Startups should be governed by a self-regulatory mechanism and the government is not keen on stepping in, according to Union Minister Piyush Goyal.
The government "should stay out" of regulating startups, "but it is incumbent that we try to create some framework that would be necessary to have orderly growth in this sector", the Minister of Commerce and Industry said, while speaking at Startup20 Shikhar in Gurugram.
Goyal said he has been in talks with Nishith Desai, a prominent lawyer, over startup regulations. "He spoke to me four or five years ago and said the potential is huge and the government shouldn't intervene."
The minister recommended that a small group of startups, led by Desai, "can create some sort of a self-regulatory mechanism, before the government starts interfering in their business, or circumstances go out of control".
"It will be a good idea we address this challenge up front," he said. Goyal took the example of the Indian information technology sector, which has fared well with minimum government intervention. "Today, it's the mainstay of a large part of our international trade and business. I do see the startup ecosystem, at some point, intersecting with the IT sector, and particularly with the new age world of AI and quantum computing."
"It'll be good if we can ensure startups are given a free runway to grow and prosper," Goyal said.
The minister's comments come amid a spate of corporate misgovernance issues cropping up across prominent Indian startups, such as BharatPe, Trell, Mojocare, GoMechanic and Byju's. The sector isn't governed by a focused body or laws, with the same regulations applying as would to unlisted firms.
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