The BL Interview. Angel tax and IPO hurdles biggest challenges for Indian startups: John Chambers

Two areas come to mind — angel tax, and that it is too difficult to go IPO here in India. So very often, companies will look at their headquarters outside of India, even though their headcount is here, because of the regulatory environment is there.

But on a scale of one to 10, I’d have to give the Indian government a 9 in terms of improvement, but we need to do it again over the next five years. And I think if we do, you’re going to see, I think the change the last five years have position the country extremely well for the next five.

Are there room for improvement? Yes, but the results are the best in the world.

In fact, being very candid, the early start-ups were basically a model after a clone of what was done in the US. And they did the same type of model. Now, you’ve seen in the last five years, that moving to deep R&D development in it, and moving away from just business-to-consumer to business-to-business.

If we’re really going to continue to expand at the rate that’s going to generate that 1.2 million jobs per month that we need, we’ve got to get the current start-ups more to be unicorns, we need IPOs.

But after the election, I would look good to see the government take what has been a very good track record of change and continue to do it. And if so, I think the focus on the areas like the angel tax, and making it much easier to do an IPO here, then you will begin to locate your headquarters here. The reason they located outside here is purely a issue of regulation has nothing to do with the business environment.

I think you see more and more focused on deep tech. And just to give you the numbers, 40 per cent of the high tech companies and 40 per cent of large enterprise companies won’t exist in a decade. It’s a period of disruptor, or you get disrupted. There is no entitlement to Silicon Valley or to India, no entitlement to Tata or Accenture. They have to earn it in terms of the direction and reinvent themselves in terms of the overall approach.

But this new generation has moved on to deep tech involvement, more artificial intelligence, more natural language processing, machine learning, computing at the edge, software as a service. You’re seeing them no longer be a model after what was done somewhere else in the world but begin to lead themselves.

First of all, especially today with my start-ups, I only develop my start-ups in countries that have very strong intellectual property protection, and a track record of being very fair.

When I was at Cisco, I was one of the few companies that ever sued a Chinese high tech company and won comfortably. And then I told him, we have to stop and to their credit, they did stop copying. So I think you have to hold people accountable. I’m a huge believer in China. I doubled down in China in 1995 when nobody else would. And for the next two decades, it was clearly very exciting. And that’s why when people see me double down on India for years ago, they say what do you see and why you so optimistic and I have a lot of weakness, but connecting the dots and pattern recognition is a strength for me.

I think it’s an instant replay. But even faster, because it’s a democracy. It has the intellectual property protection, it has the strongest relationship between India and the US. I think that’s the most strategic and should be the strongest relationship for both countries in the world.

That’s where I’m honoured to be the chairperson of USISPF and I think these two countries can can have the strongest relationship there is. So I see history replaying in terms of the economic opportunity, but even stronger replay in terms of our partner intellectual product, protection of democracy.

And I think the results are showing. India has grown faster than China four quarters in a row, GDP growth wise, and M&A deal structures have been strongest for the first time for India.

I think people don't realize how fast India’s moved. I lobbied for a tax law change in the US on a more competitive tax law for corporations and repatriation, a promise made overseas for 17 years. And they finally passed last year, and the economy took off. In India, the goods and services tax was done in a year, the demonetization was done in a weekend,

the bankruptcy code was done what in a year. A democracy moves slow but India has shown an ability to move much faster than most democracies do.

I don't know if the next ones will. But I think it's very realistic of 10 to 15 years out if India continues on the current direct trajectory that the next generation, the generation after that there'll be a number of not just unicorns, dramatic number of unicorns, but you'll begin to see some of the top players in technology occur out of India.

And I'd be disappointed if they don't, we will miss an opportunity here. It's healthy, to have the challenges. Competition is what is good for organization. So you don't have competition, you slow down, you get left behind and you eventually get completely displaced.

I think the issues to the governments have in terms of access to data are very fair. And the requirements for their citizens maintain top pertain privacy and for their data not to be shared without their sign off, that they agree their data can be shared and used for other purposes.

And when the large high tech companies did not adjust to meet the very legitimate needs on privacy, the citizens and the government and didn't fix the issue about the exposure and their data being lost, then government will react. Was it the most effective way of doing situation. Of course not. But when the companies don't move, government will always react.