India’s startup ecosystem is thriving, with over 50,000 Department for Promotion of Industry and Internal Trade (DPIIT) recognized startups as of December 2024. Major hubs like Bengaluru, Hyderabad, Mumbai, and Delhi-NCR are driving rapid expansion, and over 51% of startups now come from Tier II and III cities. The government has launched several key schemes and initiatives to support the startup ecosystem.
Startup India aims to foster innovation, create employment, and boost economic growth. Since its inception, Startup India has created over 17.28 lakh jobs, with key contributions from IT services, healthcare, and professional services. The Startup India Seed Fund Scheme (SISFS) was launched with a corpus of Rs 945 crore to support early-stage startups.
By 2024, 213 incubators have been approved, benefiting 2,622 startups. The Fund of Funds for Startups (FFS) is managed by the Small Industries Development Bank of India (SIDBI) and channels funds to Securities and Exchange Board of India (SEBI)- registered Alternative Investment Funds (AIFs), which in turn invest in startups through equity and equity-linked instruments. By 2024, 1,173 startups will have been funded.
The Atal Innovation Mission (AIM) was launched in 2015 to promote innovation, focusing on creativity and ecosystem building. Atal Tinkering Labs have been set up, and 3,556 startups have been incubated in 72 Atal Incubation Centres, creating 41,965 jobs. The Credit Guarantee Scheme for Startups (CGSS) provides credit guarantees for loans to DPIIT-recognized startups.
As of January 2025, Rs 604.16 crore in loans have been guaranteed, including Rs 27.04 crore for women-led startups.
India’s evolving startup landscape
The MeitY Startup Hub (MSH) is a central platform under the Ministry of Electronics and Information Technology (MeitY) supporting over 5,310 tech startups, fostering innovation and collaboration across India’s tech startup ecosystem.
Despite the growth and support, Indian startups face several challenges. High operational costs and infrastructure deficiencies, especially in smaller cities and rural areas, pose significant challenges for startups. Most Indian startups focus on consumer services rather than deep-tech ventures, reflecting structural economic trends.
Indian startups also face a policy environment that discourages high-capital, high-risk ventures in industries like electric vehicles (EVs), robotics, and semiconductors. Seed funding dipped by 25%, and Direct-to-Consumer (D2C) startup funding fell by 18% in 2024, reflecting cautious investor sentiment. India’s R&D investment is just 0.64% of GDP, limiting innovation in high-tech sectors.
The focus has been more on basic research than on commercially viable, applied research. Initial Public Offerings (IPOs) have underperformed, with many trading below their issue prices due to concerns about high valuations and profitability. To boost the startup ecosystem in India, several measures can be adopted.
Fostering a linkage between industry, institutions, and academia can help Indian startups in deep tech and space scale globally. Scaling innovation for global reach and positioning India as a leader in green innovation can also help secure funding for deep, innovative projects. Developing and retaining a future-ready talent pool and establishing a Unified Digital Compliance Platform can simplify India’s complex regulations and guide startups on their legal obligations.
India’s startup ecosystem is poised for continued success, but reforms in the manufacturing sector are needed to enable startups to drive industrial transformation and global competitiveness.
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