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Upscaling Start-ups in India

by Ozva Admin

Upscaling Start-ups in India

For preliminaries: Startups in India, Unicorn, India Venture Capital Report 2021, Startup India Seed Fund Scheme (SISFS), National Startup Awards, National Initiative for Developing and Harnessing Innovations (NIDHI), Startup India Action Plan (SIAP), National Education Policy, 2020 , Atmanirbhar Bharat.

for network: Current Status of Startup Ecosystem in India, Major Challenges Related to Startups in India, Recent Government Initiatives Related to Startups.

India is often described as “the poster child of emerging markets” for its great commercial potential for startups. Startups in India as in many other parts of the world, they have received increased attention in recent years. Their the numbers are on the rise, and they are now being widely recognized as important engines for growth and job creation.

However, due to a lack of forward-thinking policies and financial constraints, India’s startup ecosystem is facing a number of problems. Therefore, it is necessary to promote innovation and scale emerging technology to generate impactful startup solutions, and thus can act as vehicles for India socioeconomic development and transformation.

What is the current state of the startup ecosystem in India?

  • In 2021, Indian startups raised $23 billion in more than 1,000 deals, with 33 new companies becoming unicorns So far the year 2022 has added 13 more startups to the unicorn club.
    • The start-up ecosystem in India it ranks third after the United States (US) and China.
  • According to the India Venture Capital Report 2021 published by Bain and Company, the The number of cumulative startups has grown at a CAGR of 17% since 2012 and crossed 1,12,000.

What are the government initiatives related to startups?

  • India Seed Fund Scheme for Startups (SISFS): This plan provides financial assistance to startups to help them prove your concept, develop prototypes, test products and go to market.
  • National Startup Awards: This program recognizes and rewards outstanding start-ups and ecosystem enablers that contribute to economic dynamism by stimulating innovation and stimulate competition.
  • SCO Startup Forum: Established in October 2020 as a means to develop and enhance startup ecosystems in SCO member states, the Shanghai Cooperation Organization (SCO) Startup Forum is the first of its kind.
  • Prarambh: the ‘Prarambh’ summit aims to provide a platform for startups and young minds from around the world to generate new ideas, innovation and invention.
  • National Initiative for the Development and Use of Innovations (NIDHI): It is a comprehensive start-up plan to double the number of incubators and start-ups within five years.
  • Ranking of States in Support of Startup Ecosystems (RSSSE): the Department for the Promotion of Industry and Domestic Trade (DPIIT) under the Ministry of Commerce and Industry has been carrying out the States start-up ranking exercise since 2018.

What are the main challenges related to startups in India?

  • Lack of drive towards innovation: India’s education system lacks vocational training and industry exposure that it keeps students from pursuing innovation. As a result, this makes the indian higher education system lags behind in terms of Investigation and development.
    • This also leads to many bright young minds leaving India to research and do business abroadwhich has an immense cost to the country.
  • Lack of recognition: since almost 70% of the Indian population lives in rural areas who are still deprived of reliable internet access. Consequently, many village-based start-ups they go unnoticed and are deprived of government funding initiatives.
  • Self-sufficient nature: To run a start-up, a significant amount of working capital is required. Many start-ups in India, especially in the early stages, are self-funded, that is, self-funded from the founders’ own savings, as internal funding is limited.
    • As a result, most of the start-ups in India fail within the first five years. and the most common reason is – lack of formalized financing.
  • Scalability problem: Small startups in India have limited understanding of customers and are confined only to certain regions, where they know the local language and local people.
    • Because of this language barrier and lack of connected supply chains, makes it difficult for startups scale your products to customers across the country
  • Marginal penetration in the space sector: Indian fintech and e-commerce startups are doing exceptionally well, but space startups remain outliers.
    • Globally, the space economy is valued at USD 440 billion, with India having less than 2% of the market.
      • The reason is the lack of independent private participation in the space sector.

What should be the way forward?

  • School-Entrepreneurship Corridor: the National Education Policy, 2020 promotes student entrepreneurs by providing vocational education in partnership with industry and innovation at the school level.
    • This can have a Favorable impact on the startup ecosystem in IndiaYes entrepreneurial skills are integrated into the educational curriculum under the new educational policy.
  • Promotion of Entrepreneurship: In addition to policy-level decisions to foster entrepreneurship, the Indian business sector must also encourage entrepreneurship and create synergies for generate sustainable and efficient growth in the use of resources.
    • Businesses in India can be encouraged to collaborate with startups and support them with various company-specific resources. These compromises can be mutually beneficial.
  • Harnessing India’s demographic dividend: Given the scale of India and its resource constraints, Low-cost, high-impact solutions are required. technology startups should be especially encouraged in the field of semiconductor, space and artificial intelligence harness the potential of India demographic dividend to the max.
    • Startups can also be incentivized to provide innovative measures to bridge the digital divide in India.
  • Social Acceptability of Start-ups: By collaborating with various unicorns from Indiathe government should work for social acceptance of entrepreneurs careers and channel young people in the right direction to choose a career with ease.
  • Made in India, made for the world: Indian startups have the potential to not only analyze Indian problems, but also offer customized solutions for markets abroad. the vision of Atmanirbhar Bharat it will definitely be driven by this as well as do India a hub of entrepreneurship across the globe.

Drishti Main Question

How is the startup ecosystem in India responding to recent government initiatives?

UPSC Prior Year Question (PYQ)

Q. What does venture capital mean? (2014)

(a) A short-term capital provided to the industries.
(b) A long-term start-up capital provided to new entrepreneurs
(C) Funds provided to industries at times of incurring losses
(d) Funds provided for replacement and renewal of industries

Answer: (b)

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