Volume 7, Issue 6, June – 2022 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

A Study on the Start-Up Ecosystem in India

Muskan Ghani1, Dr.Promita Mukherjee2
Student, J.D. Birla Institute,
Assistant Professor, J. D. Birla Institute

Abstract:- Startups in India have gained immense boasts of having 43 unicorn start-ups only in 2021 adding to
attention in the recent period especially since the Covid- a total of 79 with the latest one being Pristyn Care. Not only
19 pandemic hit the country. Today, India proudly ranks this, unicorn companies have also gone public this year with
3rd in the global start-up ecosystem worldwide which Paytm leading as the country’s largest IPO ever with an
only looked as a far-fetched dream a few years back. issue size of 18,300 crores followed by companies like
Innovation in India has been at its peak yielding Zomato, Nykaa, Policy Bazaar, PharmEasy, etc.
unicorns one after the other. Startups have got the much
needed government support and mentoring which has A. Definition of “Start-up”
given way to economic development, job creation, open According to the notification that the Government of
innovation, easy availability of finance, changing India issued (19 February 2019, originally issued on 11
perception towards entrepreneurs and penetration of April 2018), when an enterprise meets the following
technology. The main aim of this paper is to analyze the conditions, it will treat it as a start-up:
current framework of startup ecosystem in India and
also emphasize on the drivers of growth, challenges, and  It has been incorporated/registered for not more than 10
the kind of support available to promote the startup years (previously seven years, except in the biotechnology
culture. Sectors that require attention for the further sector according to the notification dated 11 April 2018) in
growth of startup ecosystem in India have also been any of the following forms:
identified. The role of the Government of India as an  A private limited company under the Companies Act,
enabler in promoting startups has been emphasized in 2013 (including one-person companies);
this paper. The data included in the paper are all  A partnership firm under the Partnership Act, 1932;
secondary in nature gathered from Government  A Limited Liability Partnership (LLP) under the LLP
websites, renowned websites and journals among others. Act, 2008.
Relevant reviews of literature that support the reasons  Its turnover has not exceeded INR 100 crore (previously
for growth of startups and discuss the challenges on the INR 25 crores) for any of the financial years since
way have also been included. incorporation/registration.
 It is working toward the innovation, development, or
Keywords:- India, startup, startup ecosystem, innovation, improvement of products or processes or services or it is a
growth, unicorn start-ups. scalable business model with high potential for
employment generation and wealth creation.
I. INTRODUCTION
B. Elements of the Start-up Ecosystem
A start-up ecosystem can be described as a set of Ideally the start-up ecosystem of any country comprises
internal and external entrepreneurial factors, entrepreneurial of the following elements:
organizations (such as firms, banks, venture capitalists,  Ideas and innovation
business angels etc.), institution including universities,  Entrepreneurs
financial institutions, public sector agencies and incubation  Team members
centers and entrepreneurial processes that govern the local
 Angel investors
entrepreneurial environment. The Indian start-up ecosystem
has evolved over the last two decades. In the 2000s, the  Start-up mentors
ecosystem was still immature lacking active investors and  Start-up advisors
support from Government. The last 10 years has seen a  Office space and infrastructure
significant rise in the start-ups with support available from
C. Stages of a Start-Up
all dimensions. In India, Bangalore emerged as the hub for
Typically, the lifecycle of a start-up can be divided into 6
start-up followed by Mumbai and the National Capital
Region (NCR) among other cities. B2B has been dominating stages as discussed below:
the share of start-ups with a steady increase in the number of  Stage 1: Idea or opportunity
B2C start-ups indicating signs of maturity of the start-up This is the stage where the entrepreneur discovers an
ecosystem in India. idea or opportunity that he/ she wants to build into a
India’s start-up ecosystem is churning one after another start-up. This stage can last up to 6 months and involve
talented entrepreneurs while constantly contributing to the conducting interviews regarding the viability of the
availability of digital skills in India. One can address 2021 product, team building, looking for finance from
as a remarkable year for the start-up ecosystem in India family and friends and bring mentors and advisors on
surpassing all projections be it in terms of the number of board who can help in carrying on the further stages
successful entrepreneurs or the funds raised. In fact, India effectively.

