Why India is focusing so much on developing its own startup ecosystem?
India aims to become a $5 trillion market by 2024 and startups are a big part of the economic contribution. Maybe this is why India is boosting its startup culture.
Today, India is one of the hottest markets for startups. With the Indian government drawing up new policies every month to support entrepreneurs in the country, we can safely say that the agenda is to boost an Indian startup ecosystem.
If you look at the budget for 2023, the Startup India program alone has a budget of Rs. 30 crores. As per reports, the total allocation for startups is almost close to Rs. 1000 crores which is a staggering amount.
So, why such a need to focus so much on developing India’s startup ecosystem?
India has determined to become a $5 trillion economy by 2024. And this goal has startups in the center. How?
Startups Create Jobs, Technological Advancements, And Innovations
One of the biggest problems that India faces today is unemployment due to overpopulation. People with experience and degrees are facing the issue of a lack of employment in the country.
With a $5 trillion economy, can you imagine the level of jobs it can create for the youth of the country?
A report in Times of India states that according to data shared by the Commerce ministry in Lok Sabha, startups job grew by 14% even during the pandemic year.
Startup businesses are known for their technological advancements and innovation that disrupt the traditional market. Businesses that focus on IT solutions, agricultural innovations, and AI are addressing some underlying significant problems in various industries. Now, as these startups grow, they hire programmers, marketers, strategists, developers, designers, and so on, to support the operation. This, in turn, can reduce unemployment.
Here is a survey by the Economic Times showing the state of startups in 2021 in India:
If we want to look at the current number from 2022, it suggests that India homes around 75,000 startups creating up to 7.56 lac jobs. Not only increasing employment, but businesses with technological progress can also have a ripple effect on the growth of our country’s economy.
Reasons Behind the Emerging Trend of Startups
Availability Of Talent Pool Backing and Aiming for Entrepreneurship:
As one of the biggest youth populations in the world, India quickly recognized its need for enhanced innovation and incubation centers. Organizations like IIM, IIT, and other R&D institutes are beginning to foster an entrepreneurial mindset among students through academic knowledge and practical training.
Even the steady rise in IT support providers especially designed for entrepreneurs and digital transformation agencies to back new businesses are giving the right opportunities for a booming market.
Startup Ecosystems Backed by Large Corporations:
Often, established organizations lack the agility and innovation for a startup culture. However, things like production capacity and capital power can be easily helpful to back up an early-stage startup.
Large corporations like TCS, Reliance, and Microsoft are implementing multiple corporate-startup partnership programs with extensive success rates. Tata Motors is backing over half a dozen startups and exploring potential partnerships with more than 20. Similarly, Microsoft India has backed over 4,000 startups.
Contribution Of Foreign Investments:
One of the many reasons why the government wants an Indian startup ecosystem is when these scales and earn a significant ROI, they attract foreign investments. Foreign investments happen with capital, resource, and even production facilities.
Here is a graph by Statista showing FDI equity inflows in India for 2021:
Many foreign investors look for companies that have the potential of becoming a huge success. This can provide the needed source of capital and fuel the expansion of startups.
Favorable Government Policies:
Since 2016, when Startup India Initiative launched, the government has simplified a lot of complicated legal, financial, and resource requirements to encourage the growth of early-stage startups.
Reforms like tax holidays, space tech for private participation, creation of state-run incubators, etc., are helping startups to grow and reduce their burn rates.
Some hottest schemes to boost the Indian startup ecosystem by the government
· Startup India: The Startup India initiative is one of the most popular government schemes to back up early-stage startups in the country. Since its launch in 2016, the program assists entrepreneurship by nurturing, facilitating, and providing funds for potential startups in the country. Apart from guidance, the program also created a ‘Fund of Funds’ to help startups gain access to several funding schemes.
· Atal Innovation Mission: Another famous program of the government is the Atal Innovation Mission (AIM) which aims to promote the culture of entrepreneurship in the country. The platform holds Innovation Hubs, Grand Challenges, and self-employment activities, particularly in the tech-driven sectors.
AIM actually works on the ground level to accelerate creativity amongst the children studying in schools. The government has Atal Tinkering Labs (ATL) across India to help students gain access to technologies that drive innovation.
· Make In India initiative: Next comes the Make In India initiative that was launched in September 2014. The sole mission of this program is to transform India into a global manufacturing hub for various industries. The Make In India initiative helped a lot to develop product-based businesses in the country.
This initiative helped to replace outdated software and obsolete frameworks with the latest and user-friendly methods. The Make In India initiative has proposals designed to attract domestic and foreign investments to different companies from various fields.
· Digital India: We all know about this initiative. It came into the limelight when Reliance started advertising it to launch Jio. The motive behind the introduction of Digital India is to modernize India’s economy and make all government services accessible electronically.
The government wants India to be digitally empowered with access to universal knowledge and services.
Look at the news… what Tamil Nadu Governor says about the Digital India movement.
On A Concluding Note
Startups like OYO, BYJU’S, Lenskart, etc., are only a jump to where India can potentially reach to become a $5 trillion economy. Now, with the government backing Agri-startups, even tier II, and tier III cities, and rural parts of India can contribute to economic growth. We just need to back entrepreneurs with innovation, technological advancements, foreign investment, and collaboration with big organizations to reach this goal.
What do you think about the present scenario of startups in India? Do you think we can reach a $5 trillion economy by 2024?
Comment down below.
