Oil explorer ONGC seeks entrepreneurial energy with startup fund
YUJI KURONUMA, Nikkei staff writer
NEW DELHI -- India's state-run Oil & Natural Gas Corp. is setting up a fund to nurture startups in the energy business.
The government's Startup India campaign has given the venture scene a jolt, but the country's entrepreneurs tend to gravitate to information technology. Enter ONGC Startup, an initiative designed to spur innovation in the oil and gas industry.
The fund, with initial capital of 1 billion rupees ($15 million), will provide startup cash, management advice and technical support to young companies. Entrepreneurs will be able to apply online.
One factor motivating ONGC is that its own fortunes are declining amid the oil funk. Group sales for the year through March dropped 19% to 1.29 trillion rupees. The company's group net profit plunged 23% to 141.2 billion rupees.
To stop the downtrend, the company is eager to find new revenue sources and ways to cut production costs. Startups could give it the infusion of innovation it needs.
Getting with the program
Of course, ONGC says it is simply keeping in step with government policy.
Startup India, launched by Prime Minister Narendra Modi's government in January, is an attempt to create jobs and promote technological innovation. Under the program, companies that have been in business for no more than five years and make 250 million rupees or less are exempted from corporate taxes.
Investors in such startups are also exempted from taxes on capital gains.
The initiative has prompted numerous Indian companies to fund startups. In June, a maintenance subsidiary of motorbike maker TVS Motor poured a total of 750 million rupees into three startups, including a company that runs an e-commerce website for in-vehicle accessories.
An investment arm of JSW Steel, a major steelmaker, set up a 1 billion rupee venture fund. And Reliance Industries, a major petrochemical company, announced a plan to establish a 50 billion rupee fund.
As of 2015, there were some 10,000 startups in India, according to the Associated Chambers of Commerce and Industry of India. By that count, India ranked around fifth in terms of the number of young ventures, after countries such as the U.S., which had about 83,000.
But India had the third-highest number of IT startups -- 4,200 -- compared with 47,000 in the U.S. and 4,500 in the U.K.
The National Association of Software and Services Companies, a grouping of Indian IT businesses, says more than 800 IT startups are born in the country every year. ONGC, for its part, aims to bring some of that entrepreneurial zeal into its own industry.
Nikkei staff writer Nupur Shaw in New Delhi contributed to this report.