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Pitfalls of not having a co-founders’ agreement

By Roma Priya

Conceived an once-in-a-lifetime business idea and exhilarated to crack the opportunity jointly with more people? There might be a lot of excitement in the air where each founder might already be feeling the rush to get the new enterprise off the ground, but before any further move, you need to take a deep breath and recall whether you have completed all the procedures and paperwork before commencing the business. Procedures here indicate the legal items, which are essential to protect the business at present and in future.

If the plan is to set up the business with co-founders, it is crucial to get the co-founders’ agreement in place thus saving on a lot of hassle, money and confusion. After all, there is a possibility of situations and expectations changing, resulting in mental and financial woes for the co-founders who are planning only for the present and ignoring the potential hitches. A co-founders’ agreement outlines the rights and responsibilities of the co-founder that can help in avoiding any conflict that might arise among co-founders in future.

Ideally, the co-founders must think through any potential problems that they or the business might face and brainstorm solutions for the same. However, it is still necessary to have conversations on topics like selling of the business, co-founder leaving the country for a lucrative job opportunity or one of the founders not performing well and the recourse available in such case. Here are some of the essential clauses that must go into the co-founders’ agreement:

1. Names, roles and responsibilities of co-founders in the company
This might seem basic, but it is extremely essential to have all these details in place so that everyone associated with the business is on the same page in terms of ‘what responsibilities are each one of them sighing for?’ How much time, energy, and perhaps money each founder is putting into this company?

2. Decision-making
Apart from defining the responsibilities, it is crucial to pen down the decision-making power of each co-founder. Who can sign the cheques and authorise bank transfers? Shareholding rights of the co-founder? How to hire candidates? Who will take charge of termination in case of dishonesty, fraudulent activities & failure to reach the agreed milestones etc?

3. Equity breakdown and vesting schedule
While equity is usually split equally between all the co-founders, it sometimes does not justify what each of them is bringing to the table. This might result in arguments later stage if a co-founder fails to achieve the target set at the onset of the business. Thus, an agreement should include the equity that is to be pided among all the co-founders based on their domain expertise, capital, time devoted, resources and responsibilities.

As much an equity breakdown is important in the agreement, so is defining the vesting schedule. If co-founders get their share all at once, chances are they might just lean back and leave the responsibility on others. By creating a vesting schedule, which is often four years with equal quarterly or half yearly or yearly vesting co-founders will stay motivated to earn their keep. For instance, if a founder leaves before one year, they get no shares. If any co-founder leaves before the full vesting, the unvested shares may be nullified and absorbed into the company. It is to be understood that the above scheme of vesting is one such example generally practised while it is open to the co-founders to negotiate on the same.

4. Intellectual Property ownership
An Intellectual Property is something which is being created by the co-founders of a business entity when they start building the idea. So, it is important to make sure that whatever IP is being developed for the company, belongs to the entity itself and not any particular person behind the development of the IP, i.e. co-founders, employees, consultants and contractors. Although, it is not likely to create a problem, but in case an inpidual decides to break away and form a successful competing business with the same innovative idea, it might just be a problem to the existing company. Thus, to protect your intellectual property, mention this clause on the agreement.

5. Remuneration and Compensation
It is a basic yet significant part of the agreement. Co-founders usually overlook discussing these rudiments while setting up the entity but a co-founders’ agreement obligates them to acknowledge it, in order to avoid any uneven expectations everyone might be bringing to the table. However, it is up to the co-founders to create a definite compensation plan that takes into consideration the future growth of the company.

6. Exit Clauses
Lastly, a co-founders’ agreement should also mention the circumstances of exiting from the roles and responsibilities in case of underperforming co-founders and voluntary departures. While deciding on these clauses can be stressful, it can help in figuring out what happens with the unvested shares. Penning the exit clause on the co-founders’ agreement would indicate that everyone had agreed on the decision previously.

While a co-founders’ agreement should be made at the early stage of setting up the business, it might need alterations as the business grows and takes external investment. After all, there can also be a downside to having agreements that are not suitably tailored to the business or lack precision. Being overly rigid can choke a business, whereas an unfocussed agreement can lead to clashes. Thus, to avoid any unforeseen situations, owners, especially the startup founders can make a wise move by consulting external legal services. This would not only help them in creating a sound co-founders’ agreement, but also leverage their business relationship and the future growth of their company.

