Investment

    FRRO Foreigner Regional Registration Office

    FTA Free Trade Agreement

    GII Global Innovation Index

    ICT Information and Communications Technology

    IP Intellectual Property

    KSI Keyless Signature Infrastructure

    MoU Memorandum of Understanding

    NRI Non-Resident Indian

    OPC One Person Company

    R&D Research and Development

    SME Small and Medium Enterprise

    UNCTAD United Nations Conference on Trade and Development

    US United States

    USISTEF US India Science and Technology Endowment Fund

    WIPO World Intellectual Property Organization

    WTO World Trade Organization

    YEA Young Entrepreneur’s Alliance

  • ii

    List of Tables

    Table 1: Startup Specific Polices and Visas in Select Countries ............................................................ 5

    Table 2: India's Overall Global Innovation Index Rankings (2013-2017) ............................................ 11

    Table 3: Ranking of Select Countries in the Global Entrepreneurship Index 2018 .............................. 13

    Table 4: Presence of Foreign Startups in Different Sectors in India ..................................................... 15

    Table A1: Startup Visa Features and Policies of Select Countries ....................................................... 33

    List of Figures

    Figure 1: India's Global Innovation Index Ranking vis-à-vis Select Countries Across Sub-indicators

    (2017) .................................................................................................................................................... 12 Figure 2: Patent Applications Filed at the Top 10 Offices in 2016 ...................................................... 14

    Figure 3: Reasons for Entering the Indian Market ................................................................................ 17

    List of Boxes

    Box 1: DIPP’s Definition of Startups ..................................................................................................... 4

    Box 2: Philippines Innovative Startup Act ............................................................................................. 5

    Box 3: How PlenOptika Came to India ................................................................................................ 18

    Box 4: The Case of Harvesting - A California-based Startup ............................................................... 20

  • iii

    Acknowledgement

    This paper is part of our study on high-skilled labour mobility in the context of the

    discussions in the G20 and India’s other international engagements including the World

    Trade Organization. We express our gratitude to Rajat Kathuria, Director and Chief

    Executive, ICRIER, for giving us the opportunity to work in this area and for his constant

    support. We would like to thank the survey participants including the foreign startups,

    embassies, business councils, trade bodies, industry associations, angel investors, incubators,

    accelerators, and Indian and foreign policymakers, who participated in the survey and shared

    their valuable inputs. We would especially like to thank, Ravi Srivastava, First Secretary for

    Environment, Science and Technology Affairs and D Jagannath Rao, Senior Macro

    Economist, Embassy of the United States of America; Louis Nouaille-Degorce, Deputy

    Regional Economic Counsellor, Regional Economic Department for India and South Asia

    and Patrick Pillon, Regional Financial Counsellor, Deputy Head of the Regional Economic

    Department for India and South Asia, Embassy of France; Tania Friederichs, Counsellor-

    Head of Research and Innovation, and Wojciech Dziworski, Counsellor for Health and Food

    Safety, Delegation of the European Union to India and Bhutan; Seeta Sharma, Technical