BENGALURU: Indias startup sector needs government support either financing with minimal interest or grant to cover basic expenses to mtigate the adverse impact of the lockdown in the wake of the COVID-19 pandemic, according to senior industry executives.
Some of the startups have already raised money, giving them a longer runway and, hence, they can keep the boat steady even though economic activity is shut for some time, an industry player said.
"They can still survive. Some of them are making efforts to reduce the cost by cutting down salaries, or non-essentials cost. But some of the startups which have not raised money and which have a little runway, they will have problems," he said.
Another startup entrepreneur said it all depends on how long the lockdown continues and, if it gets lifted by April- end, they will slowly come back to normal and they can raise money if they want.
Information technology industry veteran V Balakrishnan said the government should support because startups are big employment generators in the economy.
Till now I dont think any meaningful support has come from Government, Balakrishnan, a former Chief Financial Officer of IT major Infosys Ltd, told PTI on Monday.
There is a programme in the US to support small scale industries and startups which are given some grants to take care of some of the operational expenses in the short-term.
Otherwise, some of the good startups may not be able to survive if the lockdown continues for long, cautioned Balakrishnan.
The Indian startups require liquidity in the short-term because they have to keep the operations running, he said.
"Because of no economic activity, cash flow is getting impacted so either they (the government) should give lockdown financing at very minimal interest rate," he said.
This would help them to "survive the short-term and focus on the long-term or basically give them grant like they did in the US to cover your basic cost in the short-run, so at least they will not let the employees go, and add up to the unemployment problem in the country, Balakrishnan said.
Industry insiders said consumer tech companies have been very aggressive in hiring in the last few months but with economic activity coming down, some of them have laid off people and hiring was zero.
"Net hiring will be negative for consumer tech companies," it was noted.
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