(Roma Priya is Founder- Burgeon Law)

Intellectual Property creation witnessing steady growth in India: Report

NEW DELHI: The country’s contribution to Intellectual Property (IP) creation is witnessing a steady growth, however, investments in R&D and patent activities in the country are still relatively slow when compared to developed nations, a report says.

According to globalisation and market expansion advisory firm Zinnov’s study ‘Enhancing the IP Quotient in MNC R&D centres’, IP creation is witnessing steady growth in MNC R&D centres, but investments in R&D and patent activities in India are still relatively slow.

The study further said India spends just 1 per cent of its GDP on R&D, while countries like Israel spends 4.2 per cent, Japan 3.7 per cent, US 2.7 per cent and China 2.0 per cent.

A sector-wise analysis shows that pharma, biotech and computer technology industries are leading contributors to IP creation in the country.

Pharmaceutical and biotech companies alone contribute 30 per cent of the patents filed from India (2007-2012).

In addition, several MNC R&D centres in India are leveraging the increased research focus in universities to co-create and innovate.

Bosch, P&G, General Motors, Yahoo, Texas Instruments and Mercedes-Benz are some of the leading organisations sponsoring research on innovation in Indian universities, the report said.

“The IP landscape in India is expected to improve with the rapidly evolving ecosystem and multiple opportunities in key growth verticals,” Zinnov Engagement Manager Preeti Anand said, adding that “with several top-notch innovations coming from India in the recent past, innovation in India is expected to accelerate driven by combined efforts of all ecosystem players.”

To strengthen their non-linear strategies, many Indian IT services companies like TCS and Infosys in particular were at the forefront of building strategic R&D alliances with ecosystem partners that include MNCs such as Alcatel Lucent, Hewlett-Packard, Intel, SAP, British Telecom,

Alstom

, etc., the report said.

Target $15 billion, EY advisory business looks to disrupt self

MUMBAI: EY is looking to companies like Amazon for ideas on how to disrupt its consulting model before disruption is forced upon it, as the firm moves toward its goal of developing a $15-billion advisory business by 2020.

The consulting firm, as a whole, reported revenue of $27.4 billion for FY14 with a headcount of about 1,90,000.

The advisory business is currently close to $7 billion in revenue and 35,000 employees, said Norman Lonergan, global vice chair for advisory at EY.

But the consulting firm’s business model -of rate-times-hourstimes-people -is in danger of becoming obsolete.

Lonergan said the company couldn’t rest on its laurels and expects advisory to grow in a linear fashion to 1,00,000 employees whether organically or inorganically.

“I think of it as how would we do it, if we were disrupting our own business. If you look at what Amazon did, it was growing exponentially, it put Barnes and Noble pretty much out of business and then they disrupted their own business by bringing in the Kindle,“ Lonergan told ET.

“So what is our Kindle moment?
That is what I spend a lot of time thinking about because the current consulting model has a pretty poor shelf life,“ The advisory unit will think of a business that is much more asset based, much more reliant on its own intellectual property and would have to potentially sell more subscription-type services and would even look at whether it wants to employ 1,00,000 people, Lonergan said.

Helping the advisory business more than double revenue in the next five years will be countries like India. When the advisory practice began in 2006, it focused on the developed economies to build cred ibility but now, as those markets mature, focus is moving to countries like India and so is investment.

“We are investing heavily in building out our risk practice and our management consulting prac tice. Going forward, it’s pretty clear to anybody who hasn’t been living in a cave for the last 10 years, that India is going to be vitally important,“ Lonergan said.

In July, EY opened its cyber forensics and eDiscovery Centre in Hyderabad and has been bulking up teams and expects to see strong headcount growth going forward.EY expects its headcount to increase by 22,000 to 25,000 in the next four years, taking its total employee base to 40,000 plus in 2018, ET had reported in January. This includes staff at outsourcing centres in Gurgaon, Bengaluru, Thiruvananthapuram, Chennai and Kochi where more than 9,000 people are currently employed.

India is not just a low-cost delivery centre. “We are looking at India not just as an outsourcing shared services centre. I am talking about the consulting business we are going to build here with clients that are going to be dominant global players in the years to come. It’s a vital part of our strategy,“ Lonergan said.

EY expects 30% of its revenue will come from emerging markets by 2020, and the firm has earmarked $1.5 billion in investment to support that growth across all its different businesses.

