Running a brokerage firm presents significant challenges, and the co-founders of Zerodha, Nithin and Nikhil Kamath, have voiced their concerns regarding the current regulatory landscape. They advocate for stronger collaboration between startups, regulators, and the government to foster innovation in India.
During a recent appearance on CNBC-TV18’s Young Turks Reloaded podcast, hosted at Zerodha’s office in Bangalore, the Kamath brothers, alongside CTO Kailash Nadh, discussed the hurdles faced by the startup community. Nikhil Kamath emphasized the pervasive uncertainty within the ecosystem, highlighting the critical need for a more cooperative relationship between entrepreneurs and regulatory bodies. “We are often at the mercy of regulators whose decisions can drastically impact our revenues overnight,” Nikhil noted, emphasizing the precarious nature of this dynamic.
While the Kamath brothers recognized the positive strides made by regulators in strengthening the system, they cautioned that an overabundance of regulations could stifle innovation. Nithin illustrated this concern with a classroom analogy, questioning whether creativity could thrive in an environment where fear of reprimand looms large.
Both brothers pointed to specific regulatory changes, such as the Securities & Exchange Board of India’s (SEBI) “true-to-label” circular, which they believe may hinder Zerodha’s revenue growth. “Operating a brokerage is no easy task,” Nithin remarked, reflecting on the increasing pressures from regulatory frameworks.
Despite these challenges, the Kamath brothers remain optimistic about the potential of India’s startup ecosystem. They argue that creating a more nurturing environment could catalyze substantial growth and encourage entrepreneurial endeavors. Nikhil expressed concern about the atmosphere of fear that pervades the startup landscape. “There’s a prevailing sense of fear, not just here but across the entire ecosystem,” he stated.
He advocates for a paradigm shift in which regulators, government officials, and entrepreneurs work together as partners. “If we can alleviate fear significantly, more individuals will be inspired to pursue entrepreneurship,” he concluded.