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ISSN No:-2456-2165
 Stage 2: Validation also involves acquiring customers, establishing
At this stage, the entrepreneur seeks validation for the departments, employing staff and deciding the scale of
product and tries to find out how many people show operations.
interest in their product. In this stage, the product  Stage 5: Profit Maximization
undergoes changes to suit the demand of consumers In the profit maximization stage, the product has
and the entrepreneur looks for seed funding. managed to secure a stable customer base and the start-
 Stage 3: Preparations up is making a favourable profit margin required to
In this stage, the product is finalized and preparations sustain and move forward to the renewal stage.
focus on improving the business functions, competency  Stage 6: Organization
of the product and persuasion techniques. This stage At this stage the start-up is fully grown and in a
lasts up to 6 months. position to sustain itself. This is the stage where the
 Stage 4: Scaling the process entrepreneur has gained enough experience to start a
Once the preparations are in place, the next step is new project and does not need to constantly supervise
steering the growth through networking. This stage the existing one.

Fig. 1: Stages of a Start-Up

Source: Salamzadeh, A., & Kirby, D. A. (2017)

II. LITERATURE REVIEW  N Tripathi, P Seppanen, G Boominathan, M Oivo, K

Liukkunen (2019) discusses how successful start-ups
 Sabrina Korreck (2019) analyzed the current state of have the potential to create job opportunities and
start-up ecosystem in India focusing on 3 major goals: contribute to economic welfare of the society. The results
providing an understanding of the drivers of growth and of this study indicate that current knowledge on the start-
motivators of founders of start-ups in India; challenges up ecosystem is lacking in some parts and there is need for
faced by start-ups in India and pillars of support holding a more systematic and empirical literature on the topic.
them in place.  S Singh, A Chauhan, S Dhir (2019) studied the use of
 NK Pandey (2018) examines factors affecting the Twitter analytics for analyzing the Indian start-up
entrepreneurial ecosystem in the metropolitan cities of ecosystem. The study revealed that Indian start-ups are
India and addresses how initial funding of a start-up is inclined towards digital technologies, people, planet and
determined on the basis of education, gender and profit where resource and information availability are
experience of the founder. From the study, a regression major factors in determining success. The emotions of
model has been developed for the funding of start-up tweets were categorized as positive, neutral and negative
which can help in improving the efficiency of the start-up and indicated that the Indian start-up ecosystem had more
ecosystem for entrepreneurs. The model also provides positive sentiments than negative. Finally, the study
implications for entrepreneurs and policymakers. concluded with the finding that the future of Indian start-
 SL Chaudhari, M Sinha (2021) aims at exploring trends up ecosystem is Digital India.
that drive the growth of the start-up ecosystem in India.  Choudhary, AK, Kumar (2021) studies how Indian
The findings of this study include 10 major emerging higher education is responsible for ignoring the potential
trends driving growth of the Indian start-up ecosystem, of entrepreneurship which could certainly be used to
pros and cons associated with it and areas where these provide an opportunity to explore entrepreneurship.
trends can be leveraged to build a successful start-up are Existing studies have been used as a basis for analysing
also identified. the role of teacher and ecosystem in promoting
entrepreneurship. The findings of this study suggest that a
holistic assessment pattern and incentive for teachers is