Deepika Padukone launches ‘All About You’ brand on Myntra app

NEW DELHI: Bollywood actor Deepika Padukone has launched her own fashion private label brand called “All About You” on fashion app Myntra.

The brand, which has been designed in collaboration with French design agency Carlin and Myntra’s in-house design team, expects to hit $100 million in gross merchandise value over the next two years. Royalties (profit share) and intellectual property for the brand will be co-owned by Myntra and Padukone, company officials told ET at an event in the capital.

The collection embraces special fabrics such as hammered satin, viscose & jacquards, lurex knits, blended knits, woollens and premium denims and is priced from Rs. 1500 onwards, the company said in a statement. Over the last one year, Myntra is aggressively pushing sales of its private label to differentiate itself from the competition as well as reach the profitability goal faster. The company, which is a part of ecommerce player Flipkart, is banking on its high margin private label categories to push it towards being profitable in the next 18 months.

Tata Group alleges trademark office rejected request to come out with no-backlog report; moves court

MUMBAI: The patent and trademark office’s apparent drive to clear its backlog of applications has hit a legal roadblock, with the Tatas and a group of intellectual property attorneys dragging it to court.

A filing by

Tata Steel

to register ‘ACE+’, its service centre certification programme, as a trademark was among nearly two lakh applications that the Controller General of Patents, Designs and Trademarks rejected after being treated as abandoned, lawyers dealing IP issues said. The abandonment provision allows the applicants to abandon the applications that have already been filed but not yet considered by the authorities.

But in Tatas’ and many other cases, the lawyers claimed, neither did the applicants want to abandon them, nor did the trademark office intimate them of the decision to drop the applications. In a recent public notice, the registrar said it followed the due process. But those challenging its decision say the applications had been rejected by the trademark office in a hurry in order to come out with a “no-backlog” report.

On a complaint by Tata Steel and the Intellectual Property Attorneys Association (IPAA), the Delhi High Court stayed all abandonment orders passed between March 20 and April 5, the day of the stay order. The court also told the trademark office not to pass any new orders of abandonment without giving due notice to the affected parties by registered post. The matter will come up for hearing on May 20. An official at the patent and trademark office said she cannot comment on an issue that is in court.

In its April 11 public notice, the registrar said it had treated many applications as abandoned where the applicants didn’t respond to its objections that were sent to them or their agents. Subsequently, some complaints were received claiming that applications had been treated as abandoned even though the reply on behalf of the applicants were submitted.

Some others said they didn’t receive the office’s communication, it said. The registrar said it has kept all abandonment orders since March 20 in abeyance following the court order and told the applicants to provide details of their claims.

The Controller General of Patents, Designs and Trademarks is a central body and its main function is to register trademarks which qualify for registration and maintain the Register of Trademarks. Patent experts said the registrar will have to justify in court its actions and come up with a solution to clear the backlog in a manner that is neither arbitrary nor drastic.

“The action of the trademarks office was an oversight and not in accordance with law, and hence, was liable to be set aside both by courts or remedied by administrative action,” said Safir Anand, senior partner at New Delhi-based law firm Anand & Anand.

ITC to acquire Johnson & Johnson’s ‘Savlon’ and ‘Shower To Shower’ brands

KOLKATA:

ITC

Ltd has acquired Savlon and Shower To Shower brands for India from Johnson & Johnson as part of its ambitious goal to become the country’s largest FMCG company by 2030.

Three senior industry executives estimated that the Kolkata-based cigarettes-to-hotel conglomerate will shell out around Rs 200-250 crore for the two brands that will help it foray into categories of antiseptic liquids and soaps and prickly heat powder.

ET could not independently verify the deal size.

An ITC spokesman said the acquisitions are in line with ITC’s aspiration to achieve revenue of Rs 1 lakh crore from FMCG businesses by 2030. Company would not share financial details of the agreement with Johnson & Johnson (J&J).

An email sent to J&J did not elicit any response as of press time on Friday.

ITC signed the asset purchase agreement of trademarks and other intellectual property of Savlon and Shower To Shower for the Indian market on Thursday. The deal for Savlon was signed with J&J’s Indian arm, while Shower to Shower was acquired from J&J’s Singapore arm.

The executives quoted above said Wipro Consumer Care, Dabur, Emami and Godrej Consumer Products, too, had evaluated the two brands.

“ITC buying the two brands was surprising, since it was not in the fray initially and Wipro was the favourite,” said the CEO of a rival FMCG firm.

