India’s startup ecosystem has expanded rapidly, emerging as the third largest globally. However, converting the entrepreneurship wave into a strategic national asset necessitates tackling challenges around funding gaps, stimulating innovation and improving ease of doing business.
- India added 1,600 startups in 2020 taking the total count to 38,000-40,000. Key sectors include fintech, edtech, healthtech, e-commerce and aggregators.
- However, total funding remains small at $10-12 billion versus global hubs like US ($130 billion) and China ($51 billion). Early stage capital vital for innovators is inadequate.
- Intellectual property regime requires strengthening to incentivize research and innovation. Complex regulatory processes like angel tax and compliance burdens undermine growth.
- Startups remain concentrated around metros. Promoting tier-2 entrepreneurship through incubation, mentor networks and targeted funds can drive inclusive job creation.
- Building pathways from academic institutions to startups through mechanisms like innovation cells and allowing sabbaticals can spur commercialization of research.
Strategic policy initiatives needed include:
- Boosting access to patient capital via Fund of Funds, credit guarantees, pooled government investments, micro VC funds etc.
- Tax incentives for investments in R&D, IP acquisition and technology commercialization. Faster IPR processes.
- Simplified cross-border trade, capital raising and listing norms for scale-up on global platforms. Relaxing overseas investment regulations.
- Public procurement quotas for startups to gain market access. Customized compliance regimes for diffefrent stages balancing innovation and regulation.
With robust incubation, easier access to risk capital, global connect and streamlined regulations, India can leverage its tech talent to build innovative and inclusive startups that are competitive globally.