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ISSN No:-2456-2165
required to ensure that the Indian higher education system because of which small companies have been able to enter
serves as a fertile ground for growth of innovation driven the market in industries that required large investment to set
entrepreneurship. It also reveals that entrepreneurship is up physical infrastructure for customer interaction leading to
the key that can transform India into a developed economy high customer acquisition costs.
over time.
 Rehman and Elahi, (2012) discusses benefits of Market access is the most important element for start-
entrepreneurship to the society and the economy as a ups followed by the ability to identify and track down
whole. It reveals that entrepreneurship helps in avoiding customers. With the increasing use of digital payments, it
monopolies and cartels and is also effective in keeping a has become essential for companies to verify the identity of
check on large corporations and MNCs and preventing the customer. Validation of customer identity has been made
exploitation of consumers. easier since the introduction of the Aadhaar Biometric ID
 Aleisa (2013) states that start-up ecosystems have the system in 2009. Support from the government has equipped
ability to innovate, build exceptional companies, create a large part of the population to conduct digital payments
jobs and open businesses. Success of entrepreneurs and also be a part of the Government’s subsidy programs.
depends on 3 factors that include economy, sociology and Due to various reasons including demonetisation in 2016
geography. Further it finds that Government regulations in and increased financial inclusion, fintech start-ups have
terms of tax, support, funding, incentives, education and boomed in the recent years. This brings us to our next point
training helps in building an ecosystem for start-ups along of discussion that is government support.
with the presence of entrepreneurs and investors. For an
B. Government Support
ecosystem to be effective, the Government needs to
The Modi government that came into power in 2014 put
address the needs of entrepreneurs.
digitalisation at the centre of its plans. Start-ups have got the
 Bala Subrahmanya MH, 2017 discusses that the goal of recognition and support from the federal and state
any start-up is to develop a self-sustaining network of governments as engines for economic growth. Start-ups also
talent and resources to solve issues affecting the overall contribute positively by narrowing down unemployment
entrepreneurial community. There is a need for some rates and creating jobs.
critical component such as entrepreneurs with technical
know-how, availability of a variety of sources of funding Some highlights of the government support to start-ups in
and a favourable regulatory system from the Government India are as follows:
to determine success of the upcoming as well as existing  Around INR 2.8 billion has been allocated to the Start-up
start-ups. India Scheme.
 Butler (2017) emphasizes that among 4000 successful  Investment worth INR 2 billion has been made to the Atal
entrepreneurs, the most distinct character traits were Innovation Mission.
ability to strive in uncertain times, a passionate desire to  An allocation of INR 7.2 billion has been made to more
author and own project and unique persuasion skills. than 70 technology business incubators for the
These characteristics are particularly found in individuals development of innovation and technology.
in their early 20s although the ideal age of a start-up  A total sum of INR 878 million has been reserved to boost
founder is between 30 and 50 according to many the development of entrepreneurship scheme in the
researchers. country.
 Semerci (2016) discusses that the job of an entrepreneur is
quite stressful as they are compelled to work in Schemes that accelerate the start-up revolution in India are
challenging situations with the pressure of critical decision discussed in detail below:
making which will one day eventually affect the mental or
physical health of the entrepreneur. Therefore, the a) Start-Up India
entrepreneur must possess high tolerance for stress. Prime Minister Narendra Modi announced the Start-
Up India scheme during his address on 15 August
III. OPPORTUNITIES AND GROWTH DRIVERS OF 2015 from the Red Fort, New Delhi. The main object
THE INDIAN STARTUP ECOSYSTEM of this initiative was to provide support to people
who have ideas and capabilities and wish to grow it
There are many growth drivers of the Indian start-up into a start-up. This scheme brought enthusiasm as
ecosystem. This chapter discusses the opportunities for start- well as opened doors to immense possibilities which
ups in India: will help India in becoming a better economy and a
A. Technological Change strong country.
India is a country that has been struggling with resource Within a year from the launch of this initiative,
constraints which is why there is a need for cost effective, India became the third country with the highest
high impact solutions that benefit a large population. number of start-ups standing at 4,600. The efforts of
Technology start-ups have the potential of bringing this the State Governments are very important for making
change. The penetration of digital products in the market is this scheme a success. With the continuous and
much better with increased access to consumer markets. The sincere efforts, Bangalore and Delhi have been able
market accessibility barriers have been significantly brought to establish themselves at the start-up hubs in India.
down with the improvement of digital connectivity. The The start-up ecosystem in India is being pushed for
technological change has facilitated low infrastructure cost

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several reasons which include its potential to create so small-scale industries are an important building
employment, the young demographic profile of India, block in the economic development of India. It is
the market potential of rural India, monetary benefits, important for reducing regional imbalances by
boost to the country’s GDP and economic inducing opportunities for industrialization of rural
development. and backward regions which in turn ensures more
equitable distribution of the national income and
The Start-up India scheme has been launched wealth. This is one of the main reasons why small-
keeping in mind the following objectives that will scale industries have been a part of the industrial
effectively help in simplification of the process of policies in India.
setting up a start-up and increase the ease of doing
business: The Ministry of Small Scale Industries and
Ministry of Agro and Rural Industries merged
 Compliance based on self-certification together in May 2007 to form the Ministry of Micro,
 Easy availability of legal support Small and Medium Enterprises (MSMEs). The
 Affordable patent examination ministry creates an ecosystem with policies, projects
 Credit guarantee for start-ups and schemes that foster MSMEs with the help and
 Tax exemption on capital gains support of state governments. Under the MSMEs, the
 Opportunity to showcase innovation through start- National Small Industries Corporation Limited
up fests (NSIC) has set up 6 business incubators under the
 Providing a platform for collaboration “Scheme for Promotion of Innovation,
Entrepreneurship & Agro Industry” (ASPIRE) which
 Atal Innovation Mission (AIM) with Self- facilitate hands-on training and education. It also
Employment Talent Utilization (SETU) program.
provides support and encourages prospective
b) Micro, Small and Medium Enterprises (MSMEs) entrepreneurs and start-up companies to start
Start-ups easily penetrate in the local area and manufacturing products.
provide large employment at a low cost of capital and