Investors cheered the twin acquisitions, helping the ITC stock gain 2.01% on Friday to close at Rs 378.05 on the BSE, while the Sensex rose 1.01 per cent.

Industry estimates suggest that Savlon has annual sales of aroundRs 50 crore while Shower to Shower around Rs 20 crore.

Savlon is the second largest brand in the Rs 350-crore antiseptic liquid market with 15 per cent share way behind market leader Dettol of Reckitt Benckiser that enjoys more than 80 per cent share. Savlon has a marginal presence in soaps and hand wash too.

Industry insiders expect ITC to now become a serious player in the hygiene space, replicating Dettol’s strategy by strengthening focus on soaps, hand wash and hand sanitizer.

“In soaps, two antiseptic soap brands — HUL’s Lifebuoy and Dettol — are amongst the top three; so there is huge potential for Savlon,” said a senior executive with a leading FMCG maker.

“And Shower To Shower is likely to become ITC’s vehicle for a fullfledged entry into the talcum powder market,” he said.

Shower To Shower is estimated to have 5-6 per cent share in the Rs 300-crore prickly heat powder market. Heinz’s Nycil leads the segment, followed by Emami’s Boroplus and Reckitt’s Dermicool.

ITC’s entry is expected to lead to an intense marketing war in both these product segments.

ITC, which has been aggressively persifying its business to drastically reduce its dependence on the core tobacco business, has been immensely successful in food business, attaining leadership and the second position in categories like cream biscuits, packaged atta, instant noodles and finger snacks.

While it has been trying hard to gain share in the personal care segment as well, the only major success so far has been its Engage deodorant which became the second largest brand in the segment last year. The company has just 3 per cent-5 per cent market share in soaps and shampoo.

ITC’s profitable packaged food business clocked Rs 5,717.32 crore sales in 2013-14. The rest of the noncigarette FMCG businesses — which include personal care, stationary products, safety matches and agarbattis — reported sales ofRs 2,394.66 crore.

In desi Viagra market, companies fight over names

(This story originally appeared in on Aug 02, 2013)

CHENNAI: Kamagra, Silagra, Edegra, Penegra, Zenegra… the complete list can fill reams. With more than 124 pharmaceuticals vying for their share of the pie in the multi-crore Indian viagra industry, the competition is often cutthroat. Apart from similar marketing and advertising strategy, the desi viagras also have names in common, leading to disputes. One such dispute has landed before the Intellectual PropertyAppellate Board (IPAB).

Settling a trademark dispute between two major desi viagra players on Wednesday, the IPAB disallowed them from using two trademarks. While Vee Excel Drugs and Pharmaceuticals Pvt Ltd, Delhi was restrained from using the name Vega Asia, HAB Pharmaceuticals and Research Ltd, Thane was directed to drop the trademark Vegah Tablets.

Both the companies were selling sildenafil citrate tablets used to treat erectile dysfunction and had filed cross-suits against each other. HAB claimed it started using the trademarks Vega, Vegah, Veega, Vigora etc in 2001 and the trademark Vega Asia used by Vee was similar to its. Vee, however, claimed it adopted and started using Vega and its formative trademarks in 2000 and over a period of time, its trademark Vega Asia and design of rocket had become its distinguishing features. It said the trademark Vegah used by HAB was similar to its trademark and should be removed.

On perusal of the documents, the board found that HAB had been using the trademark Vega since 2001 while Vee started using the trademark Vega Asia in 2002. “The trademarks are deceptively similar and are likely to cause confusion and deception. In such a case the prior user has the better right. The mark which is in subsequent use shall not remain on the register,” it said.

It also said that as only the trademark Vega was used by HAB in 2001 and not Vegah, it has to discontinue the second trademark. Citing three pervious judgments on trademarks, the board said a registration did not confer any new right to the trademark but merely afforded protection for the mark. Also, advertisement in newspaper did not constitute proof of use of the trademark and in the absence of an admission, facts could be proved by means of documentary evidence, it said.

According to the documents submitted in the board, the annual turnover of Vee was Rs.1,25,65,498 in the year 2004-05 while HAB had sold tablets worth Rs 700 lakh in the year 2007-08.

