Startups refer to companies in their early stages of operation, initiated by one or more entrepreneurs aiming to create a product or service for a perceived demand. Typically associated with high costs and limited revenue, startups often seek capital from various sources such as venture capitalists. The Indian startup ecosystem has seen tremendous growth over the years, with the Department for Promotion of Industry and Internal Trade (DPIIT) recognizing startups across 56 diversified sectors. The number of recognized startups has grown from 471 in 2016 to 72,993 in 2022, indicative of a booming startup environment.
The Role of the Startup India Scheme in Facilitating Growth
The Startup India initiative by the Government of India has been instrumental in promoting startup growth. It comprises 19 action items, including Simplification and handholding, Funding support and incentives, and Industry-academia partnerships and incubation, all aiming to build a dynamic startup ecosystem. An integral part of this initiative is the Startup India Hub, an online platform that connects stakeholders in the entrepreneurial ecosystem.
The Startup India Action Plan extends Income-tax exemption for three years for startups incorporated on or after 1st April 2016. Additionally, the Startup India Seed Fund Scheme (SISFS) was launched to provide financial assistance to startups at various developmental stages, further bolstering the growth of startups in India.
International Market Access to Indian Startups
Startup India has also forged alliances with over 15 countries, providing a soft landing platform for startups and fostering cross-collaboration.
Additional Support to Startups from Government Schemes
The Department of Science and Technology (DST) has introduced initiatives like the National Initiative for Developing and Harnessing Innovations (NIDHI) and Promoting and Accelerating Young and Aspiring Innovators and Startups (PRAYAS) to nurture and financially assist startups.
To bolster biotechnology innovation, the Department of Biotechnology and the Biotechnology Industry Research Assistance Council (BIRAC) actively support and promote biotechnology firms. Additionally, the Department of Defense Production has introduced the Innovations for Defense Excellence (iDEX) program to foster innovation and technology development in defence and aerospace industries.
The Atal Innovation Mission
Under the Atal Innovation Mission, the government has established Atal Incubation Centres (AIC) to incubate startups in various sectors. The mission also launched the Atal New India Challenge (ANIC) program to support startups with technological innovations addressing significant sectoral challenges.
Impact of Forex Flow and Technology on the Startup Ecosystem
Leading tech firms like Facebook, Google, and Microsoft’s forex inflow into the Indian startup ecosystem underlines the domestic market’s vast potential. With the advent of new technological tools, startups harness technologies like artificial intelligence, internet of things, data analytics, big data, and robotics to bridge market gaps.
Promoting a Conducive Environment for Startups
Fostering a conducive climate for startups demands breaking societal prejudices and fostering risk-taking attitudes. Policymakers, corporations, and funding agencies should work towards ensuring better domestic capital availability. Regulatory bodies must also formulate regulations that encourage innovation and support emerging business models.
Finally, understanding venture capital becomes vital in this context. Venture capital refers to a long-term start-up capital provided to new entrepreneurs, involving the risk of losing money if the venture is unsuccessful. This form of investment, provided by venture capital firms, is often associated with high-risk financial portfolios.