Manufacturing Sector (classified on Service Sector (Classified on New Classification Criteria

Enterprise the basis of investment in plant and the basis of investment in proposed on the basis of
machinery) equipment) annual turnover
Micro Not more than INR 25 lakh Not more than INR 10 lakh Not more than INR 5 crore
Small INR 25 lakh to INR 5 crore INR 10 lakh to INR 2 crore INR 5 crore to INR 75 crore
Medium INR 5 crore to INR 10 crore INR 2 crore to INR 5 crore INR 75 crore to INR 250 crore
Table 1: Classification of MSMEs

Source: DCMSME (2018)

c) Make in India Program (SC/ST) and female entrepreneurs with bank loans
The Government of India launched “Make in India” from INR1 lakh to INR 1 crore for setting up a
program in 2014 with the main objectives as: start-up which was known as greenfield enterprise.
 Inspire a sense of confidence in India capabilities This Standup India scheme followed by the Start-
and reflect it among citizens, the Indian business up India and Make in India initiative boosted the
community and potential partners abroad. start-up ecosystem in India.
 Provide a framework for technical information on
25 industry sectors. d) Digital India Program
 Reach out to a vast local and global audience The Digital India program is an umbrella program
through social media and keeping them updated launched by the Government of India in 2015
with opportunities, reforms, etc. involving various ministries and departments of the
Government. This program aimed at realising the
The Department for Promotion of Industry potential of digitalization in all spheres of life. The
and Internal Trade (DPIIT) is a pivotal point to run Ministry of Electronics and Information Technology
this program. A dedicated investor facilitation cell coordinates this program. Start-ups are seen to have a
(IFC) assists investors in seeking regulatory natural home in the digital sector and therefore this
approval and provide support and services initiative has been successful in complementing the
throughout the pre-investment stage, execution and start-up revolution. Nine growth areas have been
after-care support. This program has positively recognized by this program including:
impacted the perception of foreign investors which  Universal Access to Mobile Connectivity
has been clearly reflected through the Ease of  Broadband Highways
Doing Business index over the years. The  Public Internet Access Program
government launched the Standup India scheme  Reforming Government through Technology
with the objective of supporting disadvantaged
groups particularly the scheduled castes/tribes