Family-owned fragrance maker SH Kelkar & Company gets outsider on board as CEO

MUMBAI: When the Rs 640-crore SH Kelkar & Company (SHK) – a maker of specialty fragrance and flavour ingredients in which US private equity giant Blackstone invested Rs 243 crore in early September – inaugurated an R&D centre on September 12, its CEO performed the puja.

Nothing unusual about that – except that the CEO isn’t the owner of the family-owned, unlisted business but a professional. The third-generation family member in India’s largest fragrance and flavour maker sat and watched as the man he reports into did the honours. B Ramkrishnan, the 56-year old CEO of SHK, shows photographic evidence of him performing the puja to this writer. “A picture speaks a thousand words,” he says.

There is a clutch of Indian family-owned businesses – from the Daburs in the north to the Murugappa Group in the south – that have brought in professionals to manage their enterprises even as they step back as owners. In some cases, the next-gen family members are may be being groomed to take over from the professional once he is ready for the task.

At SHK, however, the family member, Kedar Vaze, is pretty clear that managing the business is not his cup of tea.

“I have the understanding about the industry as I am a technocrat,” says Vaze, a post-graduate in organic chemistry from IIT Mumbai and one of the few trained perfumers in the industry who has published five papers at various conventions, including the World Perfumery Congress. “But I don’t have execution capabilities, which Ramkrishnan has,” adds the controlling shareholder, who is second-in-command at SHK as the chief operating officer. Also, Vaze says, his objective has been to put a system in place that should work even in his absence.

SHK, set up by two Maharashtrian brothers in 1922, has not only survived the onslaught of MNC competition but also expanded its business into Europe, the Middle East and African markets. It did all this quietly. It’s another matter that it came into the limelight only recently when Blackstone bought a one-third stake in it, putting its valuation at Rs 740 crore – Rs 100 crore more than its sales in fiscal year 2012.

For SHK, putting a professional at the helm of affairs and inducting Blackstone as equity partner are integral parts of the same goal: to take the company to the next level, one that is beyond the reach of the promoter family.

That’s why the Vaze family – which includes Kedar and his father Ramesh – brought in Ramkrishnan, or Ram as he is known internally, in 2010. Two years on, SHK has raised money from Blackstone so that the US PE major monitors the company continuously. “I want Blackstone to put a mirror to us, everyday,” says the 38-year old Vaze.

 

Now a professional, Ramkrishnan has in the past worn the entrepreneur hat, too. A chemical engineer from IIT Madras, he started his own flavours company and later worked with the Geneva-headquartered Givuadan, a global fragrance leader, when it bought his firm. Having seen the grass on both sides, Ramkrishnan was keen that the pision of responsibilities between him and Vaze be made crystal clear at the time of joining.

When Ramkrishnan wrote his job description and gave it to the Vaze family, they sat on it for two months before agreeing with a rider: Ramkrishnan would prevail on anything and everything in case there is a difference on opinion with Vaze. The only front on which Vaze’s decision would reign supreme is the company’s intellectual property. That settled the contours of the relationship between the CEO and COO.

Both acknowledge that there have been instances of conflict, but most of those pertaining to the way the organisation should be run. For Ramkrishnan, the process of execution is supreme. Vaze, being an owner and an entrepreneur, believes in doing things fast.

One example of a difference in thinking has to do with the annual increment of employees. After taking over as CEO, Ramkrishnan introduced a process of annual evaluation; Vaze, on a few occasions, wanted to overrule him, citing loyalty of the concerned employee. “I was completely discomforted. I told him, ‘this is not your job’,” says Ramkrishnan.

Vaze too has had his share of bouts of despair particularly when employees used to look up to him for directions even after the professional CEO came on board- simply because they were used to taking orders from him for the past 15 years. “It was frustrating. More than anything personal, the organisation was not ready,” recalls Vaze.

But they managed to overcome those moments by talking. “There are occasions when we talk for six hours a day,” recounts Ramkrishnan.

However, they don’t interact after office hours. “I don’t encourage common interest. I want to keep my private life and personal life separate,” says Vaze.

Together, they have put together a team of professional managers. The list includes Pramod Davre, head of fragrance business, a veteran with 15 years of experience. They have also hired experienced sales personnel from MNCs in east-Asian markets.

With professionals in place and Blackstone as a partner, SHK is aiming to sustain its annual growth of 12%, double the rate at which the Rs 1,400-crore fragrance industry is growing. To that end, the company is looking to acquire smaller rivals. SHK will keep a war chest of Rs 115 crore ready for acquisitions over the next five years, says Vaze.

