Start-up Ecosystem In India

The three acts of entrepreneurship that accelerated India’s start-up ecosystem

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Start-up ecosystem in India

Context

Three acts of entrepreneurship from five years ago — Jio, UPI, and GST — have converged to accelerate our startup ecosystem.

Let’s look at each in more detail

  • Impact of JIO: India’s per GB internet data costs are just 3 per cent of those in the US.
  • A bold and risky $35 billion bet made by a private company transformed Indians from being data deprived to data-rich; consumption has jumped 15 times because costs fell by over 90 per cent.
  • The addition of millions of consumers and smartphones since Jio’s delightful five-year disruption of the market has exploded the most important universal metric in startup valuation — addressable market.
  • Affordable digital connectivity is transforming 75 crore of them into consumers, entrepreneurs, employees, and suppliers.
  • Role of UPI: Google’s letter to the US Federal Reserve suggesting America learn from India’s Universal Payments Interface (UPI) acknowledged that our real-time, low-cost, open-architecture payment plumbing is a public good.
  • UPI’s mobile-first architecture is a key pillar of the paperless, presenceless, and cashless framework of the Aadhaar-seeded India Stack.
  •  Impact of GST: GST attacked complexity and incentivised law-abiding supply and distribution chains.
  • It was long in the making but going live needed the risk-taking of starting with a second-best architecture, accepting some unjustifiable rates, and state revenue guarantees.
  • The doubling of indirect tax registered enterprises since GST creates a virtuous economic cycle of higher total factor productivity for enterprises and employees.

Flourishing startup ecosystem

  • India now has the highest ratio of unlisted to listed companies with a $1 billion valuation.
  • Initial public offering documents filed by early startups like Nykaa, Paytm, Zomato and PolicyBazaar roughly average a 10x valuation rise since the triad did IPO.
  • Estimates suggest India’s startup ecosystem valuation will explode from $315 billion today to $1 trillion by 2025.

Conclusion

Gandhiji’s notion of democracy — where the weakest have the same opportunity as the strongest — needs an economic meritocracy only possible when entrepreneurs have all the ingredients in the right proportions.

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