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 e-Governance: e-Kranti—Electronic Delivery of g) MUDRA Loans
Services The Government of India has established the Micro-
 Electronics Manufacturing Units Development and Refinance Agency
 Information for All (MUDRA) with the objective to provide business
 IT for Jobs finance to micro-business units such as start-ups. To
 Early Harvest be eligible for this loan, micro or small businesses
including start-ups must be operating in the
e) Skill India Program manufacturing, trading or service sectors and fall
If the youth of the country is not skilful enough, the under one of the following categories:
demographic plus point of India will turn into a  Sishu or infant, eligible for loans up to INR 50,000
negative point. Keeping this in mind, the  Kishor or adolescent, eligible for loans up to INR 5
Government of India formed a ministry which came lakhs
to be known as Ministry for Skill Development and  Tarun or young, eligible for loans up to INR 10
Entrepreneurship (MSDE) in July 2015 to enhance lakhs
employability of the youth by skill development.
Under the guidance of the Ministry for Skill h) International Linkages
Development and Entrepreneurship (MSDE), the India has also been successful in establishing global
National Skill Development Corporation (NSDC) partnerships to facilitate joint innovation which is
introduced the Skill India initiative that allows referred to as “international bridges”. Some of the
aspirants to register for skill training and employment successful partnerships have been established with
using the online portal. The Skill India Mission Finland, Netherlands, United Kingdom, United
created sector skill councils (SSC) to be monitored States, the Russian Federation, Portugal, Sweden,
by the National Skill Development Corporation. 40 Israel, Singapore, and Republic of Korea among
sectors have been identified on the basis of skill gap others. The State Bank of India and Mahindra are
analysis some of which include food industry, mentors of the start-up grand challenge that will help
healthcare, and banking and finance and so on. The in channelizing the entrepreneurial capacity between
standards of the industry are met by the courses India and Korean start-ups to work together and build
recognized by the National Skill Qualification solutions for challenges faced by the world including
Framework. The focus of these courses is on the Credit Rating, Predictive Analysis, Fraud Detection,
practical delivery of work and to create skilled Cyber Security, Primary/ Secondary/ Tertiary
resources who can be employed by start-ups in the Healthcare.
different sectors.
C. Increasing Need to Engage in Open Innovation
f) National Schemes Large and well-established companies feel the need to
The kick-start from the Prime Minister himself has innovate now and then to keep their hold on the fast-
inspired various ministries and departments of the changing business environment. The challenge for large
Government of India to complement the start-up companies is two-fold. They need to innovate at a steady
revolution by introducing more than a hundred pace to meet the needs of consumers in the market while
schemes. With the help of these schemes, maintaining and adapting with the changes in the existing
entrepreneurs will be able to measure the scalability industry with the provision to make innovations. Another
of their start-up ideas. The initiatives by the problem faced by existing companies is that they cannot
Government of India show the preparation of the simply build everything themselves therefore the need to
central government to make the Start-up India engage in open innovation arises. This is why existing large
Revolution a success. However, the overall success companies in India are turning to start-ups to increase their
of start-up India is only possible if the state own innovativeness. By collaborating with existing
governments are effectively able to adapt the companies, start-ups are able to get hold of various
schemes enthusiastically. Some of these schemes are corporate specific resources in exchange for their
The Ministry of Electronics and Information innovation. There has been a significant change in the
Technology—Support for International Patent attitude and perceptions of corporate managers in the last
Protection in Electronics and Information few years as well-established companies today recognize the
Technology (SIP-EIT), The Khadi and Village benefits of working in partnership with start-ups in terms of
Industries Commission under the Ministry of pace and passion.
MSME— Scheme of Funds for Regeneration of
Traditional Industries (SFURTI), The National D. Changing Perception towards Entrepreneurs
Minorities Development and Finance Corporation Start-up founders in India are driven by passion,
(NMDFC)—Virasat—A Credit Scheme for Craft curiosity and motivation to achieve. Their desire to make a
persons, etc. difference, willingness to take risk, put ideas to practice,
seize opportunities and satisfaction that comes from solving
problems is what makes them successful entrepreneurs.
Founders of Indian companies have experience of
previously working in a corporate setting and despite the
stability and high salary they see their jobs as a block to

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ISSN No:-2456-2165
their creativity. They are looking to create something of C. Introducing the Product to the Market
their own and control it. The problem is further deepened when it’s time to
introduce the product in the market because the level of
From the society’s point of view, there has been a penetration in the Indian market is difficult. The landscape
change in perception towards entrepreneurs. The stories of of the Indian market is quite competitive with many existing
success of these entrepreneurs who made remarkable exits firms and new firms entering the market. Start-ups are
and India’s first unicorns have been in the talks for quite a always at a disadvantage because of the existing large
while. These founders have come to be known as India’s companies. Large companies are more capable of dealing
“start-up heroes” and also contributed to the popularity of with the bureaucratic regulations which gives them an upper
the hustle culture and the image of an entrepreneur being hand over start-ups. Even the Government prefers to sign
tagged as “glamorous”, “creative”, “independent” and contracts with well-established companies. It is a common
“cool”. tendency of customers to prefer start-ups if they are being
promoted by large companies as partners in open initiative
IV. CHALLENGES FOR STARTUPS IN INDIA projects. If the start-ups products have been designed to
Not everything about being a start-up founder is as cater to a new market segment, it takes a lot of time and
fancy as it may seem. There are a number of risks and effort to convince Indian customers.
challenges that start-ups in India face. These are discussed D. Price Sensitivity of Consumers
as follows: Start-ups find it difficult to convince consumers to pay as
A. Building a Start-up the Indian market is full of customers with low willingness
Building a start-up is an intimidating process and to pay. Though the income of Indian households is
requires dedication to hire and manage a team, deal with increasing, the customer base is still price-sensitive and
customers and develop a marketing strategy. Indian founders expects discounts or prefers to buy cheaper alternatives
come from a technical background and lack deep knowledge produced by China. Therefore, start-ups have to think
and understanding of business. The mindset of the youth is through the costs and come up with affordable products to
to look for fixed-tenure jobs than take the risk of being an cater to the customer base which often means compromising
entrepreneur which must be changed by focusing on the quality. This is the reason some start-ups are volume-
developing the culture of entrepreneurship. The culture of driven offering marginal returns. Another price-related issue
start-ups needs to be developed and sustained to receive is the collection of payment from customers especially for
desired growth of start-ups and benefit from its contribution. start-ups who do not accept digital payments.

