Developing start-ups in India

Developing start-ups in India

India is often described as “The Emerging Markets Poster” for its vast business potential for startups. Startups in India as in many other parts of the world, have received increased attention in recent years. Their their number is growing and they are now widely recognized as important engines of growth and job creation.

However, due to the lack of forward-looking policies and financial restraints, the Indian startup ecosystem is facing a number of issues. So we have to push for innovation and scale emerging technologies to generate impactful startup solutions, and thus, it can act as vehicles for India socio-economic development and transformation.

What is the current state of the start-up ecosystem in India?

• In 2021, Indian start-ups raised $23 billion through more than 1,000 transactions, with 33 start-ups becoming unicorns. So far the year 2022 added 13 more start-ups to the unicorn club.
  • The start-up ecosystem in India ranks third after the United States (US) and China.
• According to India Venture Capital Report 2021 published by Bain and Company, the The number of cumulative start-ups has grown at a CAGR of 17% since 2012 and exceeded 1,12,000.

What are the government initiatives related to start-ups?

• Start-up India Seed Fund Scheme (SISFS): This scheme offers financial assistance to start-ups to help them prove their concept, develop prototypes, test products and enter the market.
• National Startup Awards: This program recognizes and rewards outstanding start-ups and ecosystem enablers that contribute to economic dynamism by driving innovation and stimulating competition.
• SCO Getting Started Forum: Established in October 2020 with the aim of developing and improving start-up ecosystems in SCO member states, the Shanghai Cooperation Organization (SCO) The Startup Forum is the first of its kind.
• Preamble: The ‘Prarambh’ summit aims to provide a platform for startups and young minds from around the world to come up with new ideas, innovations and inventions.
• National Initiative for the Development and Exploitation of Innovations (NIDHI): It is an end-to-end plan for start-ups to double the number of incubators and start-ups over a period of five years.
• Ranking of States on support for startup ecosystems (RSSSE): The Directorate for the Promotion of Industry and Internal Trade (DPIIT) under the supervision of the Ministry of Trade and Industry US start-up ranking exercise since 2018.

What are the main challenges for start-ups in India?

• Lack of drive towards innovation: The Indian education system lacks the professional training and exposure to the industry that deprives students of pursuing innovation. Consequently, it makes the Indian higher education system lags behind in Research and development.
  • It also leads to many bright young minds leaving India for overseas research and businesswhich has an immense cost for the country.
• Lack of recognition : For almost 70% of the Indian population lives in rural areas who are still deprived of reliable Internet access. Consequently, many village start-ups are not recognized and are deprived of government funding initiatives.
• Primed Nature: To manage a start-up, a large working capital is necessary. Many start-ups in India, especially in their early stages, are bootstrap, ie self-financed by the savings of the founders, domestic financing being limited.
  • As a result, the majority of start-ups in India fail within the first five years. and the most common reason is – lack of formal funding.
• Scalability issue: Small start-ups in India have limited understanding of customers and are confined to certain regions only, where they know the local language and local people.
  • Due to this language barrier and lack of connected supply chains, it is difficult for startups to adapt their products to customers across the country
• Marginal penetration in the space sector: Indian fintech and e-commerce startups are doing exceptionally well, but space startups remain exceptions.
  • Globally, the space economy is valued at $440 billion, with India holding less than 2% of the market.
    • The reason is the lack of independent private participation in the space sector.

What should be the way forward?

• School-entrepreneurship corridor: The National Education Policy, 2020 encourages student entrepreneurs by providing vocational training in partnership with industry and innovation at the school level.
  • It may have a favorable impact on the start-up ecosystem in Indiaif entrepreneurial skills are integrated into the curriculum under the new education policy.
• Encourage entrepreneurship: Apart from policy decisions to encourage entrepreneurship, India’s business sector also needs to promote entrepreneurship and create synergies for create sustainable and resource-efficient growth.
  • Companies in India can be encouraged to collaborate with startups and support them with various company-specific resources. These commitments can be mutually beneficial.
• Harnessing India’s Demographic Dividend: Given India’s scale and limited resources, low-cost, high-impact solutions are needed. Tech Startups should be encouraged, particularly in the field of semiconductor, space and artificial intelligence to harness India’s potential demographic dividend at most.
  • Emerging start-ups can also be encouraged to propose innovative measures to reduce the digital divide in India.
• Social acceptability of startups: By collaborate with various unicorns of Indiathe government must work to social acceptance of entrepreneurship careers and channel young people in the right direction to choose a career with ease.
• Made in India, designed for the world: Indian start-ups have the potential not only to examine Indian problems but also to offer customized solutions for overseas markets. The vision of Atmanirbhar Bharat will certainly be boosted by this as well as to do India, a hub for entrepreneurship worldwide.