From UPSC perspective, the following things are important :
Prelims level : Startup India Initiative
Mains level : Success of the scheme
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:
- Simplification and Handholding.
- Funding Support and Incentives.
- 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.
- 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.