Another constraint is managing the working capital E. Hiring Employees

requirements of the business. In the early stages, the founder Hiring employees is also a big task for start-ups. It is a
is bootstrapped as the start-up is mostly self-funded with the mentality of job seekers to not join a start-up as an employee
help of investment from friends and family. Some start-ups due to the risk of failure. The priority of job seekers is to
may find customers in the initial stages which may be work at large corporations that promise stable jobs. Another
enough to sustain and grow the business gradually. Hence, setback for start-ups is that they are not able to compete with
not all start-ups may need external investment so many of the reputation and salary structure of large companies.
them may have a difficult time in raising funds and finding Freshers who join start-ups to gain experience also shift to
the right investor. large and well-established companies after few years. The
similar phenomenon in the opposite direction is a rare event
B. Information Gap as workers of large corporations rarely shift to a start-up.
A digital divide exists between product or service
providers and those who are supposed to use the product or Secondly, applicants seeking job at start-ups are not as
service. The aim of start-ups should be to bridge this qualified or experienced as required to take the business to
information gap and understand the customers need. Since new heights. There is a gap in knowledge between what is
India is a diverse country in terms of culture, language, taught to students and what is required to run a successful
religion and ethnicity, start-ups tend to be limited to the organization. Freshers also lack industry knowledge which
local region with which they are acquainted and where they is another disadvantage of hiring fresh graduates. The
can find local support easily. This implies that building a training of new employees in a start-up adds a significant
pan-India start-up is more of a difficult task because cost and also consumes a lot of time. Even among fresh
information about customers in other regions is quite graduates, the ones that are highly qualified move abroad to
limited. This challenge is further aggravated because of the find jobs with higher salary potential. On the other hand,
founder and customers do not have a direct link. Start-up Indian start-ups have not yet developed the potential to
founders are well-educated and come from metropolitan attract talent from abroad. Reasons why Indian start-ups fail
cities compared to this nearly 70% of India’s population to attract international talent include the visa requirements as
lives in rural areas and customers do not necessarily come well as bureaucracy. Moreover, expatriates prefer to work in
from well-off backgrounds, many customers belong to the countries like Singapore because of higher pay and the
low-income groups. Because the founder and customers standard of living.
come from different living environments, often start-ups end
up with lack of knowledge and understanding of their
customer’s needs.

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F. Complexity of the Regulatory Framework Another complexity of the regulatory framework is
India ranks on the 63rd position out of 190 countries related to the legal processes of incorporating and
ranked in the World Bank Ease of Doing Business index. registering the start-up. The process is still quite lengthy and
The country’s rank has improved by 14 places in 2019 but it costly even while the Government has taken measures to
still has a long way to go. The World Bank ranks countries hasten the process. There are several approvals required
against each other based on the regulatory environment of before a start-up can be incorporated and even after the legal
the country and how helpful it is to conduct business process is completed, a formal registration process must be
operations with ease as well as stronger protection of followed to avail tax benefits. Even if a start-up fails, the
property rights. Even after the introduction of a number of process to shut down the business is more difficult than
policies to ease the process of setting a start-up, India is still setting it up.
considered to have a complex regulatory framework that
hinders the growth start-ups. The bureaucratic process is The tax policy in India is also considered unfriendly
where the Indian regulatory framework makes it difficult especially after the introduction of Goods and Services Tax
and unpredictable for start-ups to operate. The length of the (GST) in July 2017. Start-ups face a lack of clarity regarding
process is uncertain and cannot be determined while start- which items are taxable and how it works. The liquidity of
ups already face the challenge of sudden changes in the the start-up is at risk if the customer fails to make payment
regulations without prior information leading to frustrations of time because whether or not the business generates
and a waste of time and efforts or even a complete collapse revenue, start-ups are required to pay taxes regularly or
of the business model. suffer huge penalties.

