After the United States and China, India has the third-largest startup ecosystem with the valuation running in billions of dollars for more than 50 of these. The total number of companies registered as startups under DPIIT is more than 50,000 and the number is growing exponentially. The stock market listing of matured startups is beginning with huge fanfare and enthusiasm with the successful debut by online food delivery company, Zomato. Many more startups like Paytm, Nykaa are eying listing.
According to India’s ambassador to the United States, Taranjit Singh Sandhu, the Indian startups play a very important role in Indo-US ties. Speaking at an event organized in partnership with many business chambers, the Indian Consulate in Houston, US India Strategic and Partnership Forum (USISPF), and Department for Promotion of Industry and Internal Trade, the Indian ambassador to the US said, “From healthcare companies, who are discovering vaccines, to renewable energy firms, who are trying to scale up and bring down the average cost of power, to education startups, that are bringing online education to students, to startups using new technology, such as drones, to all those million others in the digital tech space you are pushing the envelope, every day and creating enormous economic opportunities, in both our countries and for both countries.”
The Modi government had launched two programs named Startup India (August 2015) and Standup India (April 2016) to encourage entrepreneurship among the young populace of the country. There are three pillars of Startup India Simplification and Hand-holding, Funding Support and Incentives, Industry-Academia Partnership, and Incubation.
These schemes are catalysing innovation, productivity and create a huge number of jobs. The Startups are budding due to investors’ trust in the Indian market and favourable governmental policy.
The investors have made huge bets on the Startups even if they are making losses. If the VCs are sure about the long-term future of the venture, a loss in short term does not matter to them. The Startups have been able to defy the cyclical slowdown as the investors had made huge bets on them, excited by the favourable government policy.
The BJP 2019 general election manifesto put great emphasis on encouraging startups. To encourage the startups, the BJP promised collateral-free credit up to 50 lakh rupees to entrepreneurs. “We will launch a new scheme to provide collateral-free credit up to 50 lakh for entrepreneurs. We will guarantee 50% of the loan amount for female entrepreneurs and 25% of the loan amount for male entrepreneurs,” read the manifesto. The party also promised to establish a seed startup fund with the amount of 20,000 crore rupees. “We will continue to promote and encourage Staups through creation of a ‘Seed Staup Fund’ of 20,000 crore,” reads the manifesto.
Entrepreneurs of the country have suffered for a long time due to License Raj. The unnecessary bureaucratic interference at every step of business development became counter-productive for the Indian economy. However, the short socialist regime could not alter the entrepreneurial energy embedded in Indian culture for thousands of years.
As the government liberalised the economy given the balance of payments crisis, the economy came on track and the country is witnessing near double-digit growth for the last two decades. The number of startups is growing exponentially every year, and many of these companies are expected to become the bedrock of the economy in the next few decades.