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India’s entrepreneurs, including tech unicorns and startups, are absent from the Election Commission’s list of electoral bond purchasers. This absence raises important questions about public policy formation in India and the space for tech businesses to participate in the process. Tech companies have encountered an often unpredictable and sometimes punitive policy environment, with the constant threat of stricter regulation. New liabilities and greater compliances are being introduced across a range of specialised legislation, such as privacy and consumer protection. This prompts a broader question: Without political patronage, how can tech companies find a voice to inform policymaking?
From Nehru to Modi, championing innovation
Governments have consistently championed technology and the innovative spirit in India. A paper in Isis titled ‘Nehruvian Science and Postcolonial India’ noted that Nehru considered the development of technology an inexorable imperative for India’s march towards modernity. In 2017, PM Modi coined the equation “IT + IT = IT”, which translates to “Information Technology + Indian Talent = India Tomorrow”. At a recent media event, he highlighted the presence of 1.25 lakh start-ups across 600 districts in the country. These trends suggest that technology innovators do enjoy some visibility in the policy consciousness, especially when they can show significant scale.
Pro-innovation rhetoric helps political leaders position themselves as advocates of progress. This, in turn, leads to a focus on introducing incentives for large technology projects, which offer significant investment and on-ground impact. For Nehru, it was large hydropower projects like the Bhakra Nangal dam.
Recent technology initiatives by the current government include the approved Electric Vehicles (EV) policy. Another initiative is the Development of Semiconductors and Display Manufacturing Ecosystem in India scheme, with an outlay of more than Rs 76,000 crore. Both the EV policy and the semiconductor scheme emphasise scale.
Small investments, great disruption
Although large investments are important, they generally create impetus for huge and well-established firms. However, disruptive innovation often occurs outside of such firms. According to famed Austrian economist Joseph Schumpeter, established firms lack incentives to innovate, partly because of their success, and are usually on the receiving end of technological disruption. Xerox, Nokia, Kodak, and RIM (the company behind Blackberry) are a few examples. Conversely, some of the companies responsible for disrupting these businesses, like Google, Microsoft, and Apple, began as fledgling start-ups.
Hence, India cannot continue on a trajectory where pro-innovation rhetoric does not translate into policy action. Smaller businesses create the markets for foundational technological infrastructure. For instance, the demand for chips is driven by the demand for devices, which in turn is driven by the demand for applications and software, much of which is created by smaller companies. According to a recent report, India leads global demand for apps, with 6.1 billion downloads in the fourth quarter of FY 23-24. Homegrown apps like Meesho are among the most downloaded not only in India but also in Asia.
Therefore, we need to work towards a more bottom-up approach that not only enables a diverse set of innovators on the ground but, more importantly, gives them a voice on important tech policy decisions. The question is how?
An American lesson
The United States (US) presents an interesting study at this juncture. American scholars and pundits have long raised ethical concerns about the expectation of a quid pro quo for corporate donations to campaign finances. Research shows that these donations typically come from large legacy businesses. However, at the same time, the US boasts several successful programs targeted at enabling small technology businesses. One of the most storied is the Small Business Innovation Research Program (SBIR), which helps small innovative companies navigate the challenging phase between initial development and market potential demonstration.
The SBIR’s launch in 1975 was initiated by Arthur Obermayer’s appeal to Senator Ted Kennedy, highlighting the need for legislative action to ensure small firms received a fair share of government R&D funding. Obermayer, representing the American Association of Small Research Companies, demonstrated that forming coalitions can give small tech firms a voice in policymaking. Indian tech founders will similarly need to find their voice and recognise the value of investments in thought leadership to advance enabling policies.
Role of campaign funding
Finally, reforming campaign finance is crucial for fair representation of business interests in policymaking. Strict limits and a bar on proxy contributions may be a good place to start. There should also be radical transparency and disclosure regarding the quantum, source, and recipients of campaign contributions. Tech companies from the blockchain space could easily lend a hand with this.
India’s tech entrepreneurs must have greater representation in public policy formation. Only then can we bridge the gap between innovation-friendly oratory and tangible policy action that maximises welfare. It falls to all stakeholders to work towards this.
