How startup day initiative could build a robust startup ecosystem in India

The declaration of January 16 as the National Startup Day by Prime Minister Narendra Modi has certainly come as a big boost to the ever-growing startup industry in India. The move is expected to add tremendously to the existing growth trajectory of the sector. Already pegged to be the third largest growing startup country in the world, this move also validates and recognises the value that the startup ecosystem brings to the country. Mind you that it was on the same day six years ago (in 2016) that the Startup India Action Plan had been launched by the government with the objective of supporting entrepreneurs, building up a robust startup ecosystem and transforming India into a country of job creators instead of job seekers. And over the years the government of India's flagship initiative has, to a great extent, succeeded in catalysing the startup culture, and building a strong and inclusive ecosystem for innovation and entrepreneurship in India.

Significantly, more than 50,000 startups have been recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), under the aegis of the Ministry of Commerce and Industry, government of India, which acts as the nodal department for Startup India - coordinating the efforts of all central government departments and the state governments. The recognised startups are eligible to avail the benefits across a range of laws, regulations, fiscal, and infrastructural support.

And mind you that it has not been a lopsided story. The recognised startups, on their parts, have contributed significantly to job creation, with 5,49,842 jobs reported by 48,093 startups with an average number of 11 employees per startup. Nearly 1.7 lakh jobs were created by recognised startups in the 2020-2021 period alone, according to department figures. The sectors with the maximum registered startups include food processing, IT consulting, and business support services.

Therefore, it's not difficult to understand that for India, startups have always been significant drivers of economic and business activity. The biggest driver to their success has been the policy environment created in the country. With the government's latest announcement, startups would now get that big push which leads to endless possibilities for growth for India.

The year 2021 was certainly a defining year for Indian startups and unicorns - which goes on to demonstrate that right policy framework (minimum government n maximum governance) can create an ecosystem of innovation and value creation. But this is just a beginning of a long journey that India should commit to (100X from here).

Having said all these, one must also remember that startups are still concentrated in few pockets of the country - Maharashtra, Karnataka, Delhi, Uttar Pradesh, and Gujarat. The startup movement has to spread widely and in a balanced manner all across the country. Similarly, the startup entrepreneurs, on their parts must look beyond food processing, IT consulting, and business support services and embrace newer and newer areas and sectors. Simultaneously with these, a systematic exercise across the states needs to be undertaken to eliminate or reduce compliances, which will have an adverse impact on time and cost of such businesses.

The good thing is that the funding opportunities to startups have been enhanced through the Fund of Funds Scheme with an overlay of Rs 10,000 crore and the recently launched Startup India Seed Fund Scheme with an outlay of Rs 945 crore. The aspiring entrepreneurs must cash in on this and take the startup ecosystem to the next level. The sooner the better.