Blackstone is bullish on the company. “SHK has unique intellectual property and a strong market presence for over eight decades. We foresee a huge growth opportunity for SHK, both in domestic and other emerging markets, driven by the growth in personal consumption in India, Africa and South-east Asia,” Akhil Gupta, senior managing director & chairman of Blackstone India, had said at the time of investing in the company a fortnight ago.

SHK also wants to build a library of intellectual properties, says Vaze, who spends extra time at his laboratory, adjacent to his spacious cabin. The company had received two patents, one each in 2010 and 2011, and wants to get many more.

Vaze’s target is to catapult SHK to the top 10 global fragrance players in the next 10 years from its current ranking of 25. By the time he hangs up his boots, the third-generation entrepreneur would like the company to be in the top 5. The combination of professional execution capabilities and entrepreneurial energy and passion will help in that endeavour.

Opto Circuits inks licensing pact with Biosensors

NEW DELHI: Medical equipment maker

Opto Circuits India

on Friday said it has entered into an licensing agreement with Biosensors for its drug eluting balloon range used for treatment of cardiac diseases.

Eurocor GmbH, a group company of Opto Circuits, has entered into a licensing agreement for their drug eluting balloon (DEB) technology and the related intellectual property rights in relation to the treatment of both coronary and peripheral artery disease with Biosensors International Group, the company said.

Both agreements will involve three Biosensors-branded DEBs— BioStream, BioPath 014 and BioPath 035, Opto Circuits said in a joint statement without giving the financial details of the agreement.

Commenting on the development, Biosensors’ Cardiovascular Division President Jeffrey B Jump said: “We are delighted to have acquired a new range of leading DEBs as a result of this licensing agreement with Eurocor.”

As a first step in this process, an original equipment manufacturer (OEM) agreement is being implemented, whereby Biosensors will market and sell, under its own brand, DEBs manufactured by Eurocor, the statement said.

“This agreement is further validation for Eurocor’s DEB products. There is a considerable scope for global expansion within this rapidly growing sector of the interventional devices market,” Eurocor GmbH COO Antonino Laudani said on the development.

Government to soon launch Rs 10k-crore fund for local electronic firms

NEW DELHI: Government will soon start an Electronics Development Fund with a corpus of Rs 10,000 crore to provide financial assistance to domestic companies in the field of electronics manufacturing and encourage innovation in the sector.

“We will soon start Electronics Development Fund (EDF) which I hope will very soon have a corpus of Rs 10,000 crore. It will be used to encourage innovation and support entrepreneurship,” Department of Electronics and IT (DeitY) Secretary J S Deepak said while speaking at the launch of Qualcomm‘s Design in India initiative.

He said the fund, housed with Canbank Venture Capital Fund, will start this month with an initial corpus of Rs 2,500 crore and rest will be raised from various sources.

“This fund is a fund of funds. This will fund venture capitalist who in turn will fund domestic companies in the field of electronics system design and manufacturing.

“We need to change present system of electronics manufacturing. It has to be rich in domestic Intellectual Property Rights,” Deepak said.

At the event, Qualcomm announced USD 4 lakh corpus for development of electronic products by Indian entrepreneurs under its ‘Design in India’ programme in association with IT industry body Nasscom.

“The company creating a product under the Design in India programme will own IPR for it. We only want to boost ecosystem for electronics design and commercialisation of innovative products,” Qualcomm India President Sunil Lalvani said.

Under the programme, Qualcomm has invited participation from people who can innovate in the field. The last date for application is February 29.

It will shortlist 10 entities which will be eligible for funding of USD 10,000 each to start prototyping their product idea at Qualcomm’s lab in Bengaluru. Thereafter, it will select three best products and give them funding of USD 100,000 each.

“India has strength in IT and that strength also includes design, engineering and R&D.

“Engineering export from India was around USD 18.1 billion in 2014-15. This is the fastest-growing segment within IT industry. This is expected to reach USD 40 billion by 2020. Design is something that you do before developing product. IT is not delinked from manufacturing,” Nasscom President R Chandrashekhar said.

He said that DeitY has also selected Nasscom to set up an incubation centre for developing an Internet of Things (IOT) ecosystem.

“The centre is coming up in Bengaluru with initial cost of Rs 25 crore to incubate ideas around IoT and encourage domestic entrepreneurship,” Chandrashekhar said.