Batting for e-commerce start-ups in India, Tata Group Chairman Emeritus Ratan Tata, who has personally invested in nearly a dozen start-ups post-retirement, said that the young entrepreneurs with high ambitions should be supported and mentored.
“E-commerce is the new trend in Indian commerce. I believe that young Indian entrepreneurs need to be encouraged, and there is need to mentor young talent. This segment is emerging and should be supported,” Mr. Tata said while addressing the 107th Annual General Meeting of the Indian Merchants’ Chamber in Mumbai on Thursday.
Stating that he had put his personal money in these ventures and not that of others, he said it was difficult to predict whether these start-ups would emerge successful going forward.
“It is difficult to predict. There is great deal of enthusiasm among the young entrepreneurs, and there are huge aspirations. Many external investors, who are very good at identifying emerging companies, have put their money. And, one has to wait and see (whether the invested companies would deliver),” Mr. Tata added.
Admitting that the valuations of these new companies were sky high, Mr. Tata said this was a global phenomenon. This had been driving the growth of e-commerce start-ups and their valuation. “It (high valuation) is similar to elsewhere,” he said. Irrespective of the valuation, one needed to encourage the youngsters, he added.
Answering a question whether corporate governance was of highest standard among the start-up community, Mr. Tata said governance must ensure that one obeyed the law of the land. The enforcement should be strict, he added. “We are weak on enforcement. There is inequality in enforcement,” he said.
Now that the government has made it mandatory for companies to spend two per cent of their profit on corporate social responsibility (CSR) activity, there has been concern whether the money is reaching the rightful beneficiaries. Answering a question on this, Mr. Tata said that CSR should come from within (the corporate) and should not be imposed as a tax. Many non-governmental organizations (NGOs) would get attracted to this money without having proper projects to implement. He said there should be proper guidelines as to where to use this fund.
Mr. Tata, who heads the Tata Trust that controls over 60 per cent of Tata Sons’ equity, said that he had been personally mentoring many companies and people who wanted to help the needy through their CSR funds, be it in providing mid-day meals to the poor or any other charitable work.
Speaking of the growing potential of e-commerce, he said, “I feel proud to see a new segment emerging in the country. Young people need to be encouraged and mentored to embrace ethical practices. They deserve a chance to prove themselves shoulder to shoulder with traditional businesses.”