A research, reviewing India’s entrepreneurial policy Startup India, affirmed its positive impact in reducing regional entrepreneurial disparities.

Startup India Initiative

• The Startup India campaign was first announced by PM Modi during his speech on 15 August 2015 address from the Red Fort.
• The action plan for this initiative is focusing on three areas:

1. Simplification and Handholding.
2. Funding Support and Incentives.
3. Industry-Academia Partnership and Incubation.

• An additional area relating to this initiative is to discard restrictive States Government policies within this domain, such as License Raj, Land Permissions, Foreign Investment Proposals, and Environmental Clearances.
• It was organized by the Department for promotion of industry and internal trade (DPI&IT).

The success of the scheme

• Minister for Commerce and Industry has informed the Lok Sabha that the entrepreneurial portal had more than 65,000 startups registered.
• Of which, 40 attained the ‘unicorn’ status in the last twelve months, bringing the total as of date to 90.
• India now ranks third among global startup eco-systems.
• The networking, training and mentoring facilities provided by Startup India alongside entrepreneurship outreach campaigns in tier-2 and tier-3 cities, helped address regional entrepreneurial disparities in India.

Limitations to its success

(1) Heavy concentration in megacities

• Entrepreneurship continues to be “highly concentrated” in three megacities, namely, Mumbai, Bengaluru and Delhi NCR.
• India’s venture capital industry is also clustered in and around these three cities.
• Such concentration can lead to increased economic inequality and hinder emergence of entrepreneurs from industries other than those belonging to the clusters.

(2) Narrow Representation

• The Startup India Action Plan document has no mention of the words ‘caste’, ‘tribe’, ‘marginalised’, ‘indigenous’ or ‘social group’.
• Additionally, the policy’s reliance on technology does not take into consideration India’s digital divide, especially with respect to urban and rural areas.

(3) Few Women in the industry

• There is an under-representation of women and marginalized caste groups in the national startup ecosystem.

Dedicated measures to support Women

• 10% of the fund in the Fund of Funds operated by Small Industries Development Bank of India (SIDBI) has been reserved for women-led startups.
• Further, all the alternate investment funds where the SIDBI takes equity have been mandated to contribute 20% in business which are women led.
• There is a capacity-building program and a dedicated webpage for women on the portal.

Way ahead

• There is a need for policies and progressive strategies from governments to encourage startups and provide access and assistance in key areas including tax clarity, incubation, affordability and licensing.
• In any case, governments should be well prepared and dedicated to creating a culture of startups to impact the entrepreneurial ecosystem in their cities, countries and citizens.

Also read:

[Burning Issue] Five Years of Startup India Scheme

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