Indicators Rank in 2019 Rank in 2018

Starting a business 137 156
Getting credit 22 29
Trading across borders 80 146
Dealing with construction permits 52 181
Protecting minority investors 7 4
Getting electricity 24 29
Enforcing contracts 163 164
Paying taxes 121 119
Resolving insolvency 108 103
Table 2: Growth of India on the Ease of Doing Business Index

Source: Doingbusiness.org

G. Gender Bias in the Start-up Ecosystem A major problem faced by women start-up founders is
Women in India occupy nearly 30% of the senior finance. If we talk about support from the family and
management positions which is significantly higher than the society, male entrepreneurs are encouraged more while
global average of 24%. But when we talk about women women are held back from starting a new venture. Women
entrepreneurs there are only 14% which is even lower in entrepreneurs are as effective and efficient as male
terms of start-ups i.e. nearly 10%. Women entrepreneurship entrepreneurs. It is the society’s ideology that lacks
is seen as an essential ingredient to improve the national confidence in women. Entrepreneurial ventures of women
GDP. Clearly, India is seen as a male-dominated society should be encouraged as much as men to help the society
where women are considered suitable for managing the accept women as “entrepreneurs”. The Government has also
household but incapable of undertaking business activities introduced schemes and incentives to help in the promotion
involving risk. This mentality has been the reason for and development of start-up ideas among citizens. There is a
hindrance in the growth of women entrepreneurs in India. need for initiatives that support women entrepreneurs until
Even in a team working on a business project, women have there is no more need to differentiate between entrepreneurs
to prove their capabilities time and again for men to accept on the basis of gender. State governments have introduced
them as equals in the team. Family’s responsibilities and some schemes such as MSMEs and Trade Related
managing household chores are imposed on women which is Entrepreneurship Assistance and Development (TREAD) to
why many women with potential give up on the dream to provide women with training, information and counselling
become entrepreneurs. with grants on entrepreneurship.

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Five-Year Plan Gender Component
It is essential to prioritize financial resources for women to advance gender equality and
8th Plan (1992-1997)
women empowerment.
Women’s Component Plan (WCP) was introduced at the Central and State level wherein at
9th Plan (1997-2002)
least 30% of the funds flow to women’s programmes.
Gender Budget Statement marked the official adoption and institutionalization of gender
10th Plan (2002-2007)
budgeting by Government of India in 2005-06.
This plan recognized gender budgeting as an important strategy for gender equality with
11th Plan (2007-2012)
focus on institutionalising GB at the central and state level.
The need for greater inputs to institutionalise gender budgeting and the need for gender
12th Plan (2012-2017)
audit was highlighted.
This plan highlights that the objective of gender budgeting is to make the entire budgetary
NITI Aayog Three Year
process more responsible to gender challenges by focusing on gender disaggregated data,
Action Agenda (2018-2020)
integrating gender budgets with outcome budgets and impact evaluation.
Table 3: Gender Component in Five-Year Plans

V. STATE OF THE INDIAN STARTUP embark on their journey as start-up founders. The data from
ECOSYSTEM post SAP in India is very encouraging and speaks for itself.
India is the third largest start-up ecosystem worldwide. A
The progress of the start-up ecosystem has self-explanatory table showing the data of start-ups
undoubtedly been remarkable after the launch of Start-up recognized by Department for Promotion of Industry and
Action Plan by the Government of India. Entrepreneurs have Internal Trade between 2016 and 2021 is given below:
received the much needed support and encouragement to

