It is the era of startups. A defining period in India’s history marked by powerful ideas and large-scale innovations not seen before. A revolution sweeping the business landscape and accelerating the country’s growth.
The following statistics reveal how startups are playing a pivotal role in taking India to new heights:
- India has the 3rd largest startup ecosystem in the world, and it is expected to witness an annual growth of 12 to 15%.
- On the 8th anniversary of the Startup India Program, the number of startups has increased from 400 odd in 2016 to more than 1 lakh.
- 47% of these startups registered with DPIIT have one women directors, showcasing the growth of women entrepreneurship in India.
- Startups have generated 12+ Lakh jobs as per the report released by the Department of Economic Affairs (DEA – India).
- Cumulative funding for over 31,000 tech startups exceeded 70 billion dollars from 2019 to 2023, as per a report from NASSCOM and Zinnov.
Today, India is one of the fastest growing major economies, striving forward to achieve the objective of a 5 trillion economy and eventually the dream of Viksit Bharat by 2047. The startup boom, especially in the tier 2 and tier 3 cities, has acted as a much-needed boost for the economic progress of the country. In this blog, we explore the factors contributing to the growth of the startup ecosystem and how they are powering India’s growth story.
How Startups are Growing and Accelerating India’s Growth?
- Government support, policies and reforms
In a vast country like India, government support enabling ease of doing business is a prerequisite for anything to flourish. Startup India, the flagship initiative started in 2016, played a massive role in developing a culture of ideas, innovations and solutions.
Since then, the government has started a series of programs supporting startups, allocated budgets to bolster their growth and created an ecosystem to help them thrive.
Here are a few of the major government policies, schemes and programs for startups:
- National Entrepreneurship Policy
- Startup India Seed Fund Scheme
- Skill India Program
- A Scheme for Promotion of Innovation, Rural Industries & Entrepreneurship (ASPIRE)
- Atal Innovation Mission’s AIM-iCREST
As a result, entrepreneurship has gripped the imagination of the nation today, giving rise to startups not only in metro cities but in small towns of India too.
The state governments are also doing their part in inculcating a strong culture of entrepreneurship among young people and encouraging small and medium businesses to grow. In fact, 30 of 36 states and union territories of India have formulated startup policies.
Here are some of the examples:
UP – Startup Policy 2020 and StartinUP programs aiming to build 100 incubators across the state. Currently established 55 incubators in 22 districts.
Odisha – Startup Odisha Yatra 2.0 and Startup Express, mobile startup incubator programs that covered 100+ educational institutions across the state to collect ideas from students.
Karnataka – Karnataka Digital Economy Mission, aims to create a Bengaluru-like startup hub in small cities like Mysuru, Mangaluru and Hubbali.
Kerala – Under the Kerala Startup Mission, 375 IEDCs (Innovation and Entrepreneurship Development Centres) have been established across colleges and universities.
Telangana – Development of Hyderabad T-Hub and IT towers operational in the cities of Warangal, Karimnagar and Khammam districts.
- A young population, new ideas and entrepreneurship
India has the world’s largest youth population at its disposal, and the country will continue to have the youngest workforce till 2030. The youth bulge, as experts call it, has given birth to an ecosystem where new ideas are flourishing like never before.
In addition, the phenomenal increase in the use of technology and internet penetration to the tier 2 and tier 3 cities, have enabled people to start businesses on their own and grow.
There’s another factor here: reverse immigration. Tech talent and other professionals returned to their native places and found an opportunity to build startups in their hometowns. The developing cities with growing infrastructure, convenience, connectivity and comfort have paved the way for startups to prosper.
The availability of land and flex spaces at low cost, highly skilled talent and the emergence of small towns as new growth markets have also supported the startup ecosystem to bloom. It has helped India’s development to reach even remote regions of the country.
- Business investments
Business investors and venture capitalists, both from India and outside, have shown exceptional confidence in Indian startups by funding approximately 8 billion dollars in 2023. At a time when the world economy is facing challenges galore, India’s resilience demonstrated by startups across India attracting investments is a huge positive.
According to a Tracxn report, some of the sectors that experienced remarkable growth through funding include Retail, Fintech, Transportation and Logistics. New sectors focused on Artificial Intelligence (AI), Space Technology, and EVs have also seen a boost in funding. As of today, India ranks 7th in funding within the International Space Tech field.
Startups, as a result, have created employment opportunities, 12+ lakhs to be precise, contributing to the growth of India. In addition, the government has sanctioned over 40 crore loans through Pradhan Mantri Mudra Yojana, providing a major boost to the aspirations of youth looking to begin their startup journey.
The startup ecosystem has transformed the business landscape of India and is going from strength to strength. There are already over 100 unicorns that have emerged from the startups, and many more to come in the future. As India ascends to new heights, the contribution of startups will be a story to remember.
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