Monday, October 18, 2021

An emerging Startup giant: India

Indian startup ecosystem has not only provided a torque to Indian economy, but has also become an engine of growth in itself. Being a vast country, there were a plethora of unsolved problems across various sectors on Indian economy. In their initial phase, Indian start-ups have tried to solve some of these problems by working on innovative ideas. But with the time and inertia, they have remoulded several business models, products/services and technologies and now this trend is accelerating for the future.
See the two reports. The Global Startup Ecosystem Report 2021 for Startup Genome marks London, Mumbai and Bangalore as the top startup hubs across the world. New York shares the second rank with London for the second consecutive year. Mumbai maintained its first position outperforming other fast-growing ecosystems on the parameters of funding, performance, market research, talent and connectedness.
This is for ‘emerging ecosystem’, i.e. an ecosystem, which is in the earlier stages of growth and has a high potential for the future.
The research also shows that Indian startups raised USD 12.1 billion in the first half of this year. As of August 2021, India has produced 24 unicorns in 2021, including 6 in just 4 days in April.
Bangalore is featured at top 30 global tech hubs and Delhi featured under top 40, ranked 36th.
What is even more interesting is that by 2021, the wave of startup ecosystem is seemingly sweeping across the country.
So much so, that India stands at the 20th spot among the top 100 countries that have been ranked in the Global Startup Ecosystem Index 2021 by Startup Blink- the other report. This report is based on the sum of three parameters – quantity, quality and business environment.
In this report, the quantity parameter comprises number of start-ups, number of start-up related meet-ups, number of co-working spaces, number of accelerators etc.
The quality parameter reflects upon the factors like the number of employees per start-up, the presence of unicorns, exits and pantheon companies. It even takes into account the number of global start-up events and the presence of global start-up influencers etc..
The business score parameters are self explaining, but they include research and development investment & number of per capita patents etc.
The state of Karnataka is also the world’s 4th largest technology and innovation cluster and home to more than 400+ global R & D centres.
The Startup India initiative was launched on 16th January 2016, by Prime Minister Narendra Modi.
Over the past few years Start-ups in India are attracting significant funding from global investors, some firms have become unicorn start-ups providing huge gains to their investors.
The added advantage India has is of being one of the fastest-growing economies in the world in the last decade. Rising disposable income levels (per capita income rose to ~Rs. 95,000 or US$ 1,301 in 2019 from ~Rs. 73,000 or US$ 1,000 in 2015) has fuelled consumption levels.
The second factor is the demographic dividend. More than half of India’s population is under 25 years and simultaneously it has a powerful consumer base.
The third advantage with India is that the government has taken various steps to providing a base, conducive for tech-led start-ups to grow. There are several government programs and schemes, several competitive events hosted by the government and creation of a smooth legal base to build a strong start-up ecosystem.
Here are some of the Government Initiatives and Schemes boosting the Start-ups:-
1. Start-up India Initiative
The government supports, builds and recognises start-ups through this flagship initiative and creates an ecosystem of innovation and entrepreneurship. Launched in 2016, the initiative has various micro-schemes and programmes that address different needs of a start-up broadly under three categories – compliance and legal support; funding and tax grants; and incubation and industry partnerships.
2. Atal Innovation Mission (AIM)
AIM was launched in 2016 with an objective to create a culture of innovation and entrepreneurship in the country. The scheme involves schools, research centres, NGOs and MSMEs at district and state levels. To oversee the innovation ecosystem in India, it offers labs, incubation centres, innovation centres, mentor networks as well as strategic public-private and country-to-country partnerships.
3. Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)
As per the Ministry of Electronics and Information Technology website, this scheme is under review, SIP-EIT is a scheme offering financial assistance to tech-based start-ups as well as MSMEs for international patent filing.
4. Promoting Innovations in Individuals, Start-ups and MSMEs (PRISM)
PRISM supports individuals who have innovative ideas and want to create a prototype or working model. The idea might belong to green energy, industrial materials, waste management, affordable healthcare, clean energy or any other technology-based field.
5. Aspire – A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship
ASPIRE is meant to promote entrepreneurship and create jobs in the agro industry. ASPIRE seeks to establish a network of technology and incubation centers. Under the scheme, 50% of the cost of plant and machinery (land and infrastructure not included) or Rs. 50 lakhs (~US$ 68500), whichever is less, is granted for setting up incubation centers.
Apart from the above-mentioned schemes, there are more than 100 other schemes and initiatives undertaken by the government to encourage a culture of entrepreneurship and innovation in the country.
Further, one of the biggest advantages is the smooth adoption of digital technologies. India is rapidly transforming into a new-age digital economy. Each Indian is today equipped with a digital identity, which is Aadhaar-based biometric ID and helps in quick and convenient verification of identities and customer information.
Start-up wave is spreading beyond big cities
In India, Start-ups are mushrooming in tier 2 cities as well. These cities have the added advantage of local talent pool and lesser cash burn. As per the Economic Survey of 2018-19, 50% of the 16,500 start-ups (registered by March 2019) were based in tier 2 and 3 cities. Jaipur, Ahmedabad, Pune, Chandigarh and Indore are some of the tier 2 cities witnessing this wave of start-up activities. Sure, it is to penetrate even deeper.

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