Startup India Initiative
India is at the cusp of its growth. The creative and innovative thinking power is so immense that in the last one decade, many multinational corporations have opened their R&D centers in India in order to take the maximum advantage for their organizations. The objective of these R&D centers is not only to work for local product development but more on global product development. In fact, some data has indicated that more than 800 MNCs have opened their R&D centers in the last 10 years, employing more than half a million Indian resources. It has also been informed that the quality of research and patents filed by these R&D centers is of an equivalent level when compared to the patents filed by these MNCs in their parent countries.
This innovative Indian mindset got a bigger boost when the Startup India initiative was announced by Prime Minister Narendra Modi on 15 August 2015 with an aim to build a strong eco-system for nurturing innovation and startups in the country that will drive sustainable economic growth and generate large-scale employment opportunities. The government further took various steps towards ensuring the success of Start Ups through “Simplification and handholding”, “Funding support and incentives” and “Industry-academia partnership and incubation”. These steps are made to ensure India realizes its hidden thinking and creative potential of the youths and make the vision of Startup India initiative a reality.
In the last few years, significant progress has been made in this direction and various milestones have been achieved. Today one out of 10 unicorns globally are born in India. The Department for Promotion of Industry and Internal Trade (DPIIT) is mandated to coordinate implementation of Startup India initiative with other Government Departments. Apart from DPIIT, the initiatives under Startup India are driven primarily by five Government Departments viz. Department of Science and Technology (DST), Department of Bio-technology (DBT), Ministry of Human Resource Development (MHRD) now known as Ministry of Education, Ministry of Labour and Employment and Ministry of Corporate Affairs (MCA) and NITI Aayog.
Startups & Unicorns: Transforming India
DPIIT has reported that more than 61,400 startups have been launched in India out of which 39,960 are the active ones. The number of startups launched in the year 2018, 2019 and 2020 were 4200, 3500 and 1250 respectively.1300 new tech startups were born in 2019 alone implying there are 2-3 tech startups are born every day. The number of women entrepreneurs stood at 14%, up from 10% and 11% in the previous two years. The funding to the startups has seen sharp increase since 2015. In year 2021, funding amount was $42 bn whereas it was $ 5.7 bn in the year 2016. The highest number of active startups as on date belong to Enterprise tech (18.7% of total no of startups) followed by Ecommerce (12.8%), Fintech (12.1%), Consumer services (9.5%), Healthtech (8.9%), Edtech (8%) and Media and Entertainment (7.9%).
These startup are leveraging the new technologies and developing innovative solutions. The intellectual power, innovative thinking, creative application and technology combined with the fertile economic ground to experiment in a market that is full of challenges and opportunities has led to a significant growth of these startups leading many turning and becoming Unicorns. Untill 2016-17, every year India added one Unicorn every year. However India has seen an exponential growth for Unicorns with a whopping 66% year on Year growth. In 2021, India there were more than 44 Unicorns born in India with a total valuation of $92.77 bn. Delhi NCR, Mumbai and Banglore were among the top cities besides Hyderabad, Chennai and Ahmedabad where young minds of India found a fertile ground to launch their ideas and set up their headquarters. As per the Inc42’s Annual Indian Startup Funding report 2021, India is home to 84 unicorns with a total valuation of $283 bn. India today contributes10% of total unicorns born globally. Despite the pandemic posing serious threats to businesses, it has been unsuccessful to deter the resolve of young Indian minds. 2021 saw an exponential boom amongst startups and unicorns in India. The credit goes to the vibrant startup ecosystem getting developed in the country.
Until end of first two weeks of January 2022, India has witnessed the birth of 2 more unicorns named Mammaearth, Fractal analytics. As per the report published in the Economic Times dated 15 January 2022, India—with 90 unicorns—is the third-largest unicorn hub behind the US (487) and China (301), and ahead of the UK (39).
Not only in the conventional sectors, Indian Unicorns are entering unconventional sectors and sub-sectors including, NBFCs, Conversational Messaging, Cryptocurrency Exchanges, D2C, Cloud Kitchens and many others. Indian unicorns are also exploring the public listing avenues as a next step to realise the growth potential. Some one of big unicorn names that offered an IPO include Zomato, Nykaa, PolicyBazaar, Paytm and Freshworks, while many are already in line such as Delhivery, Mobikwik and CarDekho.
Startups as Employment Generators
Most of these startups have been successful in generating large scale employments. Startups in the country have been able to create an estimated thousands of new jobs over the year, taking the total jobs in the start-up ecosystem to more than half a million. As per reports, the recognized startups 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. About 1.7 lakh jobs were created by recognized startups in the 2020-2021 period alone. India needs to focus on further strengthening the startup ecosysytem and target a million startups. This will not only help India to grow economically but also adress the issues of employment as well.
Educational Institutions: Re-Kindling the Spirit
As per Angus Maddison, in his book, The Contours of World Economy, India had more than 35% of the total world GDP from Ist century until 18th Century.A deeper analysis of Indias glorious past indicates that this was possible because of the strong education and innovation culture that was provided by the finest of the universities of thiose days including, Taxila University, Sharda University, Nalanda, Sompura, Odantpuri, Vallabhi, Kanthnoorshala and many more. These institutions became the centere of excellence and produced scolars, scientists and innovators who produced amazing innovations that led India to be called as Golden Sparrow.
In the contemporary world the global ranking of any country is influenced by its entreprenurial activity in terms of its innovation, competitiveness and Job creation that helps a nation to progress and grow on social and economic indicators. In last few years the education in India has re-ignited the entreprenurial spitrit of young minds leading to exponential growths of startups and unicorns.
The ever-growing entrepreneurial spirit of the young students has energized the institutional startup ecosystem. Institutes are playing a critical role in fostering innovation and entrepreneurship beyond functioning as a multidisciplinary knowledge hub. Indian technocrats and management professionals studying in various educational institutions are increasingly contributing towards the growth of startups in and unicorns in India. According to a study by UK-based payroll and accounting firm, the Indian Institute of Technology (IITs), ranks as the fourth-largest producer of unicorn startups in the world. As perEconomic Times, 30 out of 58 unicorn startup founders are graduates of IIT Delhi, IIT Bombay, IIT Kharagpur and IIT Kanpur. In fact, every second founder of Indian startups that has transformed into a unicorn is an alumnus of one of four oldest Indian Institutes of Technology.
Finding New Opportunities
India being a developing nation with huge number of challenges in various sectors will see a significant rise in the startup and unicorns in the coming days. The technology driven startups will find more opportunities for growth including Blockchain, Artificial intelligence (AI) and Big data attracting high early-stage funding deals. Five sub-sectors—agtech, blockchain, advanced manufacturing and Robotics, AI and big data, fintech—are growing in size at an astounding pace, with an average 107% rise in early-stage funding deals and 43% growth in exits. AI, Big Data and Analytics is the largest sub-sector, comprising nearly 27% of all global startups. Other sectors like cybersecurity, EdTech, cleantech and gaming are also maturing at significant rates, seeing a collective growth of 33% in funding. With such progress, India can address the issues of employability and livelihood, besides transforming certain sectors for their social and economic output.
Raj Nehru is Vice Chancellor, Shri Vishwakarma Skill University.