Transforming India: The Start-Up Story

On 15th August 2015, Hon’ble Prime Minister Shri Narendra Modiji announced his vision for a new India—a vision that would put India on the global start-up map and ensure that start-ups become the backbone of this new economy of innovation driven by the troika ‘I’s i.e., ideas, industry and investment. Today, India has emerged as the third largest start- up ecosystem in the world only behind the US and China but is on a steady path to becoming the start-up hub of the world in times to come. A robust start-up ecosystem is critical to India achieving its ambitious goal of $5 trillion economy by 2024 as well as realising its vision of creating an Aatmanirbhar Bharat.  

Apart from its crucial contribution to GDP, start-ups in India offer immense scope for employment generation and upskilling of youth, especially in the trending industry 4.0 skills. Indian start-ups have generated close to 6 lakh jobs since 2018 cumulatively. Even during the continuing pandemic, 1.7 lakh jobs were created by DPIIT recognized start-ups in the period 2020-2021 alone. In terms of funding, Indian start-ups raised an impressive $42 billion in 2021, nearly 40 per cent more than what was raised in 2020. As emphasized by Hon’ble Prime Minister Shri Narendra Modiji, India is also on track to convert this century into “a century of unicorns”. A unicorn is a privately held start-up company with a valuation of over $1 billion (approximately Rs 8000 crore). Today, 1 out of every 10 unicorns created in the world is from India. The year 2021 itself saw the creation of 44 unicorns with a total valuation of more than $90 billion.  

India has seen a series of companies looking to make significant social contributions. Apart from the significant scope for employment, start-ups have also been addressing several issues including regional and gender disparities at the social level. According to Department for Promotion of Industry and Internal Trade (DPIIT), there is at least one start-up in every state of the country spread over more than 625 districts and almost half the start-ups are operating from Tier-2 and Tier-3 cities. The start-up culture has also touched rural India, empowering women and youth in remote areas to undertake home-grown businesses such as selling pickles, papadums, handicraft etc. The food processing sector in fact saw some of the highest number of registered start-ups. These grassroot level entrepreneurs have become the true ambassadors of ‘vocal for local’.  

It is also encouraging to note that close to 45 per cent of start-ups today have a woman entrepreneur onboard, a trend that will inspire more women to take the lead. The journey to becoming the world’s third largest start-up ecosystem has been driven to a large extent by the enabling policy support from the government and its role as a facilitator. The Start-up India program was launched by Hon’ble Prime Minister in 2016 with an aim to democratize the idea of entrepreneurship and catalyse young innovators around the country. It adopted a three-pronged strategy to tap the entrepreneurial talent in the country—(i) simplification and handholding of start-ups, (ii) funding support and incentives, and (iii) industry-academia partnerships and incubation. 

In order to meet the first goal, the government set up the Start-up India Hub and eased the compliance regime for start-ups. For the second goal, the government set up a Fund of Funds with a corpus of Rs 10,000 crore and exempted them from tax for a period of three years. And for the third, in order to encourage industry-academia partnerships and spur incubation, the government launched the Atal Innovation Mission (AIM) and organizes various start-up fests and grand challenges. More than 30 States and UTs now have dedicated Start-up policies.  

The Start-up Runway on the Government e-Marketplace (GeM) portal is another initiative to help start-ups showcase and list their products/services for public procurement. All these efforts have led to India achieve a rank of 40 out of 132 in the Global Innovation Index 2022, a remarkable leap of 41 places over 7 years. Even in the upcoming G20 presidency, India intends to showcase its remarkable achievements in the digital and start-ups space and leverage that to expand the domestic digital and start-up revolution into a worldwide movement. Towards this end, India has already proposed a new engagement group under the G20 called Start-up 20 to help overcome some common challenges faced by start-ups globally such as lack of funds, right mentorship and enabling policy support. 

 As we progress towards 100 years of our independence, we are sure to witness an increasingly transformational role being played by home-grown start-ups. Hon’ble Prime Minister Shri Narendra Modiji recently declared 16th January (Start-up India’s launch date) as National Start-up Day to further boost entrepreneurial spirit. With a large pool of young talent and countless ideas, India should ride the start-up wave and outshine countries such as Israel and the US in its entrepreneurial capital. A robust start-up ecosystem and growth mindset can propel India into a self-reliant and self-confident Bharat. 
 

(The author is Minister of State for Finance, Government of India — views expressed are personal)