The Case For A $10-Billion Fund Of Funds to Propel Viksit Bharat Purpose

Reaching a $30 trillion GDP by 2047 and changing into Viksit Bharat is a grand imaginative and prescient of our Prime Minister. It is commendable that past the standard politics of caste and faith, we’re focusing deeply on improvement. Nevertheless, reaching this speedy tempo of development will not be straightforward. If India continues at its present 7% development fee, it would doubtless attain round $16 trillion by 2047 – not the $30 trillion goal we aspire for. Subsequently, we have to generate a further $14 trillion in GDP development by innovating and creating novel merchandise, mental property, and companies.

Much more difficult is the emergence of the AI-driven Intelligence economic system. If we fail to seize the worth generated by synthetic intelligence, a lot of this development will probably be superficial, with the vast majority of financial advantages accruing to nations just like the US or China, leaving little taxable wealth for our future welfare insurance policies. We want high-growth, high-margin corporations in burgeoning sectors that may present substantial tax revenues and are headquartered in India.

A New Method

Addressing this complicated problem requires a departure from our conventional top-down coverage and funding fashions just like the PLI schemes. A promising strategy lies in adopting the ‘Rainforest mannequin of innovation’, as described by Victor Hwang in his influential guide The Rainforest: The Secret to Constructing the Subsequent Silicon Valley. This mannequin emphasises fostering a vibrant innovation ecosystem by facilitating quick access to capital, expertise, and knowledge, and by selling a tradition that embraces risk-taking. That is essential for creating an innovation-driven economic system able to producing the extra $14 trillion wanted to realize the purpose of Viksit Bharat.

China’s speedy ascent as a expertise powerhouse gives a related instance, largely as a consequence of its profitable implementation of public-private funding funds often known as ‘Chinese language Authorities Steering funds’, which give attention to strategic and rising applied sciences, together with synthetic intelligence. These funds have raised practically $700 billion and performed a pivotal position in channelling capital into China’s flourishing innovation ecosystem, now poised to rival Silicon Valley.

The ‘Startup India’ Motion

To unlock this new paradigm of improvement and adapt it for India, we should intently look at profitable fashions inside our personal nation. Drawing on my over 15 years of expertise in AI entrepreneurship, funding, and coverage in India, I recognise the transformative influence of the ‘Startup India’ motion. This initiative not solely mainstreamed innovation and startups but in addition thrived on the Startup India Fund of Funds, a ₹10,000 crore programme. Managed by SIDBI with knowledgeable funding committee, this fund has dedicated ₹10,229 crore throughout 129 enterprise funds, which in flip have financed over 1,000 startups with ₹17,000 crore, creating tens of millions of direct and oblique jobs. This profitable initiative should be massively scaled up as India strives towards the Viksit Bharat purpose.

We should always start by establishing our personal steerage fund mannequin, beginning with a $10 billion public-private capital pool geared toward rising applied sciences equivalent to AI and robotics, pivotal to the event of dawn sectors. Roughly $1 billion might be sourced from the federal government, with the rest coming from institutional buyers like LIC or world pension funds looking for diversification of their corpus away from investments in China. Establishments like SIDBI or SBI might handle these funds, instilling belief by knowledgeable funding committee tasked with deciding on daughter enterprise funds. For ventures targeted on dawn sectors, the fund could contribute as much as 50% of the capital, with longer timelines of 15 years or extra to offer constant and affected person capital essential for these sectors.

This initiative will set three important development vectors in movement:

1. It’ll create affected person home capital for deep-tech innovation, addressing the crucial want for strategic rising applied sciences. At the moment, even India’s most promising deep-tech startups typically wrestle or relocate to locations just like the US, the place capital entry is extra easy and plentiful.
2. By introducing market self-discipline and experience, policymakers can improve industrial coverage effectiveness. This mannequin has the potential to cut back inefficiencies and corruption related to subsidy/PLI schemes and different coverage instruments. Additional, it could scale back the necessity for very giant PLI schemes in future to jump-start a sector, like we’re doing now for semiconductors. 
3. It’ll synergise with different giant improvement efforts just like the AI mission, the quantum mission, the creation of analysis parks, R&D initiatives, and expertise creation plans. It’ll speed up the formation of latest companies in dawn sectors and tens of millions of high-value direct & oblique jobs, resulting in larger tax development.

An typically neglected strategic advantage of such a capital pool is its potential influence on the possession constructions of strategic corporations. Many deep-tech startups see founder possession drop under 50% after just some funding rounds, hindering the potential of nurturing long-term visionaries who can information corporations by technological adjustments. Reaching the size of an NVIDIA or Fb with a founder on the helm in India stays a difficult prospect.

Investing In The Future

Establishing a $10 billion fund of funds devoted to disruptive applied sciences like AI and robotics just isn’t merely a technological funding; it’s an funding in India’s future. A future for India with a number one innovation ecosystem on the planet contributing to mind achieve of an enormous order. 

Reaching a $30 trillion GDP by 2047 is an formidable however possible purpose with the best investments and strategic focus. The time to behave is now, and the $10 billion fund of funds for deep applied sciences like AI and robotics is pivotal in unlocking Viksit India’s huge potential. Delaying motion dangers this purpose changing into an unattainable mirage inside the subsequent 5 years.

(The writer is chairman of AIfoundry, co-founder of ARTPARK(AI & Robotics Know-how Park), and passionate supporter of AI & deep tech innovation in India.)

Disclaimer: These are the non-public opinions of the writer