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As the world economy shrinks, India is growing; it’s a sweet spot to be in today: Manisha Girotra

What is happening in the world of start-ups? Funding seems to have suddenly dried up; we are hearing a lot of news flow regarding retrenchment in a lot of startups.

The world economy is facing unprecedented volatility and disruption and through all of that, the Indian economy is still looking pretty robust, despite the supply chain breaking up, food crisis, energy crisis, inflation as well as central banks pulling out liquidity.

The global economy has really got disrupted much more than anyone expected or anticipated and within that, India is looking pretty positive. Our GDP growth rates still remain intact, our central bank has been very proactive on inflation and so I think India stands out.

Having said that, there is a lot of disruption and volatility which has caused investors to pause. There is enough liquidity available in the market for Indian companies and the start-up ecosystem also. But this capital will halt and then calibrate as we go forward. I do not think we will see the kind of frothiness we saw in the market any more but for good, capital efficient businesses, capital is and will continue to be available.

What do you make of the fall in a lot of so-called growth businesses globally and the impact of that on the entire IT pack?

As I said, the disruption and volatility has surprised investors. As a result, there is a pull up of capital from all markets and basically there is a flight to quality, there is a flight to home markets, leading to disruption.

In the case of IT services companies, the anticipation is that we may not see the kind of growth we saw in the last two years because if these global companies recalibrate, their profits get reduced and they will not have the kind of technology spends that they have in the last two years. Having said that, IT services companies have shown that they are the digital partners to the world.

I remain very positive on this sector. Some sort of correction was needed in this sector and in the next four to eight quarters, we may not see the kind of valuations that we saw in the past few years. IT & BPO is a very solid sector for India and I remain very positive on it for the next 5-10 years.

What do you mean when you say IT? Do you mean names like Zomato, Paytm or traditional companies like Infosys, TCS which are high cash rich?

I thought you referred to IT services. Those are the ones that are linked to the tech companies globally.

Also, a lot of these tech companies which have got listed are saying that they are looking at saving costs and not burning money the way they used to. Do you think that is a positive?

Absolutely. As I said before, capital efficient businesses are the ones that are going to attract capital. I do not think businesses, which are just burning capital for the sake of burning capital, are just buying growth because they thought that is what could take to the IPO markets faster. Investors do not have patience for those kind of businesses. There is going to be a much needed recalibration and companies that will win are the ones that have a differentiated business model and paths to profitability and use capital efficiently.

In the startup sector, those are the business models that will win and raise capital.

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