– By Dr Niranjan Hiranandani
Dynamism and innovation characterise a fast-growing, emerging economy like India. Nothing better defines our success in embodying these qualities than the Chandrayaan-3 mission that landed a spacecraft on the moon, paving the way for India’s entry into the elite club of space farers. The mission was also a triumph for India’s cutting-edge product startups that demonstrated their profound capabilities, inspiring many others to enter the indigenous technology development space.
Supportive programs like Startup India helped the brilliance of Indian innovation truly shine. Accelerators, incubators and access to funding and mentorship networks have enabled early-stage businesses to find their feet, and also take flight.
India’s startup ecosystem is the third largest in the world. It has revolutionised fintech, edtech, health-tech, e-commerce and food tech among other things. Thriving in innovation epicentres like Delhi NCR, Bengaluru, Mumbai, Chennai and Hyderabad, these startups are also expanding operations to tier I and tier II cities, as well as to the hinterlands, significantly improving the quality of life for all citizens.
The exciting opportunities in India are a great inducement for retaining talented youth who are the engine for the nation’s economic growth. The potential of homegrown talent is illustrated in the fact that they comprise a major percentage of the workforce in leading edge technology. Indians make up 20% of the global semiconductor workforce, and one third of the global IT workforce is based in India. The right conditions can foster this rich human resource and have a multiplier effect on the Indian economy.
Launched in 2016, the Startup India initiative was a timely push for a youthful demography to exercise its disruptive ideas. The structural changes set off simultaneously such as tax simplification through GST and removal of bureaucratic red tape promoted a conducive environment, injecting enthusiasm within the business community. The Startup India scheme provided comprehensive assistance to new ventures from registration to scaling. This included single window clearances, self-certification, tax exemptions, and sector specific policies to encourage growth. Financing aids through Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for Startups (CGSS) helped secure capital for startups at various stages of their business cycle until they could raise investments on their own. The Bharat Startup Knowledge Access Registry (BHASKAR) and Startup India Hub facilitated access to resources and collaborations within the startup ecosystem.
India has more than 73,000 startups recognised by the government, generating over 1.6 million jobs across the country, becoming a magnet for global venture capital (VC) and private equity (PE) investments. Rural India has also profited from these ventures which earnestly attempt to bridge the gaps in agriculture, health, and education.
Indian startups have big milestones to celebrate. And there are greater heights to scale yet which must be done in collaboration with the government and industry. After the funding winter of 2022, investors have recovered their appetite, and, according to Tracxn’s India Tech Annual Report 2024, India took the third spot globally in the startup tech ecosystem with $11.3 billion in funding raised. This is a 6 percent rise from $10.7 billion in 2023 but a 56 percent drop from 2022. The resilient Indian startup ecosystem is bouncing back amidst global challenges which is commendable. This turnaround must be aided by easy access to early-stage funding for promising ventures. Innovative strategies should help the sector recover from the set-back following the pandemic.
Significant effort should be devoted to building the workforce for a high-tech job environment. India needs to create 8 million jobs annually and these will be concentrated in sectors that require higher order thinking and advanced skills. For instance, with India’s thrust on end-to-end production of semiconductor and electronics, more technical graduates will be key. Polytechnic upgradation, STEM education in school and university levels, awareness about the massive scope in the electronics industry is critical. Sectors such as logistics and commerce will require trained personnel to operate increasingly automised and digitised systems. The foundation in technology demonstrated by large scale smart phone and UPI adaption could be an indication of the potential of young Indians and their eagerness to learn quickly. Meanwhile, accelerators and incubators in colleges and internships are a great way to cultivate the next generation of fearless entrepreneurs.
The ease of doing business is also tied to the ease of living. As physical and digital infrastructure improves, innovations will thrive. For instance, the India Stack, which was born with the Aadhaar digital ID system, launched UPI payments. This boosted financial inclusion, catalysed an innovative fintech sector and helped crores of Indians access public services. Similarly, the Gati Shakti national master plan will be instrumental in creating the networks needed for establishing industrial corridors and smart cities that depend on superior physical and digital connectivity. This will also make way for flourishing startups that enhance mobility, trade and commerce and computing among other things.
Provided a stable policy environment to encourage investor confidence, the sky is the limit for Indian startups which are expected to inject $100 billion to the GDP by 2030.
These 9 years of Startup India have demonstrated that Indians reward businesses that marry purpose and problem-solving. Startups driven by a larger mission—rooted in societal and environmental goals—have tackled specific obstacles with effective solutions. They have risen to challenges, knowing that complacency can put them out of the race. As India’s ‘techade’ unfolds, it will be shaped by these purpose-driven startups that continue to innovate and lead India towards the Prime Minister’s vision of a Viksit Bharat 2047.
(Dr Niranjan Hiranandani, Past President, ASSOCHAM and Founder & Chairman, Hiranandani Group.)
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