Examine the role of Startup and their contribution Growth of Indian economy ? 10Marks

 India ranks fourth in the world in the number of scaleups or startups that have received over $50 million of disclosed venture capital (VC) investment, according to the first edition of Startup Genome's Scaleup Report.

India is ranked fourth with 429 scaleups, after the US (7,184), China (1,491), and the UK (623). However, India is ahead of the UK in total VC investment that has gone into these scaleups and in cumulative tech value investment of scaleups. The report stated that India recorded 429 scaleups, with a VC investment of $127 billion and a total value of tech investment of $446 billion.

Today, India has firmly established herself as one of the largest global hubs for innovation and entrepreneurship. The country’s Startup ecosystem has been growing rapidly with the number of Startups increasing over 68 thousand between 2014 and June 2023, which has played a pivotal role in catalysing the Nation’s Reputation as the hotbed of innovation, revolutionary ideas, and technologies.

The factors that have contributed to the Surge in the number of Startups in the country include:

A Tech-savvy young population;

An Expanding middle class, and;

A favourable regulatory landscape.

These key elements, along with the ever-increasing number of Indian Startups, including Unicorns (a privately held startup company valued at over US $1 billion) and Soonicorns (startups with valuations surpassing $300 million but not yet reached the US $1 billion mark), India’s GDP is projected to experience a surge to the tune of 5-10 % by 2030.

It is contended, this Startup-led disruption, challenging the status quo by introducing new technologies, business models, or services that provide greater value, or better meet the needs of consumers will result, not only in job creation, but also transform consumption patterns with new-age ventures addressing many challenges across sectors and industries.

Indian startups expected to become key drivers of growth

Indian Startups have transitioned from being primarily service-oriented to becoming leaders in product innovation demonstrating their technological prowess across various sectors. This transformation has elevated India’s stature on the global tech stage drawing parallels with more established economies.

Increasing annual household income in India has contributed significantly to this growth. It is projected that approximately 50 % of the households are set to have an annual income exceeding Rs. 5 Lakh by 2030, up from 33 % in 2019. This rise added to over 23 million households expected to earn more than Rs. 20 Lakh by 2030 is expected to boost consumer spending in the country.

Other factors expected to boost India’s GDP

Expected increase in the number of tech startups to grow from 68 thousand in 2023 to 1.8 Lakh in 2030 leading to a substantial rise in job opportunities.

Emerging tech Startup hubs in Tier II cities fostering a new wave of entrepreneurship and innovation.

Domestic investors entering the ecosystem, replacing the receding deep-pocketed global investors, leading to increased investments and cash flow within the economy.

Expected Investor engagement to grow by 46 % by 2030 with Indian High-Net-Worth Individuals (HNIs) and family offices demonstrating strong enthusiasm for the Indian Startup ecosystem.

Prediction of the number of Indian HNIs reaching 1.7 million by 2027 growing at a CAGR (Compound annual growth rate) of 16 %, outpacing growth rates in other major economies.

India’s relatively untapped market, offering burgeoning Startups the chance to enter uncharted territories and address significant real-world issues, contributing to the nation’s economic upliftment.

Challenges needed to be addressed

Despite the fact, that the Indian Startup economy is the third-largest in the world today, the following challenges are needed to be addressed:

Sustained funding access across various growth stages of Startups;

Need to streamline processes, and cultivate a Startup-friendly regulatory environment to sustain the momentum gained by the country from the Startup boom, especially, keeping in mind a key role they can play in the evolution of technologies like, AI (Artificial Intelligence), blockchain (a type of shared database that differs from a typical database in the way it stores information), and IoT (Internet of Things), a technology that allows us to add a device to an inert object, among others.

Government Schemes for Startups

The government recognizes the importance of startups in driving innovation and economic growth. Various ministries and departments accordingly have introduced schemes to provide financial, infrastructural, and regulatory support to Startups. These schemes cover sectors like technology, manufacturing, agriculture, healthcare, and many others.

Some Government Schemes for Startups in India

• Atal Innovation Mission (AIM) with the aim to promote Innovation;
• Startup India Seed Fund Scheme to support relatively early-stage enterprises;
• Startup India Initiative with the aim to provide tax benefits to entrepreneurs for a little more than 5 years;
• Aatmanirbhar Bharat App Innovation Challenge, with the aim to encourage Indian Startups to work together & develop products that are created in India for the benefit of people all over the world;
• Ebiz Portal, a platform for collaboration between the government & business (G2B) created by Infosys to serve as a communication hub for all business investors & entrepreneurs with the aim, to assist in the modernization of the country;
• Software Technology Park (STP), a system that is entirely focussed on exporting in order to expand & export technical services & computer software through physical media or communications infrastructure.

Epilogue

Indian Startups have not only expanded within the country but also globally with a significant surge in exports and the success of the D2C (Direct to Consumer) Startup ecosystem in international markets.

The Startup surge in India is believed to herald a new era of economic progress and innovation. With a potent combination of youth, tech prowess, supportive policies and real-world problem-solving strategies Indian Startups are set to play a pivotal role in boosting the Nation’s GDP.

As Startups continue to drive job creation, introduce disruptive technologies, and reshape consumer behaviour, the influence of Startups on India’s economy is destined to solidify paving the way for the country to become the world’s biggest Startup powerhouse in the years to come.