States with Start-up Policy 2016 2017 2018 2019 2020 2021
Andaman and Nicobar 0 1 2 5 12 16
Andhra Pradesh 4 103 162 140 478 717
Assam 10 35 68 57 197 324
Bihar 1 48 149 15 374 693
Chhattisgarh 11 57 121 143 377 528
Goa 2 20 44 32 113 184
Gujarat 29 298 452 518 1555 2586
Haryana 28 271 487 591 1635 2475
Himachal Pradesh 0 9 17 25 64 104
Jharkhand 2 35 88 80 235 407
Karnataka 67 886 1,213 1,374 4206 5979
Kerala 24 172 332 563 1292 2040
Madhya Pradesh 7 107 297 272 815 1258
Maharashtra 93 1,104 1,661 1,778 5477 8327
Manipur 0 4 7 4 19 41
Nagaland 1 4 2 2 10 16
Odisha 4 115 168 142 520 810
Punjab 7 31 70 81 223 390
Rajasthan 14 140 246 300 823 1314
Tamil Nadu 54 271 459 489 1509 2329
Telangana 20 328 511 492 1609 2456
Uttar Pradesh 29 413 791 709 2342 3857
Uttarakhand 4 45 69 84 231 353
West Bengal 8 181 275 255 839 1344
Table 4: Comparison of State-Wise Number of Start-ups Recognized by DPIIT 2016-2021

Source: DPIIT

Start-up India is a flagship initiative of the Government The vision of “Start-up India” can be achieved together
of India launched on 16th January 2016. The initiative aims by the efforts of all stakeholders’ including start-ups,
at fostering entrepreneurship and promoting innovation by investors and the Government. The RBI Committee on
creating an ecosystem that is conducive to growth MSMEs found that the reason for start-ups migrating to
of start-ups. A total of 44,534 start-ups have been other countries is better enabling environment, tax
recognized by DPIIT as on 24th February 2021 from the concessions, exit policy, ease of doing business and well-
launch of Start-up India initiative. developed infrastructure.

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Fig. 2: Start-up Landscape in India

Source: Drishti IAS

VI. CONCLUSION recently launched schemes namely Fund of Funds Scheme

and Start-up India Seed Fund Scheme have an outlay of INR
The launch of the Start-up India initiative has led to the 10,000 crore and INR 945 crores respectively, enhancing
spread of start-ups across 623 districts. Now, each state and funding opportunities for start-ups. Multiple programs
union territory has at least one start-up and states have also implemented by the DPIIT have offered the opportunity to
announced Start-up Policies specific to their state. In the engage with partners and get recognized for their
current scenario, Maharashtra, Karnataka, Delhi, Uttar contribution. These programs include National Start-up
Pradesh and Gujarat have the highest number of start-ups. Awards, State Ranking Framework, Prarambh: Start-up
When the Start-up India initiative was launched it took 808 India International Summit, Global VC Summit, etc.
days to add 10,000 start-ups whereas the latest 10,000 start-
ups were added in merely 180 days. The graph of start-ups With a robust start-up ecosystem, India will not only
has increased exponentially as 743 start-ups were be able to boost the economy but also contribute to
recognized in 2016-17 which was the launch year of the sustainable development goals (SDGs) specifically SDG 8
initiative and 16,000 start-ups were recognized in 2020-21. which is related to economic growth and decent work. It is
Entrepreneurs also have access to benefits from various remarkable that new start-ups entering the market this year
laws, regulations, fiscal and infrastructure support. have turned Covid-19 from crisis to opportunity. In fact,
2021 has been the most successful year for start-ups in India
With an average of 11 employees per start-up, around with as many as 33 start-ups entering the unicorn club.
549,842 jobs have been reported by 48,093 start-ups of Experts believe this momentum shall continue in 2022 as
which 1.7 lakh jobs were created in 2020-21 alone. The India is eyeing to add at least 75 start-ups in the unicorn list.
sectors with maximum registered start-ups were ‘Food Even while the whole world has been facing the pandemic
Processing’, ‘Product Development’, ‘Application and its successive waves, India has managed to make it into
Development’, ‘IT Consulting’ and ‘Business Support the top 50 in the global innovation index rising from the 76th
Services’. Another remarkable development of the start-up place in 2014 to the 46th place in 2021.
ecosystem in India is that nearly 45% had a women
entrepreneur in the leadership team which means India is
overcoming a major challenge by inspiring more women
entrepreneurs to turn their ideas into start-ups. Two major

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