Start-up Ecosystem In India

Startup India Initiative and its Success

Note4Students

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:
  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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